VOL. 126 | NO. 87 | Wednesday, May 4, 2011
Seed Hatchery Helps Local Startups Spring to Life
Springtime gardening isn’t just for farmers anymore. The new Memphis venture group Seed Hatchery hopes to plant six innovative new companies into home soil.
Financial investments, mentorship and a business-owners’ Boot Camp are part of a 90-day process of entrepreneurial training.
Seed Hatchery, a for-profit venture group in Memphis, was established earlier this year, backed by Solidus Co., a similar organization in Nashville. Solidus received several million dollars to farm new companies in Tennessee.
Eric Mathews, president of Seed Hatchery, said his company is one of only 10 similar companies in the state whose mission is to establish new companies with creative, mostly tech-oriented products or services.
Last December, Seed Hatchery released its application for startup businesses and promoted it through blogs and social media. The group received 65 responses, mostly from within Memphis, but from as far away as Russia.
The list was whittled down to six, which began the process in early March.
“The ideas (for the startup companies) should be innovative in nature, but within the first 30 days they change very rapidly,” Mathews said. “It’s just the design of the program. We do a lot of great customer discovery work in the first 30 days, and people quickly know that we didn’t select them because of their ideas, because plenty of people have ideas.”
“We have an equity stake going forward and success incentive for our work. (The startups) will be moving out of the nest.”
– Eric Mathews,
President, Seed Hatchery
The startups were assigned mentors from a pool of experienced businesspeople who guide them through a rigorous crash-course training program. Seed Hatchery also invests $15,000 in each startup in return for 10 percent of the companies’ equity.
“We feel like we’ve learned more in the last 50 days than we’ve learned in three years that we’ve been at Christian Brothers,” said Demarcus Love, who with his partner, Abe Villarreal, owns the startup company Choomogo. “It’s very engaging. For every activity, there’s something that you have to do to act on the information they give you.”
Both Love and Villarreal are Memphis natives and junior finance majors at CBU. Choomogo will offer cell phone and digital device charging kiosks with interactive touch screens at universities and other high-traffic venues.
Use of the kiosks will be free to customers and venues and profit will be generated by advertising revenue.
To prepare for media interviews, Love and Villarreal were grilled by members of the Memphis Bar Association.
“The way the program is structured, they hit you with a lot of stuff all at once,” Love said. “We were overwhelmed. Now, as we go to potential clients, we’re very knowledgeable. Anything that’s very hard, if you do it repeatedly, it gets easier.”
Love and Villarreal got the idea for Choomogo after reading a Business Week article about a similar product in New York City. Love said their product will differ in that the touch screen will allow customers to play games and read sports and fashion news while they wait for the charge to complete.
“There’s a learning curve,” Villarreal said. “We have to know every component of our business model, so we are getting into the marketing, we are getting into the tech side and learning as much as we can so we can have a conversation with technical people about our products.”
Besides Choomogo, Seed Hatchery invested in obeedo, which will offer a drive-thru style grocery store from which customers purchase groceries they ordered online.
Another startup, Work for Pie, will help score technical talent online for those seeking or offering jobs in specialized fields.
The company Krikle is creating a smartphone app to allow users to create virtual graffiti specific to and accessible from one physical location using GPS.
Another, stiQRd, enables smartphones to carry information for customer-loyalty programs in lieu of carrying swipe cards on keychains.
And Smarter City will use a digital mesh network to provide information about the availability of parking spaces through the use of digital sensors.
StiQRd, Smarter City and Work for Pie were among 28 Tennessee startups chosen to attend the annual Venture Showcase in Nashville Thursday, where they will begin pitching their companies to investors.
But if it sounds like a non-TV reality show, the good news is that all six Seed Hatchery startups get the same prize.
On June 2, they will pitch their companies to a group of angel investors, venture capital groups and other invited private investors organized by Seed Hatchery.
“We have an equity stake going forward and success incentive for our work,” Mathews said. “(The startups) will be moving out of the nest. It’s our hope that many or most will receive follow-up investments.”