As a first-time entrepreneur fresh out of college, you are fully equipped with a disruptive, world-changing idea, a bunch of determination to start a business, and probably a bit of debt. If you’re being honest with yourself, you have no idea what you are doing.
At an age where many of your future employees will be older than you, you’ll encounter a lot of people who tell you that you’re going to fail. You have to prove yourself, so you’re not going to let on that you feel a bit lost.
Entrepreneurs are supposed to be confident and a little head-strong, but successful ones will take guidance from mentors. There are a lot of tough, unexpected decisions to make and lessons you’ll have to learn while starting a company. The best way to prepare yourself is to listen to and consider advice from mentors before making your own decision. Don’t operate with a tunnel vision, with the mindset that you are always right.
It’s possible and necessary for entrepreneurs to be confident and coachable at the same time. Coachability is one of the main qualities we look for in applicants to the Flashstarts startup accelerator.
One of the best demonstrations of coachability (and traction) from our 2014 startup accelerator program is real estate crowdfunding platform Vestor.
The Crowdfunding Business
Vestor is an online real estate investment and financing platform that directly connects developers, projects and individual investors. The crowdfunding platform aims to allow investors to enact real change in their communities by investing directly in projects in their areas.
The founding team is comprised of CEO Matt Moss, Chief Development Officer Scott Schirg, and Lead Developer Jeff Chen. Moss and Schirg got the idea for Vestor from a class project to create a finance plan for the development of a space in Midtown. (Both Moss and Schirg were students in the Master of Urban Planning, Design and Development program at Cleveland State University. They graduated this past May.) Upon realizing the rise of real estate crowdfunding across the country and finding its application to their development plan to be successful, they decided to make it into a company. (You can read more about Vestor’s founding on Medium.)
With Chen as their developer, Moss and Schirg draw from their complementary real estate backgrounds to operate Vestor’s real estate investment and financing platform. Moss worked in the public sector of real estate for the City of Cleveland, while Schirg worked in the private sector to manage real estate advising and economic development.
“Real estate development is a complex process and concept,” said Moss. “So we specialize in specific aspects of that process, particularly those relating to the actual financing of real estate projects.”
Moss and Schirg want Vestor to serve as a marketplace where investors—those who are real estate savvy or those who aren’t—can go to find credible development projects. (Vestor conducts thorough due diligence on every development project before featuring the offering on their website.) Vestor is not intended to give investors recommendations on which projects they fund, but rather will “provide investors with the information they need to make a sound investment decision,” according to Moss.
“The idea behind Vestor is to connect investors to real estate projects they otherwise wouldn’t have access to, while connecting developers to private capital – a much-needed form of financing that is very time consuming to procure and difficult to find.”
Milestones to Date
Since starting in spring of 2014, Vestor has built out its platform and has two development projects listed on its website and raising money.
Vestor’s first project, the transformation of three rundown buildings on Euclid Avenue into a Le Meridien hotel, started crowdfunding in July. The equity offering is soliciting between $3.5 and $7 million and the project’s completion is scheduled for December of 2017.
The other development project is a debt offering to crowdfund the second mortgage for Cleveland start Forest City Brewery in Duck Island, a pocket neighborhood between Ohio City and Tremont. Forest City Brewery will operate a brewpub and house two tenants: local startups including a coffee house and a meadery. Read more about the project.
Vestor is finalizing a third project and is preparing to launch several more offerings within the coming months.
Like all other real estate crowdfunding platforms, Vestor is currently only focused on projects in one specific region. (For Vestor, their focus is Cleveland and in time, the Midwest.) However, Moss and Schirg expect that real estate crowdfunding platforms will start spreading out and moving into each other’s territory. When that time comes, the co-founders say their biggest competitive advantage will be knowledge.
The Knowledge Business
“In the real estate industry, having one extra bit of knowledge can help you make millions of dollars,” said Moss.
Depending on the size of the project, the exchange of capital and the pace of development can move very quickly or very slow. However, as Moss and Schirg have learned, those who know first about a development project can have an immense advantage. The financial success of a building—whether it be a retail shop, apartment or parking garage—can be helped a lot by the development of a nearby road, hotel, etc. The first to know about the coming roads and hotels can be the first to invest nearby and the first to profit.
“There are people who make it their business to know the latest real estate developments” just to play the game, according to Moss. “The only way you can succeed in real estate is by having the right connections and listening to other people to figure out what’s going on.”
“You have to know the market and the people in the market,” said Schirg. “If you don’t pick up on that really quickly, you will lose a lot of credibility.”
Moss and Schirg, who have learned the value of knowledge through their years in real estate, plan on delivering the right real estate information to investors through Vestor. Their appreciation for knowledge has also helped them successfully leverage the resources provided to them in our startup accelerator program this past summer.
The co-founders will be the first to admit that they don’t know a lot about starting a business. However, they’ve used their ability to gain information and learn from it as a major asset every step of the way—including the choice to join Flashstarts. Moss explained:
“When we got the offer from Flashstarts, we didn’t jump on it right away. We took some time to think about it. Of course the investment was enticing, but I think what really made our decision was their connections and their experience in creating those connections. Maybe this is more specific to our business, because our business relies so heavily on connections. But that insight—knowing who to talk to and when and how—were all things we wanted to learn more about.”
Moss and Schirg have utilized information as their biggest asset, and are admittedly eager to advantage of any opportunity to learn. Starting a new company will always be somewhat unfamiliar territory, even for experienced entrepreneurs. There are a lot of decisions that need to be made, and most of them will have to be made quickly.
“We decide courses of action to take based off of what we think is the best knowledge we have at the time,” said Moss. “And there’s no way to tell whether you’re right or not until after the decision is made.”
The Vestor co-founders have learned that sometimes while making business decisions you can do as much research as possible and you’re never going to have all the information you’d like. Sometimes that will be alright, but that will likely bring a lot of risk: the decisions an entrepreneur has to make have huge consequences. Therefore, it is important that you are not indecisive, you are comfortable with the choices you make, and you consider advice from mentors.
Vestor’s advice to new entrepreneurs is to “balance hasty decisions with thoughtful reflection.”
Your decisions are only as good as the knowledge you relied on to make them. So soak it all in.