Men’s Style Lab CEO: ‘if a startup is going to raise money, it doesn't matter the geography’

I regularly talk with entrepreneurs, investors and community builder-type folks about the entrepreneurial ecosystem here in Iowa. Sooner or later, we typically circle back to questions about our investment climate such as how do we attract outside venture capital to take a closer look at Iowa companies? Why don’t local angels have more risk tolerance for technology ventures? Do we have enough capital to support this market?, etc.

The only one of those questions that has a definitive answer is the last one and that answer will always be a firm “no” (as Brad Feld wrote in his book Startup Communities, “there will always be an imbalance between the supply of capital and the demand for capital”).

 Derian Baugh image via Rebekah Molloy

One person who has been consistently able to find capital in this market is Derian Baugh, Founder & CEO of Men’s Style Lab. When he mentioned the other day that they had recently closed a round of funding I asked him, “what’s it like to raise money in Iowa right now?”

His response was fair, honest and raw and he agreed to let me share it here:

I didn't feel like being in Iowa hindered our ability to raise money in this round. But there were investors in Iowa that did not invest because they had in some ways been burned by other Iowa investments. So that was a little unexpected. Building relationships with investors is kind of like dating: There are some that pretend they're interested, but they're not. They don't return calls or emails. There are some that have higher standards (not that standards are a bad thing), but at some point it does get to where I'd love to say to a few specific investors, "You know I can't take away ALL of the risk, right?" These investors are looking for a slam dunk and the answers they want won't be known for another year or two down the road. Investing in a startup is never a sure thing.

It's interesting when an angel investor wants the company to be performing like they would at the Series A stage, where they have everything figured out and are ready to pour gas on the fire. The interesting part about that to me is when a company is ready for Series A funding, it's most often coming from larger funds and not from one-off angel investors, so I think there are some self-proclaimed angel investors (locally) that like the investor title or knowing they could invest if they wanted to, but they don't have any real intention of acting on it because they don't want to take a risk, which is the very definition of what it means to be an angel investor—investing in an idea while there is still risk—basically being an angel to the founder/company to help them prove out their idea. 

At the same time, there are some incredibly smart and helpful Iowa based investors who participated in our funding, but have also been strategic in their experiences, mentorship and introductions. I don't want my prior comments to overshadow these individuals. I meet with these investors on a regular basis and find a lot of value in their mentorship. Ultimately, in my opinion, it’s the investors who are willing to get involved with the startup who make all the difference and ultimately minimize their own risk. An investor’s time and money go hand in hand. If you simply want to invest money, but you don’t want to open up your schedule or make introductions, then you’re not doing all you can to ensure the success of the startup. Fortunately, I’ve been able to find Iowa based investors who are willing to give both time and money to provide guidance as we scale. 

At the end of the day, if a startup is going to raise money, it doesn't matter the geography. If the startup has the right ingredients—if they know HOW they make money, if the cost of acquisition is less than the Life Time Value, if the product-market fit has been validated—the money is out there. Even here in Iowa.

Men’s Style Lab is a Des Moines-based concierge clothing startup. They’ve raised almost $3MM in investment capital and recently relocated to the East Village neighborhood.