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.

Listen to the full podcast episode and review the transcript here.

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.

Drop

Today, Drop is a marketplace platform that helps consumers save money and get rewarded for loyalty when they spend through partner brands and retailers. Think Uber, Walmart, and Sephora. Advertisers benefit from getting in front of customers and understanding the returns based on real payment data.

Fundraising

As of our interview, Drop had already raised $70M through a Series B funding round. They picked up $750k in their pre-seed. Then $4M in a seed round. Followed by a $21M Series A and $44M Series B round.

Storytelling is everything which is something that Derrick was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.

Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below

Fung says they were lucky to raise their first round just based on a PowerPoint and the idea. Then they raised to expand into the US. Then to scale and expand internationally.

He says there are 3 Ps to getting funded:  

  1. Product
  2. Progress
  3. People

You might get away with being really strong with one of these areas in your earliest rounds. As you go investors will be more demanding. Even for Derrick, who had already had a successful exit, he had to work through 40 or so investor rejections before getting one “maybe.” Of course, once they hit #2 in the Appstore it was the investors hunting him down to give him their money.

Listen in to the full podcast episode to find out more, including:  

  • Derrick’s breakdown of their last four funding rounds
  • Why Canadian entrepreneurs should launch in the US first
  • How to survive countless investor rejections
  • Leading with culture and core values
  • What retailers are doing instead of paying for Facebook and Google Ads
  • Who you need to hire first
  • The multi-billion-dollar moves banks are making, and what’s coming next in fintech

 

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