1099 is no longer being updated, but please enjoy our archives.


By Ken Gordon



Add Feedback

View Feedback






Whether you borrow from a frowning father-in-law, refinance the house, or sponge off a wage-slave spouse, funding your own company usually involves some unhappy combination of pride-swallowing and belt-tightening. In fact, you may have such awful start-up memories, or such active fundraising-phobia, that you're about to click out of this article -- but don't touch that mouse! Starting up doesn't have to hurt. Below are the stories of two IPs whose methods may change your mind about gathering seed money.

Ten Grand Twinkies

Chris Smith is a distinguished young filmmaker. His latest film, American Movie, which is just about to be released nationwide, won this year's Grand Jury Prize for Documentaries at the Sundance Film Festival. But his main distinction, as far as our story goes, is the way he financed his first feature, American Job, a film about low-end wage slavery.

How did he do it?

One word: Twinkies.

About five years ago, Chris was hardly the full-time auteur he is today. "I was working a minimum-wage job at a camera store," he says. He also worked as second assistant cameraman on a country-and-western TV show called The Road. "I was in the back loading and unloading cameras," he recalls, without a hint of complaint or regret in his voice.

Meanwhile, American Job was moving along nicely. He had shot the film during his off-hours for about $7,000 (which, in the great tradition of independent filmmakers, he begged, borrowed, and stole). But midway through production, Chris saw that he needed more cash to finish. Enter Twinkies, stage left.

It so happened that that year saw the 65th Anniversary of the Twinkie, and the birth of something called The Golden Twinkie Film Awards. The GTFA was a contest that challenged young filmmakers across the country to produce a short piece about America's favorite cream-filled, chemically fortified, tawny little sponge cake. The winners would get a $5,000 grant to make the film and a $5,000 cash prize. If Chris won the contest, he could use the money to finish American Job. The idea had a faint Brady Bunch or even, yes, Twinkie aftertaste, but that didn't stop Chris.

Chris submitted a script for the "animated short" category. The script was supposed to be a tribute to Twinkies, but, as Chris explains, "It didn't really pay tribute to anything." He called it The Escape. Set in a Twinkie Factory in Twinkie Village, the plot involved a Quality Control Twinkie with cowboy hat and eyes, two Twinkie pals, a grocery store, a nighttime janitor, and, of course, a big escape. The director says that The Escape shares American Job's "alienated nature," though the Twinkie piece is more "lighthearted on the surface."

Chris entered. Chris won. Chris collected $10,000.

He spent as little Twinkie Money as possible on the animated short, and as much as he could on his real film project, American Job. In the end, Chris finished his Job for just $14,000. And while much of the film owed its life to the Twinkie dough, it had a big debt much closer to home. American Job's incredibly low production costs were possible because Chris' friends, many of whom saw a rough cut of the film, were so impressed that they worked for nothing. On his Web site, Chris nobly salutes all the people who "donated their time to make this portrait of what it's really like to work in low-end America." With friends like that, who needs subcontractors?



The annoying truth is that angel investors rarely fraternize with IPs


Pennies (And Then Some) from Heaven

Few fundraising strategies are as appealing as angel investing. You've heard about angels, right? These usually independent, and independently wealthy, beings pump healthy sums of money into small businesses (between $50,000 and $500,000, according to Ron Lieber, author of Upstart Start-Ups!). Ideally, getting this kind of funding is a study in symbiosis: the business gets the cash and the angel gets a percentage of the business.

Unfortunately, the annoying truth is that angel investors rarely fraternize with IPs. Angels are mainly interested in companies that promise to grow into big businesses: bad news, even for profitable IPs. Nonetheless, members of the two groups have joined forces. And there was commerce between them. And it was good.

She Talks to Angels

Kimber Bishop-Yanke is the founder and president of Inspired By…, an online catalog featuring "products and stories that create value and an appreciation for the inner strength of women!" And, to paraphrase the always-eloquent Black Crowes, she really does talk to angels.

It began when Kimber was studying International Management in business school. There she discovered that many female students face similar types of self-esteem and body image issues. Kimber told herself that one day she would merge these concerns with her professional life.

That day wasn't the day she graduated from business school. In fact, she soon jumped into the labor pool and landed a job at ERO Industries. At ERO she developed water sports products, designed two promotional videos, and worked in international sales. She stayed for four years, soaking up some extremely valuable experience.

"Then I went to Nepal," she says, making a buoyant little segue. "I took a month-long vacation and realized that I didn't like the corporate world. I didn't feel fulfilled. I was always thinking of women's and girls' issues." ERO, apparently, wasn't. "I decided to go out and try on my own. I wanted to take the risk."

So Kimber left ERO. She and a friend collaborated on the first draft of an idea that eventually led to Inspired By…. Then, a few months later, the partner pronounced the venture "too risky and too much work" and jumped ship, transforming Kimber into an instant IP.

Kimber soldiered on. "Believe it or not," she laughs, "I spent an entire year doing research." By 1997 her business plan had swollen to 100 pages. "It was like one of these homework assignments you couldn't stop doing," she says. "During that time I talked to everybody: writers, designers, CEOs -- everybody." Along the way, she joined organizations like the Direct Marketing Association and "participated in a couple of very expensive training sessions." In the end, there wasn't much more she could learn.

She knew that Inspired By… would cost a lot of money to get started. First she tapped all the usual fund-raising sources (for example, she dug into her savings and gave her credit cards a workout) -- and then she went hunting for angels. Kimber began by exhibiting her concept at a 1998 business conference. In May of that year, she attended two similar events. With each conference, Kimber grew more and more confident. These experiences had two important benefits: 1) they gave Kimber the opportunity to refine her pitching skills; and 2) they increased her visibility.

In the midst of furious sessions of talking and listening, of presenting and pitching, of logging on to various funding networks, Kimber was introduced to a California-based businesswoman who, she was told, "would be a good person to talk to about investing." This person, who wishes to remain anonymous, eventually became her angel.

How did Kimber know that this was the right person for her? Simple: she had in mind a list of four criteria that her potential angel would possess. "I knew that, for me," she says, "the person who'd be interested in investing would probably be a woman; wealthy; an activist; and interested in the women's issues that I have on my agenda." The investor met Kimber's requirements. They set up an appointment.

Surprisingly, Kimber, a confident woman with a strong sales pitch, didn't go into the meeting alone: "I had a guy in San Francisco -- Kaz -- who was kind of my mentor. He had raised $8 million for a computer software company in California. He went in with me to talk to her." When Kimber and the angel started talking about women's issues Kaz suggested that they needed "to get back on track." The investor, however, "was more interested in the social aspects, though she did ask a few questions about the business."

And the business plan?

"Basically, my angel investor -- I don't believe she read the business plan."


"She liked what I was saying. She believed in me."

She… believed in you?

The angel believed in her to the tune of $20,000. In fact, Kimber's backer wanted to cut a check right then and there, but Kaz suggested they wait until the paperwork was done. The next week Kimber received $5,000; two weeks later, she got the rest of the money. And what did the angel get in return? Not much -- not yet, anyway. "The money she gave me will turn into equity once the bigger investors come in, " she explains. Kimber, of course, is still on the lookout for other angels. With her persistence, her sales skills, and her business knowledge, she may well convince a few more of them to join her side.

Making Luck (Out of Nothing at All)

Some of you may be inspired by these stories, but others, particularly those folks who didn't get $20,000 from an angel or $10,000 from a junk food giant, may be thinking: This isn't about fundraising, it's about luck! And yes, there is an element of luck here, but Kimber and Chris worked as hard as any IP ever did to get their start-up cash. Remember, it took Kimber a very long time to secure a backer. But had her investor been less agreeable, more interested in the bottom line, Kimber would still have been able to make a good case for herself -- after all, she had all that pitching practice and a two-ton business plan on her side. And Chris wasn't just handed his money, either. He entered the contest, wrote an offbeat script, and then used the Golden Twinkie cash with tremendous care.

Which is to say, the funding didn't just fall into the bank accounts of our two IPs: they had to hustle for it. If this is a story about luck, then it's also a story about making luck through hard work. And that's a good lesson for us all.

November 4, 1999
Primary Editors: Lawrence San, Eric Gershon
Illustrators: Keith Gendel, Lawrence San, and Michael Buonarroti
Production: Keith Gendel

We'd love to hear your comments about this article!

Ken Gordon is Associate Editor of 1099.


Go to top of this page

Entire contents Copyright © 2000 1099 Magazine. All rights reserved.
The 1099 name and logo are trademarks of 1099 Magazine.