This is the third in the series of posts that outlines the companies I’ve invested in, and why I picked them. My goal is to reach 100 early stage investments by January 1, 2018. The previous posts are listed below:
A side note: I think one of the reasons I’ve been late on the next posts in this series–even though I have like 25 investments I could potentially write about–is that I feel like I may have skewed expectations with the first two posts (on my investment experience with Deep Eddy and investing in my friends restaurant). The Deep Eddy post was a funny story to read, and the next post was really emotionally honest about a pretty big mistake I made. Those two posts were pretty good. Not all the posts in this series are going to be that good.
In fact, those two may end up being the best I ever write, at least in terms of the most entertaining to read. A lot of the companies I’ve invested in, there is very little to say beyond describing the company itself and how I made my decision. I am saying this just to make sure you understand the point of this series; its to help people understand how to think about start-up investing, by showing them how I think about it. Some of them will also be entertaining, some not.
What Does It Do?: Regalii has created a way for people, via their mobile devices, to send remittances to their families back home, which are received in the form of credits to pay bills, or to buy groceries.
Way To Think About It: It’s like a modern Western Union, designed for immigrants using mobile devices.
Year Invested: 2013
Amount Invested: Less Than 25k
How I Found The Deal: AngelList (their profile)
Why I Invested: The quickest way to learn about Regalii is either read this TechCrunch piece, or watch their presentation.
This was just a no brainer to me. A company that wants to build a platform for people to send money to anyone they want, all over the world, using just their mobile device, and not going through the banking system, for a flat fee? Um, yes…where do I sign up to put money into this company?
Here’s what’s so fucking smart about Regalii: They don’t start by trying to immediately solve the transferring money around the world without banks problem. That is a HUGE problem, and is going to take a long time, a lot of money, and serious political clout (witness all the Bitcoin issues right now). They start someplace much smaller and easier to get traction with: a platform that is specifically designed for immigrants to send money back home to their families. And the genius is that they use a financial structure that is already in place: gift cards. They don’t have to build anything new or deal with any regulatory hurdles to make money. They use technology to remove a pain point that millions of people have right now, and have had for decades.
This was one of those companies where, when I read about it, I sat up in my chair and said, “Holy shit, this is so fucking obvious, how has no one done this before?” I’ve dated girls or been friends with so many people from all over the world, and this is a super common problem that so many of them have, but I’ve never seen a great solution to (the common way–Western Union–are a fucking thieving group of assholes, btw). It hit me as the most obvious thing ever, even the super smart way they use gift cards and team up with retailers, so the families can use the money on what they’re going to spend it on anyway: necessities.
I think there are several reasons why this company didn’t exist before. The main one being that very few Americans understand the cross border money transfer to family problem, because they are Americans and don’t have family in Brazil. Plus, very few tech entrepreneurs are recent enough immigrants to know this problem, but also have the education and connections that cross both the world of start-ups, and the world of poor immigrants that send money back home to their families. The founder, Edrizio De La Cruz (more about him in a second), has that weird combination of experiences.
Second, and I see this ALL the time: Most entrepreneurs are focused on making money, and NOT on solving real problems that real people have. This is for a few reasons. It’s easier and quicker to focus on making money. And it seems like very few people actually understand that the best way to make money is to not focus on that, but instead solve peoples problems. I could go on and on about this, but the point is simple: In the long run, the companies that succeed (make money) do it because they are creating real value, and you can ONLY do that by solving the real problems of real people, but this is the harder path, and very few people take the harder path.
The other reason this company didn’t exist when it should have is that it’s not in a “sexy” industry. So many entrepreneurs are focused on the industries and markets they read about in the tech press, the ones that get all the attention like apps or software or things like that. But thats a really poor way to find a start-up idea. The fact is, almost every single industry in America is ripe for disruption, and the only ones that have seen real disruption so far are the ones that are sexy to the tech press. The “boring” industries are the ones where all the next big movements will be. This is a perfect example. Immigrants sending money home? Most people aren’t thinking about that, because thats not on the cover of Wired. At least not yet.
I am really impressed with the founder, Edrizio De La Cruz. I have not actually met him, but I know enough people in common with him I was able to get a good read on whether his press was bullshit or legit, and everyone I talked to vouched for him. You can read more about him on their WeFunder page.
So, to recap: What I love about this company is that they are solving a real problem that a LOT of real people have, doing it in a way that ensures immediate cash flow, but also gives them a beachhead to create a platform that could potentially tackle a huge problem that everyone would love solved: Easily, quickly and safely transferring money between people all around the world. Like all start-ups, nothing is guaranteed, but this has every chance to get really, really big.
Lessons I Learned: The company is brand new, so there aren’t really any lessons so far. I guess I can talk about the lessons I already know that I applied:
1. Pick companies that are solving real problems
2. Pick companies that are generating revenue immediately
3. If they are building a platform that makes it easier or cheaper for people to do things they are already doing, that’s a BIG plus
4. The founder(s) have to be great or none of the above matter