If you have ever been on either side of an investment, you know firsthand how hard it is to find the right partner. Durham newcomer Qodeo is helping investors and entrepreneurs alike skip “kissing frogs” to build healthy, long-lasting investment relationships.
A longtime consultant, former investment banker and Brit by birth, founder and CEO Simon Glass started Qodeo to solve a problem: facing an information overload and limited resources, investors often invest only inside their network. By working with people who look like them, investors miss out on valuable deals and valuable diversity.
“Let’s say you’re an investor; if you went to the same alma mater, there’s an automatic connection that you can’t deny,” Glass said. “But by that very fact, you are sourcing most of your deal flow from a very narrow network. That means two things: it means that you’re not looking at, and you’re not giving opportunities to, diverse entrepreneurs. People who didn’t go to Harvard, Stanford, Cambridge, or MIT don’t get a look, in many cases, because you don’t even know where to start.”
Research has found that investing in more diverse companies builds more profitable portfolios than only investing only in companies within your “trusted” network. By casting a wider net and expanding investing opportunities from “trusted networks” to “indirect trusted networks,” investors can profit from better investments. Qodeo is building that “indirect trusted network,” thereby “democratizing” fundraising opportunities.
Now Qodeo, which already has a presence in London and New York, has set up shop in Durham as well. [Editor’s Note: The startup is also sponsoring GrepBeat’s Happy Hour on Thursday, Nov. 17, at Durham’s Bull McCabe’s, where all entrepreneur attendees will get 50% off Qodeo Concierge, and one lucky trivia winner will score a free year of Concierge (saving $99-$240).]
Think of Qodeo like a dating app for venture capital or private equity investment. Once an entrepreneur or investor is on the platform, Qodeo’s algorithm will facilitate “matches” with investors that are rated “Hot,” “Warm” and “Cool.” Just like on a dating app, entrepreneurs or investors can reach out once they have “matched,” ensuring to entrepreneurs that the firms they are reaching out to are actually good fits and to investors that they hear from entrepreneurs whose companies fit their interests.
Qodeo is a SaaS data provider, not a broker, so it doesn’t take commission on deals. To investors, Qodeo’s platform is completely free—and there are some 7,000 on the platform. Entrepreneurs pay a monthly subscription fee of between $10 and $20.
“We did research at INSEAD, a business school in Europe, about the average cost and time entrepreneurs spent stuffing around just trying to start that journey,” Glass said. “We found they could spend tens of thousands of dollars and hundreds of hours just to start a process that we can automate for 10 bucks.”
Compared to the price tag and uncertainty an entrepreneur might face courting investors in-person, this small fee is a bargain, Glass contends, especially when considering the opportunity cost many entrepreneurs face as they balance time spent finding investors with the day-to-day responsibilities of running a business.
Qodeo believes it saves founders searching for funding 350 hours on average—that’s almost nine work weeks, if you’re doing the math. Redistributing time and effort from the funding process to the day-to-day also helps protect founders from fundraising burnout, and the risk that they may give up just before finding the perfect match.
“To get a sale, you have to speak to your lead six times, and most people give up on the third or fourth,” Glass said. “So if you’re talking to venture capitalists, and you’re talking to the wrong ones, people just kind of give up, and you could potentially be funded.”
Expansion to Triangle
One benefit that Qodeo offers founders is connecting them to investors that may not necessarily be local. The Triangle, which offers both networks of investors and loads of entrepreneurs across industries, is a natural market for Qodeo. But despite his British accent and London home, Glass’s roots in the Triangle stretch back three decades.
Glass discovered the Triangle as he led concert tours across the Southeast for a production company in the 1990s. Even then, he saw the area’s vitality and growth potential. Previous work with research partners at Duke’s Fuqua School of Business further cemented Glass’s faith in the Triangle market.
After Qodeo’s “flip” to become a U.S. corporation late last year, Glass began looking for a second city to expand in the U.S. after New York. North Carolina left an impression on Glass–that’s why he chose Durham, not Los Angeles or Seattle, for Qodeo’s second headquarters.
“People in the Southeast are very receptive to opportunities and ideas and tend to get overlooked often by other folks,” Glass said. “From a market perspective it’s fascinating, and from a diversity perspective, it’s also fascinating. Many of the businesses down here are African American-run businesses and women-run businesses. There’s an interesting collision in the Southeast, and in Durham, of the old South and the new South.”
While he is still flying back and forth between Qodeo’s offices in New York, London and RDU, Glass is seeking Triangle funding to hire local employees in the coming months to expand its small team. Just like the investors and entrepreneurs Qodeo connects, he believes Durham and Qodeo are a perfect “match.”
“We’re looking to grow much more enduring roots than we would do nominally in New York,” Glass said. “We very much want to grow in Durham, because it’s a great location. You’ve got great people there, you’ve got talented engineers and coders, you’ve got talented marketing people. You’ve got lifestyle options, great access to transportation and great knowledge of one of the core markets: the Southeast.”