Getting a Charge Out of a Bright Idea

A market-hardened venture capitalist schools a couple of budding entrepreneurs, and learns a thing or two in the process
Getting a Charge Out of a Bright Idea

Back in February 2017, Anish Sharma and Greg Fedele, then undergrads at Smith School of Business, tracked down Paul Chipperton in his office. Chipperton is a lecturer at Smith, and one of his students had suggested to Sharma and Fedele that they talk to him about their new product idea — a universal smart phone charger capable of charging an empty phone battery to over 50 percent in only 30 minutes.

Beyond teaching at Smith and Ryerson and McMaster universities, Chipperton is a serial biotechnology entrepreneur and an entrepreneur-in-residence at a venture capital firm. He also sits on the board of a number of technology companies and Angel Investors Ontario. “My sweet spot,” as he describes it, “is the formation, funding, and firming up of the initial traction of product-market fit.”

Every year, Chipperton evaluates 30 to 40 potentially disruptive IP-based biotechnology ideas. From his university exposure, he sees double that number of incremental small-market apps and widgets — “maybe five with some fundability and market merit, and the rest just fantasy.”

Up to that point, Chipperton had never invested in a student-entrepreneur idea. The product that Sharma and Fedele were describing, however, was enticing. Chipperton had prior knowledge of the battery charger market and knew there was potential in servicing millennials who see their smartphones as essential lifelines. Sharma and Fedele planned to sell their charger, dubbed SWFTCharge, in nightclubs. Their thinking was that revellers itching to Instagram a crazy moment would pay for a chance to re-charge a depleted phone.

Adding Data to the Idea

Chipperton wanted to know their assessment of product-market fit. How many potential customers did they speak to? Sharma and Fedele said no one. “So I said, Well lads, I’ve seen something like this before and I know there’s a market problem, but you haven’t given me data to show you can solve that problem. So why don’t you go this weekend to some nightclub in Kingston and do some interviews?”

Chipperton didn’t expect to hear from them again. “Usually when you challenge young entrepreneurs to put their product concept out into the public domain,” he says, “they shrink because they already know in the back of their minds that there are problems and 17 other competitors. They’re fearful of actually asking potential customers because they’re going to get the answer that they probably already know.”

Sharma and Fedele were back at Chipperton’s office the next week. They followed his advice and spoke to 150 people at local nightclubs to gauge interest. From that, they came away with a promising data-supported price point. Chipperton was impressed by their initial hustle but continued to push. “That’s all very good,” he told them, “but what are you doing next weekend?” He suggested they go to Toronto’s entertainment district and conduct more interviews with club goers.

The young entrepreneurs returned the following week with 400 data points. They observed that people arrived at Toronto clubs with less than 25 percent battery charge on their phones. The willingness-to-pay price point in the Toronto market was even more encouraging. “Now this was starting to look interesting,” Chipperton says.

“They earned my respect quickly, showed they had the necessary hustle, and got a cheque from me because they were clearly committed to doing the hard yards”

Chipperton was now prepared to invest his own money to help start producing units. But he expected the students to have skin in the game as well. Not exactly cash rich, the students, on the cusp of graduating, swallowed hard and borrowed money from their parents.

“When they did that, I had to take them seriously,” says Chipperton. “They earned my respect quickly, showed they had the necessary hustle, and got a cheque from me because they listened, adapted, and were clearly committed to doing the hard yards.”

Sharma and Fedele not only listened; they had some intriguing ideas of their own. They wanted to pivot from the nightclub market — which required additional point-of-purchase elements — to music festivals, where customers could sign up for chargers on a per-day or festival-length basis. Chipperton wanted them to stick with nightclubs, but the students were confident their new plan would prove to be a winner.

Their instincts were right. During the summer of 2017, SWFTCharge generated $100,000 in revenue at just four Ontario music festivals with just a skeleton team. The proof of concept was beginning to look like a viable business.

Winning Over Investors

The success prompted the students to develop a proper business plan and pitch to investors in January 2018. Over the following three months, they received three term sheets and closed $400,000 from seasoned investors.

“It was, frankly, astonishing,” says Chipperton. “People looked at this product and saw an almost perfect product-market fit. You have a captive market, a killer value proposition, and it’s mapped to a beautifully defined market segment. At these long festivals, everyone has a smartphone, credit card, and very little else. At a music festival, you need to drink, you need to eat, and above all you need to make sure you capture and share every single cool moment on your smartphone. Almost everyone immediately got the vibe.”

Best of all, they came up with a dividend strategy that allowed Sharma and Fedele to retain control of the fledgling business.

This summer, Sharma and Fedele and a deployment team of Queen’s undergrads are running the SWFTCurrent business at music festivals across the U.S. and Canada. On Chipperton’s suggestion, they used some of the capital they raised to negotiate exclusive three-year contracts with the festivals.

Finding a Barrier to Entry

“When I do biotech stuff, it’s mainly underpinned by expensive intellectual property, so you have an exclusive right globally to exploit that opportunity for 20 years because of patents,” says Chipperton. “With portable batteries, there’s typically limited intellectual property and therefore fewer barriers to entry. So we did something interesting with the tech and bolstered that through creating novel contracts and business models for the industry.”

The exclusive contracts, he says, will buy them time to build the business.

Chipperton has been impressed with Sharma and Fedele. In the past, he may have been frustrated by young entrepreneurs who did not seem willing to try and understand how to translate a business idea into a fully functioning enterprise. He has learned to apply a tighter filtering process to assessing ideas from young entrepreneurs. “I push them to check, to do x and y to prove that we should even be contemplating working together. I get them to talk about their products in the real world.”

Working with Sharma and Fedele reinforced long-held suspicions he held about the types of people who cope well under stressful situations. “What they taught me,” says Chipperton, “was that you really have to work hard to appreciate the context in which the entrepreneur has been living, both on an IQ level, which is relatively straightforward, and on an EQ level, which drives all levels of motivations and actions beyond the normal reason and rationale. And when you do, you’ve got to give them license to carefully and sensibly pivot and pursue, just as they’ve done with the switch from the club to the festival market. If it’s got any kind of chance, I’m 100 percent convinced Anish and Greg are the two best people to do that.”

Chipperton has closely monitored and advised a second project by another Queen’s student, and is poised to invest again. He feels more faculty members, particularly those with expertise in entrepreneurship and marketing, should help close the gap between theory and practice. “Nothing says it’s real more than writing a cheque and volunteering your time out of class.”

Alan Morantz

Smith School of Business

Goodes Hall, Queen's University
Kingston, Ontario
Canada K7L 3N6

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