Intro: I may or may not say this every time, but this time I am right– you just need to sit down and just get ready. My friend Jessica Kim is an entrepreneur and she began her first company baking out of her dorm room at the age of 19. She went on to raise one million dollars to fund and scale that company and then sold it for millions more. She did not stop there. She went on to found the company called BabbaCo. Some of you guys might know it. It’s a parenting lifestyle brand and e-commerce subscription company that sent enriching activity boxes to families to create memorable moments in new ways. That company was eventually acquired by Barefoot Books which is a global children’s publisher, and also a direct sales company—FYI. For 2 years. Jessica was the president of Barefoot Books, which has the mission to share stories, connect families and inspire children. After that, she was asked to be an entrepreneur in residence at a venture capital firm, which you guys have to hear even what that means–a venture capital firm. It’s based in Boston.
Now she’s starting her third venture called IanaCare. I can’t wait for you to hear what IanaCare is all about. This episode taught me so much. We really break down what to do when you have an idea and don’t have the money. So many of us stop there. We have ideas and we begin talking ourselves out of them almost immediately, and money plays such a huge factor—she just breaks it all down for you today. She really is our business coach, and I absolutely know you are going to learn a ton from her story and from her tips.
Business is the Study of People
Jessica H: Hey Jess, welcome to The Going Scared podcast.
Jessica K: Thanks, I’m so excited to be here. Thanks for having me.
Jessica H: So, I really wanted Jess to come on this show because she is a serial entrepreneur. She’s actually in the middle of starting business number three. And she goes about finding her businesses differently than how Noonday was funded. So, we got to have a really great conversation a few months ago when we were in a business accelerator program. I was there as a mentor. You were you were there to focus on your third business, I think. We just had this really, really great conversation around the different ways you can fundraise. Some of the things we’re going to talk about today with you guys is–you have an idea that you don’t have the money for. It’s just going to solve your problems, right?
Jessica K: Absolutely. I’m here for you.
Jessica H: OK. But first I wanted to start off by you sharing your story of your first business because it is such it’s such a cool story. I’d love for you to begin with the Reader’s Digest version of your first company. Then, how it led to your second company, and now, how you get into your third.
Jessica K: Okay great. So, I am proud to say that I was born and raised in New “Joisey,” just kidding, I don’t have a Jersey accent. I’m the youngest of three, with an awesome big brother and sister, and my parents were immigrants from South Korea. My dad grew up very, very poor in the countryside of Korea, while my mom was basically a queen in the city of Seoul. It’s incredible that they had such opposite upbringings, which provided such a great balance in their parenting. He really, truly built himself up with nothing and no support—he immigrated here–so his life was true grit; he has been an inspiration my whole life. So, he became a psychiatrist, which was fascinating as a kid. I grew up with him constantly lecturing me about emotional awareness, people dynamics, grids, and mindset. As a kid I hated those lectures, but I now realize it was the foundation of my self-confidence and understanding of people. So, Jess, do you remember getting asked the question “what do you want to be when you grow up.?
Jessica H: I do, I do.
Jessica K: I remember at 10 years old my answer would be “I want to study people.” I had no idea what that meant in terms of a job. But I’ve always been, and I continue to be so intrigued by people; how our upbringing and different cultures and situational experiences literally shape the way we see the world. So, even on this podcast, people are physically listening to the same words, but the way each person interprets them and applies them will be different for everyone.
“…our upbringing and different cultures and situational experiences literally shape the way we see the world.” – Jessica Kim
So, my parents were just like “OK.” You know, they never pressured me to be anything that I wasn’t. What they did say, which I tell my kids now is, they said “do what you love, but once you discover it, do it well and just go for it.” So, I did. I went to Brown University and majored in anthropology–the study of people. One thing led to another, and I started baking out of my dorm room as a sophomore in college.
I say all that background because I love studying people, and that’s really what I feel like business is all about. It’s all about people understanding their desires, their behaviors–and baking–that literally was not in the plan. I did not intend to start a business. I didn’t say “oh, I want to be an entrepreneur.” It wasn’t a thing. I don’t want to date myself, but this was 1998 and there weren’t entrepreneurship programs yet, or a lot of courses, or just a lot of stories being shared.
It really was kind of a fluke that I started baking out of my dorm room. I walked into a pizzeria. It was called Fellini’s which was a hot spot on campus and I saw a plate of banana bread being sold. It was saran wrapped with a toothpick sign that said “one dollar and 69 cents” So, I knew it was homemade and not an official brand that you see in the store. So, I said to the owner who makes this–“I could do so much better.” He was like, “yeah? bring it!” So, I brought it in and he sold out immediately. I kept bringing my banana bread and they kept selling out. I eventually said, “you know, wait, I want people to know that I made this.” So, I got wicker baskets literally from the local store and made–out of construction paper and markers—(this is not high tech, Jess)–and then called the company “Jessica’s Wonders” with the slogan of “mmmm, so good it will make you wonder.”
Jessica H: I love it. Your why—was it just like “oh my gosh, this looks so bad. I could do better. Like, what was your motivation? You weren’t really into baking necessarily. I feel like it could have been anything. Right. But it was just this moment of like seeing something going, “I could do better than that.”
Jessica K: I was just like “Whoah, what is this? You’re selling this? I can bake better than this.” And I didn’t think of it as a business then. I was the furthest from that—I didn’t come from a family of business.
So, my whole thing is always that if you see something, just go for it. Take that next step. Don’t overthink it. I basically fell into entrepreneurship. I didn’t know what I was doing. I didn’t intend on starting business. I just said, “You know, I can bake better banana bread,” and he sold out and I found it to be really fun.
Falling in Love with Business
Basically, I went to a professor at Brown. I started spending a lot of time baking in my dorm room, and you know trying to still take classes and everything. I asked him, I said, “You know, is this a thing? Is this like a business, is this what you call a business?” I remember he was the first person to say: “Absolutely this is a thing.” He agreed to do an independent study with me, but only if I entered the first business plan competition that Brown was launching. I said, “OK, if I can get credit for that, I’m in!”
It was doing that business plan–that was my first real exposure to thinking through business concepts. I fell in love–like I didn’t know what marketing was. But then when it was positioned as “why would someone buy your products over someone else’s?” I was like, well that’s fun to think through. Then sales–like figuring out how much I had to sell to make a profit. You know, manufacturing and operations and packaging–I loved it all and was so energized by the process and get this—Jessica’s Wonders ended up winning the business plan competition out of 77 teams that year. I got a whopping three thousand dollars in prize money. But more importantly, I got connected to amazing and generous mentors who really just took me under their wing and taught me what it was to run a business.
So, long story short, I ended up raising one million dollars. My senior year in college, I was 20 years old.
“Long story short, I ended up raising one million dollars. My senior year in college, I was 20 years old.” – Jessica Kim
Jessica H: I want to break this down because I think that when I started Noonday, I wouldn’t even know what you meant by “went and raised a million dollars.”
Jessica K: Sure.
Jessica H: So, you had built your baking business at this point to what? You were still in the one store…this pizza place?
Jessica K: I did expand to 13 different hotspots around campus–I was baking out of my dorm room, out of this tiny efficiency–cooling cakes on my stacks of textbooks. I mean, it was probably very unsanitary wrapping it up and selling it. I mean it was so grassroots. I don’t even know how to truly explain.
Jessica H: So, it’s in 30 different spots around campus—Jessica’s Wonders. It’s profitable because I mean, let’s face it–banana bread–the actual raw costs of that, you can’t get much cheaper than that. Bananas are like the cheapest fruit you can buy at the store.
Jessica K: That’s true. I didn’t think about that till now.
Jessica H: You have no office expenses. I mean you’re using your dorm kitchen or whatever.
Jessica H: And now you have a professor come along and validate your idea, which is awesome, because I think maybe someone else could have just blown this off. Right?
Jessica K: You know it takes one person.
Jessica H: I know and I love that
Jessica H: From the beginning you had a professor sort of validate; “Yeah this is a business and you win this competition.” Now take us through this whole fundraising concept.
One Idea = One Million Dollars
Jessica K: The competition was a real pivotal moment in my life and for the business, because thinking through all the different elements of a business plan was so helpful –especially for someone that had no experience in business–or even had job. I was like 19, 20 years old. So, after I came up with the plan and we really believed in it, and I was matched up with some of these mentors who said, “You know this is a thing–like you this could be a great business–you have this branded.” The way we positioned it was that it was like the “Ben and Jerry’s” of baked goods, you know, personality brand, super-fun. The product names were like Kelly Jelly Banana Mmmm Bread and Jay Jay’s Most Moist Mocha Cake–like super fun, all named after my real friends and family and so there’s like a whole brand around it. I have to say the baked goods were really delicious.
So, all these mentors were just saying “this is a thing” and actually that initial mentor said “I will invest in you. I feel like you have something here, and I’m going to give you money to do it.” And then he connected me to other people that were investors, and then those investors connected me to other investors, like it was a true networking type of thing. I would just present my business plan, talk about how we’re running it, and I was in operations–it was not just a dream or idea. So, I was able to answer all the questions even at 19, 20 years old–learned how to position it and I ended up raising a million dollars.
Jessica H: Were you specifically thinking, “I’m raising a million dollars because this is where I want to take it and I need money for this kitchen,” because you could have continued to organically keep growing the business…
Jessica K: Sure.
Jessica H: …and just put money back from the business and you know the profits back into the business to eventually, you know, rent a kitchen somewhere. So, what was driving you? Like, “if I had this money, what it would mean for me?”
Putting the “Fun” in Fundraising
Jessica K: Well, I think the question you have to ask is; if I want to just literally be almost like that woman who was selling to that original pizzeria. She was just doing this on the side, baking out of probably her kitchen, or maybe a side kitchen, it must be sanitary. So she probably had some kind of approved kitchen, and she just kind of wanted to make money on the side. But once I did the business plan and I saw the vision that this could be like a Ben and Jerry’s like branded company, then we started growing and I was like “I need to get out of my dorm room.” So, then I then kind of went to a professional kitchen and I have to pay for that. Then, in the midst of this whole process you know P.R. (Public Relations), they just picked up the story and I remember Providence Journal putting the story in that we won this prize. Stop and Shop Supermarket called me and they said “hey, you know we heard about your brand. We’d love to carry you in our stores.” Initially I said “no, we’re not a supermarket brand.” That’s a different story.
We then ended up pitching to them, talking, and they said “great, well let’s do two test stores, 3 test stores, 4 test stores, and then we went from four test stores to 327 stores along the entire East Coast with one buyer. In order to do that, it was beyond even my professional kitchen. We were doing like a thousand pounds of peanut butter in one recipe, right? That’s a whole lot of peanut butter, Jess. In order to serve all of these retailers, I just needed upfront money to be able to pay for the cost and all the testing and get everything lined up before I got it delivered–the products–and then get paid by Stop and Shop.
Fundraising is just as strategic as any other part of your business. I think so often we think about our products and the features of our team and our impact. Then we just say, “Okay, I need money for this” or “do I need money for this? Who can give me money for this? That is the biggest mistake I see; what you really need to do is also lay out—“what do we envision for this company, and what kind of funding will match that vision, and that journey, and the possible kind of outcome that we’re going for?” It’s just as strategic as any sales or marketing plan. I really strongly believe in that.
“Fundraising is just as strategic as any other part of your business.” Jessica Kim
Jessica H: I think to ask that question you have to see yourself as the next Ben and Jerry’s. I mean, I think that if you continue to see it as a side hustle, you’re not even going to stop to ask a question of where you want it.
Jessica K: That’s a great point.
Jessica H: ‘Cause you’re not even thinking about three years out–your thinking “is this even going to make it?” You know what I mean?
Jessica K: Absolutely.
Jessica H: So, tell us a little bit more when you go and raise money–what is that? We know what it means for you. It means money. What does it mean for the investor–what’s motivating that investor?
5 Best Fundraising Methods
Jessica K: I want to get real practical here and just break it down to…I’m going to focus on five different funding sources.
So, first of all, I have to say that funding your company is key–no matter how you define it. Even if it’s, you know, even if it is bootstrapping self-funding–that is a funding strategy, right? I didn’t come from family money. When I started my businesses, I didn’t have a lot of savings, so I needed to figure this out if I was going to make this huge vision come to life and something that struck me is that 94 percent of companies will fail in their first year. There are several reasons, but one of the top most common reasons is the lack of funding–as we were talking about–businesses requiring money to buy inventory, equipment, hire people, testing, sales materials–you name it–before you make enough revenue to cover all that. If you don’t manage your cash correctly, it could be the reason why you can’t move forward, no matter how awesome you or your products are. So, I take it seriously because I don’t want that to be the reason why I can’t bring my solution to the world.
Jessica H: You’re right.
Jessica K: so here are five funding options to explore. And I you know again there are so many more but I’m going to talk about bootstrapping, crowdfunding., Angel investors,
Jessica H: I’m literally taking notes right now. This is ridiculous.
Jessica K: I love this, Jess, really. You and I are just having one of our calls. Venture capital. And then I’m going to actually cover competitions.
I’m just thinking initially, you have a great product idea, and how do I get started? So, that’s really what I’m going to focus on today.
Fundraising Method #1: Bootstrapping
So, bootstrapping: This is basically you self-funding the business, whether you’re using savings, getting friends and family to give or borrow, whether you borrow money or are maxing out credit cards. Essentially you are saying “I’m going take the responsibility of funding this business.” So, the good thing about this is that it’s an effective way to get the money you need–especially for first time entrepreneurs who don’t have a track record or don’t have traction yet in the business.
It’s typically easier and faster to get started because it’s on your terms and there are far less formalities or procedures to go through. The greatest thing, Jess, that I know you know–which is amazing–is that you own your company and you’re in control, right?
So, I think it says a lot that you know you have to first believe in yourself to muster up the courage and ask someone else to say “hey, believe in what I’m doing,” but that will only happen effectively if they know that you’re competent in yourself. So that’s key. But some of the things to be careful of with bootstrapping, just to kind of lay everything out, is you. The thing is, you may lose all this money and it can be very stressful.
You know I started BabbaCo literally maxing out credit cards, and it was super quick.
Jessica H: Babbaco was your second company…
Jessica K: My second company.
Jessica H: Yeah, we’ll get into that.
Jessica K: It was super quick to get started. I just needed to get materials and stuff to kind of make the inventory, initially. So, I maxed out credit cards. But the thing is, if it didn’t go well, I would have had thousands of dollars in credit card debt to pay off by myself, right? And the other thing is if you need a large amount of money to really make this business idea work before you’re able to make revenue, then unless you’re totally rich, by yourself it’s hard to fund it completely by yourself and keep up with the need. So, examples would be if you dreamed up an innovative baby stroller where you need engineers to create it for durability and you have to really test for safety. You need funds to pay people and materials and molds and for all the testing before you can make your first sale, right? Or another example is a software based company where you need to hire great developers to make the products for months or years before being able to sell it to an entire corporation or the public.
So, those are kind of examples where even if you know where you need a large amount of money and sometimes you just don’t have enough, even with maxed out credit cards, or asking friends and family. So, ultimately my takeaway here is I personally recommend doing some version of bootstrapping in the beginning, because you are your first investor. If you don’t believe in it enough, where you’re gonna put some of your own money at risk, how can you ask anyone else to take that initial risk first? So, I think it’s a huge sign of just credibility and belief and that you have skin in the game.
“I personally recommend doing some version of bootstrapping in the beginning.” – Jessica Kim
Jessica H: I pawned gold jewelry, I pawned my family heirlooms at a pawn shop. I went and shopped around and you know at the time I didn’t have a fundraising strategy. But then I look back and I was like “oh, that was me bootstrapping, right?”
Jessica K: Right, it was. That’s the hustle and the belief that you had in yourself. I love your story Jess.
Fundraising Method #2: Crowdfunding
OK. Crowdfunding. You want to get to crowdfunding.
Jessica H: Oh Yeah.
Jessica K: This has become a really popular way to fund new products and ventures. So, I think of the famous ones to check out are Kickstarter, GoFundMe and Indiegogo. I mean there’s so many out there now and different niches. Essentially, it’s a site where you share your product idea and the general public can contribute money typically in exchange for a pre-sold product, or just because they believe in what you’re doing. So, that’s crowdfunding. I’m a big fan of this method, if the product is conducive to connecting with an audience.
I have a friend who has a camping gear company and now uses this platform as their product launch strategy all the time. It’s fascinating to watch. They raise hundreds of thousands of dollars in pre-sales and support through it, and it’s actually also a really great way to build up the marketing and product awareness as well. But the thing to watch out for–so I’m going to try to do pros and cons with each one–you know the thing to watch out for is that it takes a fair amount of work to create your campaign. You know, like having a really compelling video to help sell your concept is key, but that costs money and time. There are hundreds of campaigns out there, so you really need to stand out and market it. So, there’s a whole strategy around this crowdfunding approach.
Jessica H: I would wonder if–especially if you already have a consumer brand and you’re trying to do marketing to get people to buy that consumer brand–and then you’re also asking someone now to give money, but I guess what people do is position as they actually do get a product right. It’s like that’s what is interesting, is that it’s ultimately–it is buying a product, right?—at times, but it’s couched as investing in my company.
Jessica K: Yes that’s exactly it. I think it’s a great way to launch a product and it kind of gives you…so, for example, in my case with BabbaCo; instead of maxing out credit cards, I could have done a crowdfunding campaign if it was out there at that time. It didn’t exist at that time, but it totally could have a benefit then, because I didn’t have a company yet. So, it would have been a great way just to say like “do people like it?” and would they put their money behind it to pay for it and it could give me the funds to just get started. The only thing is that it’s typically not enough to fund the entire operations of your company, like you were talking about. So, I see it more as like a product launch opportunity. I mean the good thing is you know later if you have success on a crowdfunding platform, it could attract bigger investors or partners later, because that’s part of the attraction. So, you can strategically use that to get started.
Jessica H: Well, like I remember, and I’m going to interview Jeremy Cowart of the Purpose Hotel on the podcast, and I remember he did a crowdsourcing campaign. I remember thinking like, “you are building a hotel—like, this has been really good. But again, it is like proving your point. People want to get behind you. Now he’s able to use that to go actually raise other types of funding.
Fundraising Method #3: Angel Investors
Jessica K: OK. So, angel investors. They are essentially wealthy individuals who like to invest in startups where they typically have a high interest or an expertise in that area that you’re focusing on. Typically, they want to contribute and get personally involved.
My angel investors were tremendous mentors to me and most of them are now really dear friends of mine. I actually really appreciate them and you can find them
Jessica H: And these were Jessica’s lenders.
Jessica K: So, for context you know, I should have started this way. Like for context I experienced almost all of these except for crowdfunding, because it wasn’t around at that time but I maxed out credit cards. I got friends or family. I got angel investors. Then I got super angel investors. Then we got venture capital funding.
Jessica H: So, this is a great point because it’s not necessarily…you can take all or a combination of these.
Jessica K: Absolutely. You don’t have to just pick one.
Jessica H: OK, but an angel investor actually gets ownership.
Jessica K: Yes. Angel investors will get ownership that take equity for their money. You know, it ranges typically like anywhere from like 15 to 25 percent is kind of what they’re looking for. You can find them individually or there are also angel network groups in every city. There’s also something called Angel List which is a very popular online angel network that you can post something online and it’s almost like a LinkedIn, but for angel investors. So, it’s called Angel List. The disadvantage here is that each individual can only invest so much personally because it’s their own money. They don’t have a huge fund behind them. It’s their personal bank account.
“Angel investors will get ownership that take equity for their money.” – Jessica Kim
Jessica H: Is this like Shark Tank? Is that basically what they are?
Jessica K: This is exactly Shark Tank. You know they’ll give anything from a one-time check of ten thousand dollars…I had a super angel that invested $250,000 himself and then they got equity in the company. But usually, they can’t do more than that. If you need more for your business to scale it even more, typically the angel investor is a one-time resource. I love key angel investors in my startup–I’m going to do it again because I just find them so valuable and they become mentors and connectors whom I really respect.
I highly recommend that if you are willing to share you know your company.
Jessica H: I guess angel investors don’t put as many demands as venture capitalists, right? Because investors are more personal they’re invested in you and the idea, and they are a real expert in that area. So, there’s not as many demands whereas, VC funding which we’ll get to, is high demand, which we’ll mention.
“Angel investors are more personal they’re invested in you and the idea, and they are a real expert in that area.” -Jessica Honegger
Jessica K: You know, for me, angel investors are the reason why–I did it with all with my previous two companies–and I’m intending to do that with this company as well– because for me, I found a few angel investors whom I just really respect, and actually building the company together is very fulfilling. It’s more of a relationship than money. It’s almost like the money is their role in it, in terms of how they contribute on top of their expertise, but it really is more of a relationship and building this together. They contribute so much that I find it so worth it. So, that’s just kind of how my how my experiences have started.
Jessica H: OK. Next. Next up.
Fundraising Method #4: Venture Capital
Jessica K: OK here comes the venture capital. So, you hear about VC companies all the time, especially in this tech startup world. So, this is a professionally managed fund that invests in big win opportunities—and I emphasize “big win” on purpose. Their business model is to discover and invest in the big bet “homeruns”; meaning like hundreds of millions of dollars of revenue and exit. Billion-dollar exit. That’s what they consider homerun. So, this means they look for big markets, aggressive growth plans, scalable business models, and proven entrepreneurs, because that is how they make their funds work. I loved my VC investors. They were smart, super networked. They’ve seen so many companies operate so they can bring a level of expertise and awareness to the table. They helped me hire really great people because they’re so well networked.
However, the thing to consider that I learned going through it is; VCs typically want a big exit of hundreds of million dollars—a billion-dollar exit in five to seven years, which is a short amount of time. I mean, building companies take a long time, and I don’t care what industry you’re in.
Jessica H: I mean the success rate of this has to be like .05.
Jessica K: Exactly. But that’s how they operate. That’s the bet that they’re taking is that they’re just saying “1 out of 20 that I invest in have to be the ‘Facebook’ and we’re good with that. Because that was such a huge return, and the others, whether they don’t have a return or a very small return, they’re not there to manage that. So, I used to, going through it, used to be sometimes be bitter, like, “gosh, I’m building something amazing here. What if we’re not the ‘Facebook?’” and I’d get kind of upset about it. Then after some time, and now I’m like personally friends with a lot of VCs, I really kind of understand their mindset, and more of how they work, and I just realized; it’s just their business model. There’s nothing good or bad about it. It’s a strategic thing and that’s it. So, my thing as an entrepreneur is; if you envision your company to operate at that speed and scale, it’s a great fit, actually, because if you want to do that there’s no other better way to fund it than with VCs, because that’s the only way you’re going be able to raise sixty million dollars to make it happen. If you need that, you know? Some business models need that. But if you don’t envision your company to be that, it’s not a great fit at all because it is just a misalignment of partnership.
So, personally my takeaway is; I appreciated my VC investors and my board so much. I actually thrive on that level of accountability. But it’s really a matter of whether your business vision and journey matches their growth expectations. So, even with this next company we’re working all of that out. We don’t even know the answer yet, because I just want to make sure it’s aligned. So, it’s not a “yes or no” or “good/bad” or they’re good people and bad people. I know great VCs, but I’m just like; are we aligned in what we’re trying to do on the timeline that we’re both trying to do it? So, it’s more of an emotionless kind of partnership discussion, if that makes sense. It took me a while to get there.
Jessica H: I have to say to myself, there’s something quite sexy about it. For some reason, I didn’t know it was sexy until I started hanging out with entrepreneurs. I noticed people would wear their VC backed companies like they’re badges, like, “here’s who is investing in me and here’s who’s investing in me.” I was like “I don’t have anyone invested in me, is that okay?” But I don’t know, I guess it’s because…what is that?
Jessica K: I think it’s absolutely OK and I think, I think the most important thing, just like anything, is that you know what you want and you’re being smart about how you’re going to get there. You know, and that’s different for every single person and there’s no hierarchy in that.
In fact, the hierarchy is; someone’s confidence that they know what they want and they know how to get there, and they don’t they don’t get pressured by anything else they see. But I think the sexiness comes from–because VCs invest in these huge big home runs, every entrepreneur–when you start–you’re willing to put everything on the line because you believe in this opportunity so much. So, sometimes that feeling, like “I’m a homerun…”
Jessica H: And someone else thinks I’m a homerun!
Jessica K: Yeah, and you feel that and sometimes you don’t. You know it took me a while to really understand like “OK what level what does a homerun mean to a VC investor what does a homerun mean to me as an individual,” right? Those things could be different because you could be running a 20 million-dollar company, owning all of it and walk away. You know, all of that as opposed to owning, getting diluted, owning five percent of you know a 50 million-dollar company, 100 million dollar company, you know. I think the sexiness just comes because it taps into our desire and ambition to be big and to make this happen because we believe in it so much. So, when we hear that we say “what?’ and you know when I heard the statistics of less than 4 percent of VC funding goes to women, or something. I was just like “whoa that’s crazy. We need to change that, first of all.”
It is hard to get VC funding because they are looking for those big wins and so they see thousands of pitches and they’re going to only invest in the few that they feel like are going to be a big win. So, it’s this element of like, they believe in this just as much as I do and they’re putting their money behind it. But I think that’s where the sexiness comes from. But the whole aspect of entrepreneurs raising money and feeling like….
Jessica H: That’s their success?
Jessica K: No, that is not success. It is a congratulatory thing in the sense of “wow you are executing” because it’s again, one part of your execution–just like marketing and sales and product development, right? So, it is something to congratulate someone on. It takes a lot of work to get to be one of those 4 percent, right? But it is not the purpose of a business and it is not the result of a business. It is part of the execution of the business.
Jessica H: I think that’s what I see; I see people feeling like they’ve arrived because they got their funding and I’m like, you don’t even have a profitable company. Come on, let’s get to work!
Jessica K: Or even sales, they are companies that raise money and don’t even have sales.
Jessica H: It’s just a concept which is crazy to me and I’m such a bootstrapper, it’s been a new sort of journey for me. OK. Number five.
Fundraising Method #5: Contests
Jessica K: Number five yes. So, the last thing we’ll dig into is winning money through competitions or contests. This is one of my favorites. These are pitch contests. Business plan competitions, kind of like what I did at Brown–female founder impact impact pitches–you name it. There’s so many different contests. It’s like Shark Tank–people love watching pitches, attending pitches, being a panelist on pitches. There are usually sponsors, like other companies, that give this money away.
So, I did this pitch once by giving a five-minute description of my company, a demo of the product to a panel of judges. It totally happened on the fly. I was at this conference. They were saying “hey we’re doing this pitch competition,” I was like, “okay, I’ll go and do it.” I ended up winning one hundred thousand dollars in cash in five minutes. It was crazy. It was super fun. Another example is I was recently a judge of one of these venture pitch competitions for $50,000, and these are everywhere. It takes prep to pitch your business. But I would argue that you need to be able to pitch your business at any point at any time anyways. So, you might as well put yourself out there and get funding without giving equity away. So, I’m a huge fan of this–go out and find them and get your pitch ready and just go out there–have the courage to put yourself out there. The worst-case scenario is that you’ll flop, but that’s even part of your journey of getting better and you can walk away with $100,000 with no strings attached—literally, no strings attached.
Blending Business and Purpose
Jessica H: OK. This was awesome. So, you gave us these five different journeys, usually it’s a combination of all the above or a couple of the above.
I want to circle back to your story so you raised a million dollars. Now let’s take us through–you ended up selling. I want you to take us down your journey of how you decided to sell. Then how you decided you could have just sold, and then been like “alright, I’m going to go order my margaritas from here on out.” You decided to start another company. So, tell us that journey.
Jessica K: With Jessica’s Wonders, you know, I ran it for five, six years. You know, the oddest story there is that I ended up selling my shares and going to business school afterwards to get my MBA, because I was really burnt out that I did nothing but work. I didn’t surround myself with all these, you know, like a community or anything. So, I was always at the office, always in the kitchen, hustling to create this multimillion dollar company. But I lost myself a bit in that. So, we went through this major strategic change and there was this opportunity where I could sell, and so that’s what I did. Then I went to business school because I was just like “wow, that was my first job ever, at a full-time job–what just happened?
So I wanted to go get my MBA to just put everything in its structure, which is super helpful to understand the frameworks and the structure of business and look at all these case studies. From there, I decided to get a job at Kraft Foods doing brand management, which essentially, you know a brand manager runs each product brand as if it’s its own company. So, it’s very similar to entrepreneurship, and I wanted to stay in food to get that apples to apples comparison of what it was like to start a company literally out of a dorm room, and what it was like to be part of a Fortune 500.
So, I did that. While I was there, I was on maternity leave, had my first baby Kayla, who is now 11 years old. Crazy. When I was on maternity leave, a whole new world opened up to me just like a lot of us new parents. What I experienced with a lot of brands trying to sell me things, and when I looked behind the curtain, I kept seeing these companies being run by men in suits. You know this was 10 years ago, almost 11 years ago now, when the parenting industry was such a different place. You know Mommy blogging was just starting to become a thing. Social media was just launching, and there were still all these ads showing only the peaceful, beautiful days of motherhood. I remember thinking “why aren’t the moms creating products for other moms instead of these men selling to moms, and where’s the reality of parenting? Come on.”
So I envisioned this brand of a truly authentic mom CEO creating innovative products and making life what I called “Simple, functional and super cute.” That’s what launched Babbaco. We started by creating infant car seat covers and self-inflatable play mats. I learned how to sew watching YouTube video—it was going back to my bootstrap hacker days. We were a wholesale business selling into big retailers like Bye Bye Baby, Bed Bath Beyond and Amazon as well as thousands of boutiques. But after a few years, I saw where the Internet was going with the rise of social media and e-commerce. So, we got into a tech startup accelerator which this was called TechStars. If you don’t know what TechStars is, the way I’d describe is it’s like the American Idol for startups. You go through all these interviewers, they select 13, you go through a three-month intensive mentorship and then you have this big demo day of which you get funding. So, I guess that’s another method of funding. But that experience essentially helped us pivot into a subscription e-commerce model where we launched the bottle box—which were these awesome monthly activity boxes that got delivered right to your door with everything you needed based on a different theme every month to just open up and enjoy with your kids. I realized, at that time, is that there are so many things that we can buy for our kids. But the most important thing that you can give to your kids is your time attention and love. That can be hard sometimes, but the reality of life as a parent is busy, exhausting and messy.
So, we tried to make that easier by just sending these boxes that you could just open up and enjoy. With that business, we raised about 5 million dollars in venture capital funding in total, and grew from there. Then, on New Year’s Eve of 2013…so essentially you know the first of 2014, which is actually my birthday. First there was a great birthday present. We got acquired by Barefoot Books, which is a beautiful, global children’s publishing company that has a mission to share stories, connect families, and inspire children.
Jess, you would love this company. I mean they feature stories from all over the world and depict children of all colors and sizes and cultures. My favorite part about it was that it was direct sales, so we had thousands of ambassadors just running their businesses, sharing these stories, and it’s the connection with ambassadors that I love the most–which I know you are so amazing at. So, I stayed on as president after the acquisition for about two and a half years, and then got a call from one of my previous investors, who was actually a venture capital investor. So, you know, I do have good relations with them. His name is Marat, and he gave me this incredible opportunity to be an entrepreneur in residence at his current firm called CRV–Charles River Ventures–and they are a venture capital firm that invests in early stage, late stage companies and are just fabulous at what they do, while being some of the greatest human beings I’ve ever met. What an entrepreneur residence is essentially; they gave me a salary, office space, and freedom to explore the base of my next venture.
It was a total blessing. I still can’t believe that exists…so grateful for it. I structured my time there by spending one month on a different problem I’ve always been intrigued by, but never had the time to really dig into and then ultimately, that time is what led to what I’m going to do next.
Jessica Kim’s Next Big Venture
Jessica H: It is so beautiful. I feel like we’ve come full circle. Started off with; what do I do when I grow. You wanted to study people, and I loved how you were able to widen your definition of business to really be about the study of people. I love that definition, and then you got to spend this whole last year really being an anthropologist.
Jessica K: You’re right!
Jessica H: In business, you know?
Jessica K: I really was. I just spent time talking to people, observing people. You’re right. I mean yeah, it is full circle. I love that Jess, Thanks.
Jessica H: That’s amazing. Okay we’re needing to wrap. Okay, everyone is dying to hear what you’re up to next. Give us a taste of what is to come.
Jessica K: Okay so I’m in the midst of building out my third venture called Iana Care with my co-founder Steve Li who is just an incredible person. Iana spelled I-A-N-A. It stands for “I am not alone.” So, it’s a platform to help family caregivers of loved ones with prolonged illnesses such as cancer, and also the elderly, and we help them navigate through this complex and difficult journey of caregiving.
You know this is my “going scared” moment, for me, more than any of my other ventures. This is deeply, deeply personal to me, and I’m so driven to make this really serve the community.
So, my mom had pancreatic cancer for 7 1/2 years, which is a miracle in itself. This past year my mom and dad moved in with me from New Jersey to Boston where I live, and my dad was carrying all the main caregiving work until that point, but then they just got too weak and exhausted taking care of themselves. So, it was the first time I ever fully stepped back from work, even after having three kids, to be her full-time caregiver. She fought so hard. She is my hero, but she passed away and went to the Lord just this past June of 2017. So, it was the hardest year of my life, and you know, honestly, I’m still healing and recovering from it, but as part of the healing process I just started reading non-stop about what I just experienced, what my mom went through and started doing research and talking to–again, maybe it’s my anthropology–just talking to doctors and nurse practitioners and caregivers. What I realized is that the unpaid family caregiver is truly the invisible backbone of our entire healthcare system, our social system, in fact. So much care happens in the home and not in the hospitals, especially as hospitals keep shortening the time patients spend there; they’re always trying to kick us out. So, Iana care is there to empower caregivers with the community, the tools, and care coordination help that they need to best care for their loved ones, so they can be fully present in the moment.
“…the unpaid family caregiver is truly the invisible backbone of our entire healthcare system, our social system,” – Jessica Kim
We’re super early in the process. I’m starting from scratch again–like literally from scratch–everything. Just yesterday we got our logo. So, we’re just going to start our social media accounts. So, I’m going to do it today probably. It’s scary, but I’ve never felt stronger about building a solution to help people during this really important time in their life that will stay with them forever. So, I just end with, like I truly believe that the ultimate reason why we start businesses and that maybe the ultimate end result that we want to see is for people to feel loved and for them to flourish. After interacting with our community–I know you lived that out. That’s why I love you and I respect how you run your company and that is really what is getting me through to knock down any walls and to really attack my “going scared” moments, because I believe in that mission so much.
“I truly believe that the ultimate reason why we start businesses, and that maybe the ultimate end result that we want to see, is for people to feel loved and for them to flourish.” – Jessica Kim
Jessica H: Wow, I am so proud of you, I have tears in my eyes.
Jessica K: That means a lot, Jess.
Jessica H: I do. I mean I it is such a need, and you broke me down—the funding podcast is not the one I expected to cry on. I mean, you know, I told you that the pastor of our church has had a stroke. He’s 35. I have another friend who had a stroke five years ago and is still not able to live fully independently. He’s still not able to get his voice back–I’ve seen firsthand; and if I’ve seen it, then I know every single person right now listening knows of someone who had to navigate how to care for a crisis, or a parent who is sick, a wife who is sick–and this is such a beautiful problem to solve. So how do we help come alongside you? Where do we find youf? Where do we find IanaCare?
Building Businesses Together
Jessica K: So, by the time the podcast launches, I’ll have my social media up and what we really want to do is first connect people. We’re going to create a Facebook group. So, I would love for, if this impacts you in any way, to come alongside and just help build this community. We really want this to be an authentic community where our guiding principle is that we empower people so much where they themselves say “I’m not alone in this,” because you feel so alone and sad and our culture doesn’t talk about it. So, we want to create a place where we can learn from each other and support each other. So, it’ll be IanaCare on Facebook–Facebook group. It’s I-A-N-A-C-A-R-E. So, you could do that, and then you know personally JessicaNamKim. Yes, Jessica N-A-M-K-I-M. On Instagram, I will share the journey of building this, and I’m just so grateful that everyone is just listening.
Jessica H: We cannot wait to follow along and cheer on this next event, because I have a feeling that it’s going to be wildly successful and that you are a “homerun.” I want to have you on again. We didn’t cover, especially the personal side, of how I wanted to ask about how you kind of lost yourself in your first two businesses, but you’re not doing that this time. We’re going to have you on again on the other side of IANACare.
Jessica K: Okay.
Jessica H: Maybe two months from now we’re going to follow this journey. But thanks so much for your insight.
Jessica K: Thanks Jess, I love you so much. You are the real deal. You inspire us all. And I’m just grateful to call you my friend. So, thank you.
Jessica H: Thanks, Ditto all the way.
Take the Courage Quiz
Jessica H: You all are going to hear me say this until I turn blue in the face. You hear me say it all the time. But there’s so much power in belief. I just love how Jessica believed and sold that company and believed again. And that company got acquired and now she is believing again and it takes courage. If you want to know where you stand on the courage meter, go take the courage quiz that I designed to help you become more brave. Jessica Honegger.com. Click on “Take the quiz” and I will give you tips and tricks on how to continue to choose courage over comfort, just like Jessica did.
I also have to admit when Jessica was talking, it made me so proud to be running a direct sales company, because you can become an entrepreneur for Noonday Collection and the start-up capital is one hundred ninety-nine dollars, which if you don’t have, you could definitely sell some stuff on Craigslist to cover that, then your growth potential and your income potential is huge, and your impact potential is limitless.
So, it was just fun for me to hear because there are so many obstacles. I feel like we can get stuck on this obstacle of money. I think that’s probably one of the most common fears. Hopefully, today you learn that don’t get stuck there. There are options and there are paths. It just involves courage and it involves other people because there is not one single option that was put out there that doesn’t involve putting yourself out there and inviting other people to come along with you.
I hope you continue to put yourself out there. Thanks again for tuning and to this week’s episode of Going Scared. Stay tuned for another entrepreneur chat with my friend Rachael Hollis on the next episode. See you then!