Rho
Alex Wheldon is the co-founder of Rho Business Banking.
- Alex Wheldon has founded four startups, three of which were acquired. He launched the latest, Rho Business Banking, in October.
- Fintech requires a balance of the speed of Silicon Valley and the compliance and regulatory standards at play in financial services.
- More established startups are able to compile different types of investors across debt and equity options for each round of funding. However, for early-stage startups, finding a good seed investor can be more challenging, Wheldon said.
- Decisions on when to take an exit like an acquisition, Wheldon said, have to be based on a combination of market data and a founder's personal sentiment.
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Alex Wheldon is a serial entrepreneur, and he's far from done building companies.
"My career has been about finding problems, solving them as simply and elegantly as possible, and ensuring that there's a real need that you can build a brand on," Wheldon told Business Insider.
Wheldon has founded four startups, three of which were acquired. He launched the latest, Rho Business Banking, in October.
He started with an online poker company called Vegas Wireless Entertainment which launched right after the dot-com boom. Wheldon, who didn't go to business school, said that's where he learned all about what it takes to grow a business.
"That was like my street MBA," he said.
Wheldon would then launch two adtech companies, Trebax Innovations and Kanary.
Wheldon made a move toward fintech with the launch of Rho Business Banking alongside his co-founder Everett Cook.
Fintechs, he said, need to operate a bit differently than consumer tech startups, especially when working with business customers. Rho is a digital bank for small businesses, so customer acquisition strategies differ from some of Wheldon's previous experiences.
"It is different because you're reaching consensus with a smaller group of decision-makers," Wheldon said. Building a customer relationship with a business is often more personal than that with a consumer, he said.
And when you're selling a financial product, the regulatory bar is high. Fintech requires a balance of the speed of Silicon Valley and the compliance and regulatory standards at play in financial services.
"You have to move fast and be precise and you have to the best of your ability," said Wheldon. "We have a very clear view to be the safest, most secure, most stable platform that we can, and that is probably the difference of operating in a regulated space versus unregulated space."
While none of Wheldon's other companies were fintechs, it's all about solving a problem, he said.
"First, you're thinking about a product, but generally you need to know how well it's solving a market need, if any," said Wheldon.
Rho hopes to take on incumbent banks to better serve the small business segment. The genesis of the company was its founders' own challenges opening business bank accounts in the past.
Pulling yourself up by your bootstraps
Once you have a product, it's time to find funding to get off the ground. For founders, there are several options. More than just VC cash, startups have debt options and private equity options on the table.
"The market is certainly awash with capital, and the landscape of venture capital to private equity to angel investing is really blurred," said Wheldon. "That's certainly a dynamic that shifted over the past 10 years."
More established startups are able to compile different types of investors across debt and equity options for each round of funding. However, for early-stage startups, finding a good seed investor can be more challenging, Wheldon said.
And in a crowded market, it can be hard for early-stage companies to garner investor attention.
"Sticking out from the rest of the market is really like the hunt for a job," said Wheldon. "Especially if they are not going down a revenue generating or profitability measure from the get go."
Another option to get started is self-funding, or "bootstrapping."
Wheldon did exactly that when he started Kanary. Convinced the adtech product was different from the rest, but struggling to stand out in a crowded market, Wheldon invested his own money in 2012.
"I took like a really big risk. I kind of gave everything up and bootstrapped the business," said Wheldon.
He said it worked out, but wouldn't necessarily recommend bootstrapping to every founder.
"I was just super committed and had total conviction," he said. "I think that every great entrepreneur has to have some mixture of those two qualities."
Kanary was acquired by advertising company Gravity4 in 2014.
When to bow out
Decisions on when to take an exit like an acquisition, Wheldon said, have to be based on a combination of market data and a founder's personal sentiment.
"An exit into the public markets or into an acquisition is generally the driving or a permeating result of your business," said Wheldon. "You're trying to make sure that it will continue to live on in the best possible way."
To be sure, even if a founder is ready to move on, an acquisition or IPO may not be the best decision for the business.
Founders need to ask themselves if it's better to step aside and let someone else take the reins, as opposed to seeking a buyer when you're not in love with the business anymore, Wheldon said.
"There are lots of people that are certainly in love with your business, if it's scaling and growing," he said.