Providing consumer products to customers anytime they need, Jetpack is a “last mile,” on-demand service with delivery times often less than 15 minutes.
Jetpack is one of several black-owned companies currently running equity crowdfunding campaigns. Equity crowdfunding allows anyone to invest as little as $50 in early-stage companies, a privilege previously reserved for wealthy, “accredited investors.”
Goldman Sachs estimates that equity crowdfunding has the potential to be a $1.2 trillion industry. For diverse founders, equity crowdfunding can be a game changer for companies seeking investment. Moreover, it’s a wealth-building opportunity for investors previously restricted from investing in startups.
Brandon Andrews sat down with Jetpack founder and CEO Fatima Dicko to discuss her business and the new opportunity presented by equity crowdfunding.
Brandon Andrews: Tell us about Jetpack. How did you develop the concept, and what problem does it solve for customers?
Fatima Dicko: Jetpack is a peer-to-peer delivery platform that brings you the products you need in less than 15 minutes. There are a lot of moments when college students need certain products right away and stores are either too far and/or closed, or students just don’t have the time or energy to travel. Traditional delivery platforms take too long because students and professionals are located in buildings or on campuses not easily accessible to the public. Whether a student is studying in the library and needs an energy boost or in between classes and forgot a charger, having the right product right away can change the entire day.
I started noticing that students on Stanford’s campus were using email listservs to blast people within their dorm for products they either forgot or didn’t have and needed right away. That paved the way to our solution: Jetpack! We pre-stock students with the most important items inside cool backpacks, and then we use technology to connect people who need things with the student Jetpackers who have them. We pay Jetpackers to distribute the products.
(Jetpack Backpack with products. Image: Jetpack)
Andrews: How is equity crowdfunding helping Jetpack take off? Why was this the right funding opportunity for your business?
Dicko: Equity crowdfunding is helping Jetpack take off (promise there’s no pun intended) by allowing people who would actually use the product to invest in our company. Prior to new laws and regulations passed by the Obama administration and the SEC, only accredited investors could invest in startups. In the United States, to be considered an accredited investor, one must have a net worth of at least $1 million (excluding the value of one’s primary residence) or have an income of at least $200,000 each year for the last two years. With new regulations, now everyone can invest in privately held companies through equity crowdfunding.
Equity crowdfunding can be really transformative for businesses where the target consumer is likely outside the definition of an accredited investor. So, for us, it was important that we find a way to gain financial support from consumers actually interacting with our product-college students.
Andrews: What should entrepreneurs consider before raising money through equity crowdfunding?
Dicko: While there are many benefits to equity crowdfunding, there are also a lot of things to consider beforehand. First, it’s important to note that in order to raise money, you’ll have to verify your financials on the [equity crowdfunding] platform. This [financial] information will be available to anyone who would like to see it. If you aren’t interested in sharing the financial history of your company with the public, equity crowdfunding probably wouldn’t be best. Similarly, if there are proprietary elements of your business you haven’t yet protected, you probably wouldn’t be too interested in launching a public campaign.
Finally, there’s also a time commitment required to manage the campaign. When launching an equity crowdfunding campaign, it’s important that the company can afford to manage it. I recommend considering whether or not your company is in a phase where the team can allocate time and energy to raise capital through a campaign without sacrificing the growth of the business.
There’s always an inflection point where the momentum is steady. That inflection point happens at different times. Prior to reaching that, we spent one to two hours a day answering questions and running the campaign.
Andrews: You are currently running an equity crowdfunding campaign on Republic. How did you prepare your business for the campaign?
Dicko: We had to make sure we put together material that would fully articulate the potential of our business to the everyday person within one to two minutes of visiting our campaign page. Although we understand the ins and outs of our business, we had to take a step back and remember that everyone else may not. This involved creating a short video, powerful visuals, and important metrics that potential investors can understand. It’s really important to invest a lot of time during this phase so that you can focus on managing the campaign once it’s launched.
The equity crowdfunding platform we chose-Republic-offered to help with creating the collateral for our campaign, but I wanted to manage the design process. This took additional time, but was worth it.
(Jetpack Mobile App. Image: Jetpack)
Andrews: How have you successfully maintained momentum during your campaign? How much work does maintaining the campaign require?
Dicko: I wish I could say we just watched the money flow in after the launch. There’s a massive chunk of time you’ll have to spend spreading the word about the campaign, answering all the questions from potential investors, and sharing updates on your company’s progress throughout the campaign. The rewarding part is that you end up playing a volume game and can convert people much faster when the minimum investment amount is relatively low.
Andrews: You reached your campaign minimum fairly quickly. Congrats! What’s next for your campaign?
Dicko: We just increased the maximum amount we can raise and extended the length of the campaign. We have about a month left to continue raising money on the [equity crowdfunding] platform. We are also using the traction from the equity crowdfunding campaign to successfully pitch institutional investors. We’ll continue to share updates about our progress over the next month!
Andrews: Fundraising is hard. Fundraising for diverse founders is harder. What impact do you think equity crowdfunding will have on access to capital for diverse founders?
Dicko: I believe this fundraising method will democratize how capital is deployed to underrepresented entrepreneurs. As many already know, the current VC system is very broken. As a Black, female founder, I want to show other minority founders that traditional VC capital is not the only way to grow an early-stage business. With equity-based fundraising platforms only in their infancy stages, it’s an exciting time for people from all walks of life to invest in the people and ideas in which they believe. There’s never been more opportunity for African Americans to invest in people who look like them.
Andrews: Looking back, is there anything you would do differently with your campaign?
Dicko: Initially, we set the maximum amount of money we could raise as $107,000. There are extra financial-verification steps necessary to increase that amount to $1 million. Toward the initial end of the campaign, we were on track to raise more than $107,000, so we increased the limit. In making changes to our campaign, we were required to update our financial information reflecting the change and notify our investors to reconfirm their investment. This can be a be a tedious process, so it’s best to make sure you plan accordingly and set the maximum amount you can raise high if you: 1. believe you realistically can raise over a certain amount, and 2. can afford the time and resources to do so. It wasn’t the worst problem to have but still required time.
Andrews: What’s next for Jetpack? How do you plan to grow the business over the next year?
Dicko: We’re super excited to be introducing our product to multiple campuses this fall. We’ve also revamped our tech to allow students to place orders within seconds with a text message. The next year will involve gaining new users across different regions, learning which products work best on different campuses, and eventually opening up our platform to allow the exchange of people’s own personal items and products in addition to the products we provide.