Derrick Fung has raised tens of millions of dollars for his second startup. He’s been through the full cycle and knows how to build, scale, and finance new ventures.
We recently got together for an episode of the DealMakers podcast. During the interview, Derrick shared the journey of his latest company, how finding and securing product-market fit has changed, the secrets to fundraising and how capital markets are evolving. As well as the next big shift in fintech and eCommerce.
The Numbers Guy
Derrick Fung is a Canadian born entrepreneur. He was raised in Toronto. A mini New York City which is very diverse and has seen its startup ecosystem booming in recent years. Many big tech giants have been moving there to take advantage of the talent coming out of its schools.
Fung has always been into numbers and found he was good at it. He grew up on the internet, playing chess online, and fascinated with the Canadian version of Wall Street, Bay Street. He was very interested in economics, finance, computers, and trading. Much of which he credits to his parents’ influence.
While there may be a lot of creativity in being an entrepreneur, and just grinding out the work as a founder, Derrick says knowing the numbers is very important in a startup. Whether you’re creating financial projections for your pitch deck or you’re raising money and fleshing out your idea, you’ve got to know numbers.
He got the chance to play with a lot of numbers through a variety of amazing internships. The first was with Microsoft. Then he was involved in derivative sales with French bank BNP Paribas. Then it was Merrill Lynch as they merged with Bank of America.
He even worked for the Clinton Foundation, and Bill Clinton’s annual conference, the Clinton Global Initiative. He was then hired by big Canadian bank CIBC for their trading floor.
Then Derrick saw the new surge in tech and startups. He got into the ring and has been working for himself and his own companies ever since.
The Key To Being A Successful Entrepreneur Is…
Fung says one of the essential traits for succeeding as an entrepreneur is adaptability.
The world changes fast. Your journey is always unfolding. You have to learn to roll with it and evolve yourself and your company on the fly. His first rodeo was in the music business. Back then investors were short-sighted. They didn’t see any money in it. Derrick made it work anyway. He built and sold Tunezy. In turn, the acquiring company went public on the Nasdaq.
Then came the initial idea for his next startup, Drop. It started out as a concept to build a loyalty program for those attending music festivals. He convinced his brother to join him as a cofounder. They dug in and found the opportunity was much bigger and broader than they expected.
The New Product Market Fit
Product-market fit is the holy grail for startups and their founders. Without it, you don’t really have a viable business. Your rocket ship isn’t getting off the ground or staying in the air until you hit it.
During our podcast, Derrick talked about how achieving product-market fit has changed over the past few years. It used to be about gaining users and app downloads. There were a lot of vanity metrics which maybe weren’t all that sustainable.
Today’s consumers have so many options and they are more demanding than any others before. Now, real product-market fit is about becoming indispensable to users.
How much is it changing their lives? How much is it delighting them? How devastated would they be if you shut down and took your product away? One easy test is how many of them have your app on their very limited space on their home screen? If it’s not at least 60%, then you might as well go back to the drawing board and start over.
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