Catalyze

PROBLEM

Small and new businesses, especially those in untapped communities, have low success rates largely due to limited access to capital and limited awareness of best practices.

Angel investors largely rely on pre-existing relationships, word-of-mouth, and intuition to make investment decisions. 

Accelerators, incubators, and venture studios have difficulty scaling their capacity to leverage their network of advisors. 

SOLUTION

An online platform that turns the art of new venture creation into a science by providing

• Unprecedented data and automated due diligence on early ventures to make more informed decisions
• Ability for accelerators to make high quality connections to advisors, investors, and other partners in their network at scale
• Guidance on best practices for founders to make fewer mistakes

IMPACT

If scaled globally, a small or new business owner anywhere in the world will have access to the resources that are currently only available to Silicon Valley insiders. 

We seek to solve the problem of small and new businesses, especially those in untapped communities, having limited access to capital, networks, and technology. 

According to the Global Entrepreneurship Monitor, there are 587 million entrepreneurs in the world. However, the top 5 cities for venture capital investment account for 46% of the global total. While Silicon Valley used to be the epicenter for startup activity, the proliferation of high-speed internet, mobile devices, and cloud computing makes it easier than ever for anyone in the world to start their own business. Economically, now that the world has gone through the largest expansion of the global middle class in history, there are also now more potential customers around the world than ever before. 

Even though small and new business owners in untapped communities are well position to grow given their proximity to their customers, entrepreneurs in technology hubs such as Silicon Valley may continue beating them to market given their superior access to investors, accelerators, advisors, and partners. Without a platform that gives small and new business owners in untapped communities similar access, these business owners around the world may miss this golden opportunity to catch up. 

Our solution is an online platform that streamlines small and new business formation and growth. This solution will be an online hub for startup activity. What AngelList did for startup financing and hiring, we are doing for startup collaboration and operationalization. We accomplish this by providing 

• Guidance on best practices for founders to make fewer mistakes
• Unprecedented data and automated due diligence on early ventures for investors and accelerators to make more informed decisions
• Ability for accelerators to make high quality connections to advisors, investors, and other partners in their network at scale
• Tools for founders to develop collaborative relationships, especially with collective go-to-market strategies

We will leverage processes that have been developed by experienced founders, angel investors, advisors, and accelerators. 

Technologically, we will use AI to make high quality connections and offer guidance on best practices based on real-time founder, investor, advisor, and accelerator activity. A defining technological characteristic in our approach to this platform lies within our approach to data. While matching algorithms tend to work well, the data available to these algorithms is often very poor. Catalyze innovates on this dilemma by generating high-quality primary data to provide better external validity of the results.  

Our solution primarily serves any small or new business owner that wants to prosper, especially entrepreneurs that operate outside of major startup hubs that have difficulty accessing capital, networks, and technology they need to succeed. It also serves accelerators, investors, and other partners that support these entrepreneurs. 

My team and I have spent years traveling around the world meeting small and new business owners of all kinds. These owners are predominantly social impact entrepreneurs who have identified social, cultural, or environmental issues that they are uniquely qualified to tackle given their proximity to the issue and their involvement in the communities affected by it. 

We have also worked for and with numerous startup accelerators to learn the ins and outs of their business, including their best practices and key pain points. We already have partnerships with several of these accelerators in place to bootstrap our early platform activity, codify best practices, and share resources.

We have also worked with investors ranging from small angels to large private equity funds. We have seen how many angels and venture capitalists make their investment decisions and we have identified ways for the process to be more data driven. 

The business practices of high growth technology companies are applicable to many small and new businesses around the world even if they are not themselves technology companies. Unfortunately, the people with knowledge of these business practices are highly sought after so they often continue working in the same exclusive spaces that can adequately compensate them. Our solution will not only provide entrepreneurs in untapped communities with these best practices, but will also connect them with the capital, networks, and technology they need to accelerate their growth and reach their full potential. 

Our closest competition is AngelList. They help angel investors form syndicates. In return, they charge a 5% carry (i.e. profit share). We plan on leveraging their business model. A key difference between us and them is our target market and our supplemental business model. 

AngelList focuses on technology companies. We focus on entrepreneurship more broadly so that we can be of service to small and new business owners in untapped communities. 

Also, since it usually takes about 7-10 years for investments in startups to materialize, AngelList had to raise over $25M to fund themselves as they waited for their investments to mature. We are applying an Amazon Associates' model to earn revenue as we wait for our syndicated investments to mature.

Amazon Associates is an affiliate marketing program. Whenever an affiliate makes a sale of an Amazon product, the affiliate earns a commission of up to 10%. We apply this affiliate model in a novel way. Instead of traditional advertising, we embed the services directly into the user's flow.

For example, for the first time ever, an entrepreneur will be able to go online and receive an automatically-generated pro forma customized to that entrepreneur's specific situation. This pro forma will offer budgets for line-items such as marketing, design, and legal services. Each line-item will be linked to a Catalyze partner that can provide the services at the stated cost. If they go with our partner provider, we will receive an affiliate share. 

The primary technological driver of our platform is AI. In order to connect the right people at the right time at scale, we will need to collect relevant data on all participants and use AI to optimize the quality of the introductions.

An entrepreneur that barely has a concept is in need of very different connections than an entrepreneur that has a product in the market with rocketing KPIs. Some investors invest exclusively in pre-seed rounds while others need to see promising KPIs. By gathering relevant data on all parties, we will be able to make high-quality connections at scale. 

As our platform begins making connections, we will then be able to track the success rate of the connections to train the AI. If, for example, the AI matches an early-stage entrepreneur with a potential advisor and both agree that the connection was worthwhile, the advisor may introduce the entrepreneur to an investor. This would be a resounding success, reinforcing this pattern for future AI-driven connections.  

Today, introductions are often bespoke processes whereby someone who believes in an entrepreneur will think of a relevant connection off the top of his or her head, craft an email connecting the two (often omitting relevant reasons or context why they should connect), and not know what happens unless he or she actively follows up. We plan on creating an AI that automates that entire process in a way that leaves us wondering how we ever conducted this process without our solution. 

The AI we use to generate introductions and offer guidance on best practices is similar to the AI used by Facebook and LinkedIn to suggest connections. A key difference is the underlying data that is fed into the AI. By designing the platform specifically for the operationalization of and collaboration between entrepreneurs and their collaborators, we will have unique and valuable data that will enable us to apply that similar AI to reach unique results. 

Activity

Develop an online platform that systematizes the formation of new companies by providing high-quality connections, guidance on best practices, streamlined investor due diligence, and tools for founders to develop collaborative relationships.  

Output

Founders connect with higher quality collaborators (e.g., investors, advisors, partners, co-founders, accelerators) faster than they would have otherwise.

Investors gain access to a larger pool of potential companies to invest in and have more data on these companies so that they can make more informed investment decisions.

Short-Term Outcome

More companies are formed because people who never saw themselves as entrepreneurs or who viewed the process of forming a company as too opaque and intimidating now have a platform that guides them through the process and offers them relevant support at appropriate junctures.

The companies formed using this platform have higher-than-average success rates since they are following best practices, connecting with the right people at the right time, and are collaborating with each other.

Investors make more money because they are making more informed decisions and their portfolio companies are more successful than their peers.

Long-Term Outcome

Impact investing becomes a more reliable means of generating profits. This leads investors to funnel more capital to people and companies that are regenerating our planet, especially those that collaborate with one another.

This theory of change is support by over a decade of community building research conducted by our team's lead architect and over a decade of the entrepreneurship and social impact work of our CEO.

Number of people we are serving: 0 since our solution is still in its concept phase.

Number we will be serving in one year: 10,000 people as we use the first 6 months build our MVP and the second six months to work with our accelerator partners to better serve their incubated companies and broader networks

Number we will be serving in five years: 10,000,000* people as we form partnerships with more accelerators, incubators, venture studios, and entrepreneurial networks to seed the platform, which then leads to increased organic growth of entrepreneurs, angel investors, and advisors and increased success of the companies using the platform since they are receiving more support. 

* In addition to the small and new business owners, advisors, investors, and partners, we are also including people employed by these new businesses. We do are not including the people served by the companies we serve.

Within the next year, we plan on completing graphic design, UX design, high fidelity prototype, basic user testing, and alpha (MVP) development. We plan on sharing the MVP with our accelerator partners to gather feedback ahead of developing our beta. We already have the team in place to accomplish all the above, are already investing our free hours into creating the product, and are awaiting funding to enable us to offer more of our time to this company. 

Our current network spans from experienced Silicon Valley entrepreneurs and investors to first-time social impact entrepreneurs in Indonesia. By creating a product that delights this broad spectrum of users and by incentivizing users to bring new people into the network, we have the potential to create a product that goes viral. Our anticipated incentivization  mechanisms is to create a reputation score that increases as users invite people to use the platform and help other users who are already on the platform. The higher the reputation score, the higher the quality and quantity of introductions. 

To reach our five-year target of 10,000,000 people served, we plan to bootstrap our network by seeking partnerships with existing networks of entrepreneurs and investors (e.g., MIT, Wharton, Global Startup Studio Network). By providing connective tissue for organizations that are already doing much of this work manually, we hope to get higher utilization out of the existing organizations and seeding our network with high quality users.

This Year

The primary barrier this year is financial. We already have a team with the technical, operational, marketing, and networking skills necessary to design, develop, and distribute our MVP, but we have limited bandwidth due to our need to financially support ourselves with contract work. We currently dedicate our free time to pushing this company forward and would be able to dedicate more bandwidth if we could reduce or eliminate the contract work we are taking on. 

Over the Next Five Years

Network Effects

The success of this solution is highly contingent on achieving network effects as soon as possible. This problem is compounded by the fact that we are attempting to build a two-sided marketplace in that entrepreneurs will not be as inclined to join a network with few investors and investors with not be as incline to join a network with few entrepreneurs. 

Legal

We anticipate legal challenges operating in foreign jurisdictions that could hinder our growth and perhaps limit our functionality in certain countries (e.g., syndication needing to comply with financing laws in disparate jurisdictions). 

Culture

Our community and design research has predominantly occurred in a U.S. context so we may learn that conditions for optimal collaboration differ by region or culture. 

This Year

We are attempting to overcome our financial limitation by applying to grants such as Solve and approaching investors for pre-seed investment. Given how this is a product for not just entrepreneurs but also angel investors, we hope to turn this barrier into an opportunity since we can gather feedback in addition to investment from the investors to whom we are reaching out. 

Over the Next Five Years

Network Effects

Since achieving network effects is paramount to the success of our solution, we are designing our financing strategy with virality in mind. Financially, in addition to grants, we are seeking investment from as many and as diverse a group of angel investors as possible. Additionally, we are seeking partnerships with existing accelerators, incubators, venture studios, and entrepreneurial networks to bootstrap our growth. 

Legal

We have legal advisors that can direct us away from any expensive, ambiguous legal territory. As we begin with simple functionality that works across jurisdictions and we generate enough revenue to afford a larger legal budget, we can explore more expensive realms, such as syndication.

Culture

Fortunately, our community and design research is applicable to the world's most developed entrepreneurial markets. To the extent that there are cultural differences between the U.S. and the rest of the world, we can conduct A-B testing to learn these differences. 

2 part time

6 advisors

Our CEO, Max Einhorn, started his first non-profit as a sophomore in high school, his first social business as a junior in high school, graduated from Wharton with honors, worked as a management consultant for three years, founded a technical blockchain advisory firm with clients ranging from startups to enterprises, and is now passionate about lowering barriers to entry for other entrepreneurs. He has first-hand experience working with entrepreneurs, accelerators, and angel investors so he understands many of the challenges they face. His combination of financial, operational, strategic, and technical experience uniquely position him to create and run this business. 

Our Chief Architect, Carlen Young, has researched group dynamics and community building for over a decade as a research associate at University California Santa Cruz. He brings his anthropological work with community to technology in order to architect mission-driven user-flows and digital spaces. His ability to deeply empathize with users uniquely positions him to structurally design a platform to maximize collaboration and connectivity. Carlen has been sharing his vision for Catalyze with accelerators for years, which has enabled him to validate the market, gather valuable feedback, and secure partnerships with accelerators that are eager to use our solution. 

Tangle Lab and TCA Hub: two accelerators that have partnered with us to codify best practices and share resources.

Terran Collective: a collective of developers that have granted us access to over $2,000,000 worth of code in addition to free developer time to customize portions of their code to optimize for our use case.

Wharton Social Impact Club: a business school initiative that provides us with access to a media forum in which we can promote businesses that emerge and develop on our platform.

California Economic Summit: an annual summit that provides us with access to broad network of high-level business, equity, environmental, and civic organizations.

Our short-term business model is to copy Amazon Associates' model and our long-term business model is to copy AngelList's business model. 

Short-term

Amazon Associates enables people to advertise services on Amazon's behalf and receive up to 10% commission on each sale made. Similarly, we plan on advertising design, marketing, development, operational, and other support to the entrepreneurs on our platform. These will not be intrusive advertisements. Instead, we will have built-in functionality that offers these forms of help based on the stage of development of the company. For example, if the entrepreneur has not yet developed a pro forma, we can automatically generate a pro forma with built-in quotes to service line items such as design, marketing, etc. Whenever we successfully direct an entrepreneur to a service provider, we plan on receiving a ~10% commission on the contract value. This is revenue we can generate immediately since we already have a network of service providers in place.

Long-term

As the platform gains traction by providing unique value in operationalizing within and collaborating between organizations, we will have a strong enough foundation to then begin incorporating aspects of AngelList's business model of syndication. AngelList charges $4-8k for each syndicate and, if the investment underpinning the syndicate is successful, AngelList receives a 5% carry. We plan on charging similar rates. 

Currently, our team supports ourselves via design, development, marketing, operations, and strategic contract work with social impact organizations. To eliminate the contract work and increase the bandwidth we can dedicate to this company, we are raising $150,000 in pre-seed investment capital from angel investors. We plan on using the investment capital to generate a MVP that can begin our process of supporting entrepreneurs with affordable support services from our established network. We will begin earning revenue as soon as we make these service referrals via our affiliate commissions. 

Our affiliate commission strategy is a tactic to cover our expenses and minimize the amount of investment capital we need. We expect the majority of our profits to begin materializing once the investments made via our syndication business model come to fruition. We will be able to earn syndication fees of approximately $4-8k per syndicate immediately upon the close of any syndicate. The largest upside lies in the carry of approximately 5%, but liquidation events for early-stage companies usually take between 7-10 years. Therefore, we will focus on creating a profitable business based on affiliate commissions, and hope that by doing our job well well, we will also be playing our role in ensuring that the small and new business owners that we support outperform their peers. 

We are applying to Solve because we genuinely believe that working together would be mutually beneficial. Solve is an ideal early user of our platform since you already have an established network of peers, funders, and experts that help awardees advance their innovative work. We would love to design our platform to serve your needs! 

Are you having trouble managing introductions between experts and awardees? Are you able to keep track of what your investors' and donors' preferences are in terms of stage of development, industry, and geography? Are there other problems that we haven't touched on that you wish you had a scalable tool to address? We have the chance to make MIT the epicenter of this network that facilitates entrepreneurship globally. Let's work together!

Specifically, this partnership would help us overcome our key barrier of achieving network effects because working together would enable us to bootstrap our network with Solve's high quality network. The first users of a platform set the tone for future users and we would love to set the tone with Solve!

Our primary partnership goal is to work with Solve to design our platform to cater directly to Solve's needs since Solve is such an ideal bootstrapping partner for our platform. We would like to meet with Solve leadership to deeply understand your needs and to customize our platform to ensure we meet those needs since Solve is a great microcosm for the global network we seek to bring together on the platform. 

Once our platform fully addresses Solve's needs, we would appreciate Solve's help getting other innovation networks, accelerators, incubators, venture studios, investors, experts, and entrepreneurs to use the platform. Since we anticipate configuring our reputation and referral system to favor early adopters of the platform, Solve would continue to benefit by gaining access to the highest quality entrepreneurs, investors, advisors, and partners that join the network. 

Within Solve Community

On your partnerships and community map, we noticed that one of your Solve members works at Leap Ventures. Our team already has decent coverage across North America, South America, Europe, Nigeria, and Indonesia. We would value connecting with Leap given their focus on the Middle East and North Africa and our desire to connect entrepreneurs with relevant resources regardless of geography. 

Similarly, we noticed a spotlight for Laboratoria, the organization training women in Latin America to answer the call for talent in the tech industry. We value diversity and would love to partner with them to direct their talent to support the companies on our platform. 

Outside Solve Community

We also want to partner with as many angel investors, venture studios, accelerators, and incubators as possible so that we can funnel as much intellectual, social, and financial capital as possible to the entrepreneurs who use our platform. Example organizations include Y combinator, A16Z, Human Ventures, and Global Startup Studio Network.

While we have not yet leveraged AI since our company is still in its concept phase, we plan on utilizing AI in our matching algorithms to connect entrepreneurs with the most appropriate advisors, investors, and partners at the most appropriate times. 

By designing a platform specifically for entrepreneurs to have equal, if not greater, access to the intellectual, social, and financial capital of Silicon Valley, we will generate unprecedented primary data. This data could include personal details about the founder, highly granular information on the company itself (e.g., stage of development, geography, degree of collaboration with others in the entrepreneur's field), and other information that angel investors usually are forced to intuit about a prospective investment. If we are able to successfully place ourselves at the forefront of global entrepreneurial activity, we'll use every tool at our disposal, especially AI, to make the most of the data to ensure we are being of most service to our users and the planet. 

Where to even begin! We are entirely aligned in that we also believe that returns should not and need not be sacrificed for the sake of impact. We are also a scalable, for-profit solution that helps catalyze entrepreneurs to create more scalable, for-profit solutions. 

Even if you do not allocate us any capital, we would greatly appreciate the opportunity to have a conversation with you to learn more about your needs and the needs of your investor network so that we can tailor the investor-related aspects of our platforms to meet your needs. It would be a win-win. We win by getting high-quality investors on our platform and you win by having a platform that automates much of the due diligence on early stage ventures that you would otherwise do manually or would not even be able to do at all (e.g., track the degree of collaboration the founders are engaging in with others in their field).

We appreciate your consideration, and hope to have the opportunity to speak with you.