From the Trenches interviewed Ruben Schwartz, cofounder of Swoop, back in June here. Since then, his company has secured a $3.2 million VC Raise led by Signia Ventures. This is pretty awesome stuff for an idea that literally started in a garage with other founders Peter Evenson and Amir Ghorbani. So we thought we’d check-in and see what the journey was like, and what advice Ruben has for people looking for investment.
Quick refresh: Swoop is an online platform for group transportation. For vehicle operators, Swoop makes it easy to run their business using their SaaS platform. For customers, think Airbnb, but instead of getting accommodations, you can easily book group vehicle transportation (limo, party bus, charter bus) with a professional driver. Perfect if you need to move your team for a tradeshow, a family for a wedding, or a group of enthusiastic wine drinkers from one vineyard to the next.
LAS: So you went out and raised $3.2 million in the middle of a global pandemic. Not bad. How did that happen?
Ruben Schwartz (RS): It’s a big puzzle. In the beginning, some of the pieces don’t seem to align, but now they all somehow came together. (Laughter)
Going back to Swoop’s beginning, one thing we’ve done really well is adding a lot of good partnerships. Like with the Netflixes of the world, the Googles, the Airbnb’s. Pre-COVID, we were doing lots and lots of trips with them, and what we realized was that the bottleneck wasn’t in the booking experience anymore. The issue was making sure that operationally the ride goes well: The right vehicle at the right time with the right driver.
So we developed software to handle that experience that can be used by the operators. What we’re doing is integrating into the operator’s businesses and getting them off pen and paper and into our data tools. And in order to really grow that, we needed to raise money. And that’s really where this VC round came about, to help us with that. Signia and the other investors bring incredible tech experience to the table on how to build a product and how to scale businesses.
LAS: What do you think they saw in Swoop that attracted them to the business model?
RS: We already have traction. During the pitches, people would often ask us, wait, can I book a Swoop right now? And we’re like, yeah, you can. It’s been live for two years. We have a proven business.
You often see startups fail because of founder fights or not understanding the industry. But we had already worked through all that.
Maybe I’ll get this wrong, but there was a study on the most common reasons for startup failure. Number one, was founder fights. And number two was not understanding the industry well enough or having a blind spot for the industry that you’re trying to disrupt. Because we’re old-time friends, and because Amir’s parents own a group transportation business that we understand, we really sidestepped both those things. I think that’s what the investors really appreciated us.
LAS: So the key was having a business that was proven. Anything else?
RS: I think VC investment has to be complementary to what you’re already building. It should never be what you need to rely on for success. You should already be on your path to success. And VC’s just help you accelerate it either through money or often more importantly through resources.
So it’s nice to raise $3.2 million because that helps us hire more really good technical people. But it’s also really, really important to have our VC’s insight into scaling products, how to build out a SaaS, all that. If you look at the people who invested in this round (end of the article) you’ll see tons of expertise in those areas.
LAS: Is there a downside to getting this investment?
RS: Obviously you have some additional pressure and some additional oversight, which I think is actually nice. I think it’s good to have discipline and accountability.
Investors want to see certain progress, right? And you obviously want to hit those milestones. But you just have to make sure you are both always on the same page, so you can reach goals together. That can be challenging sometimes for sure, but we’re excited by the opportunity.
LAS: You’ve got this money now to build and scale. What other plans do you have for this investment?
RS: Really the main goal is to build great software for our operators. And when I say operators, I mean operators across the US initially, but then globally. And when I say operators, these are often mom and pop shops. They own three to five vehicles ready to deploy to pick groups of people up. They just need better tools to do that and it’s been a very overlooked market. I think providing value to them is what we’re going to do more than anything. This money gives us the runway to do that.
LAS: What advice would you give to the first time bootstrapper the entrepreneur who is out there on the streets, trying to get something off the ground like yours?
RS: The answer I’m about to give is not true for all businesses, okay? There are some business models where it makes sense to raise money from the get-go, but most likely I would start by solving a problem first. It’s not expensive anymore. Stripe has a platform called Atlas and you can start a company for like a thousand dollars. And then you have a Delaware C Corp, and you’re ready to go.
Start by really solving a problem. Once you have some type of traction, whether it’s revenue or users, use angels or use VC money to accelerate what you’re already doing. That way you’re diluting less when you’re raising at a later point in time. My advice to students is to build for another three to four months and get a higher valuation.
LAS: Just how excited are you right now to have this investment?
RS: (Laughter) You don’t know me that well yet, but I’m German so I don’t really get excited. So if you ever hear me speaking like this with a smile on my face, I’m excited. It’s a nice stamp of approval for a lot of hard work, especially from the entire team, starting it from nothing.
And as I make decisions for the company, I always think Swoop first and then team second, and me third. And I think it’s the best thing we could’ve done for the company. With that, I’m incredibly excited. Just look at the list of investors and our team right now and you’ll see we have a really, really good lineup to change the way people move. What more could you ask for?
- Ed Cluss & Sunny Dhillon, Signia Ventures
- Ruchi, 1st female engineer at Facebook & Aditya, former CTO at Dropbox, South Park Commons Ventures
- AJ Solimine, Evan Tana, 122 West Ventures
- Manik Gupta, former Chief Product Officer at Uber
- Kevin Weil, Co-Creator of Libra, VP of Novi (Facebook)
- Kim Fennell, former Executive at Uber
- Elizabeth Weil, former Partner at Andreessen Horowitz, 137 Ventures
- 400M passengers in the US that spending $40B on chauffeured group transportation
- Small local mom and pop shops, who own 5-6 vehicles on average
- Extremely fragmented with no vehicle operator capturing more than 1% market share