With so many people paying with plastic these days and not getting any change back, the tip jar is often overlooked – and what’s a barista to do? Speaking of change, DipJar is changing all of that. It’s a tip jar and donation box for credit cards. The jar contains a standard credit card scanner and you simply dip your card to give a fixed, pre-set tip or donation. A cloud-based software platform then manages disbursement and display of data to customers.
Co-founder and CEO Ryder Kessler, a former director of strategy at Bandwagon, tells us about the funding and shares a few startup tips of his own.
Who were your investors?
Our round was led by Project 11 — the new fund led by Bob Mason, a founder of Brightcove, and Katie Rae and Reed Sturtevant, former directors of Techstars Boston. Other participants include Will Herman, Warren Katz, Joe Caruso, Mike Dornbrook, Bill Warner, Scott Heller, and others.
What was the funding process like?
We’re a portfolio company in the Boston hardware startup incubator Bolt. The directors there, Ben Einstein and Axel Bichara, were helpful in connecting us with a few members of the local angel community (Will, Warren, and Joe), who further introduced us to fellow angels in their networks and to Project 11. It was a smooth process, and we were grateful for such a positive response to our progress so far and vision for the future.
What are the biggest challenges that you faced while raising capital?
Before joining Bolt, we had been operating pilot tests of DipJars in New York and had had some conversations with local VCs.
While reception of the idea was warm, we consistently hit up against the chicken-and-egg problem of not being able to raise significant funding without more units in the field while not being able to make more units without funding. That holding pattern was a frustrating obstacle to progress, which is why being invited to Bolt was an important inflexion point for us.
Another big challenge was handing investment offers we didn’t feel were right — a few times along the way we turned down term sheets that we felt undervalued the company or put onerous restrictions on our leadership. Those were hard decisions to make without being sure that we’d have a path forward, but I’m glad I went with my gut on those calls.
What factors about your business led your investors to write the check?
Without speaking for them, I think what appeals to our investors is that we’re solving a major problem that exists today: the crisis in tipping and charitable donations that’s resulted from the shift from cash to plastic.
Billions of dollars are left on the table when people without bills or change in their pockets can’t give money to a barista at a coffee shop, coat check attendant at a restaurant, housekeeper at a hotel, or charitable collection box. Filling this need offers a major financial opportunity while also helping those most in need of these gratuities. It also opens the door to future value as DipJar becomes a key player connecting merchants, employees, and customers.
I’m grateful to say that I think our investors also saw in me and my cofounders a passion and expertise that will enable us — with their guidance and with the feedback and support of our customers — to turn our vision into a reality.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Every situation is unique, so I can only offer what I wish I’d known sooner.
First, if you can’t raise money under your status quo, figure out a way to change it — whether that means joining an accelerator, bringing on a cofounder who complements your expertise, or more aggressively bootstrapping your business until you can generate meaningful revenue.
Second, don’t be afraid to start with a small raise, even if you think you should be nailing down million-dollar checks on day one. Third, if you’re building your business part time, commit fully as soon as you can. The most important thing is to keep moving forward.
Where do you see the company going now over the near term?
We’ve just hired a full-time hardware engineer and are bringing on full-time software engineers as we finalize next-generation DipJars for manufacture and national deployment.
We know that you’re fond of coffee shops. Any tips on the best cafes in NYC?
Don’t make me choose! I love any place that lets me retreat from the city for an hour with a coffee, treat, and a book — which, in Manhattan, is thankfully almost every other storefront.
Okay, a few favorites: the best bagel-coffee combo is at Grounded on Jane Street; for coffee and a chocolate chip cookie, go to Pushcart Coffee on 21st and Second or 25th and Ninth; and for a perfect cappuccino and gelato, check out Fresco on Second Avenue between 8th and 9th (and dip while you’re there to tip the friendly and talented staff!).