A little help from my friends

A little help from my friends

When Devon Wright couldn’t raise funds from banks and VCs, he turned to the people who knew him best.

To Devon Wright, friends and family are more than just the people you see on the weekends or call up for a chat. They’re also the ones who’ve helped him turn a small business into multi-million dollar success.

Three years ago, Wright and his friend and former Ivey MBA classmate, Matt Hunter, were working in finance on Bay Street. On evenings and weekends they’d spend their time touring Toronto’s bars with their indie-electronic band, Natural Animal. In time, the band developed quite a following, but the more they grew, says Wright, the harder it became to stay connected with their fans.

To rectify that issue, the duo did something very unmusic-like – they built a rudimentary wireless router, which allowed them to communicate with their mobile-connected fans. They could offer people free tickets and other forms of recognition right at the show. Soon, venues were asking to keep the router, seeing the value in having a way of tracking patrons. By June 2012, Wright and Hunter had quit their day jobs to focus on the venture full time. They also brought in a third partner, Chris Gilpin – another Ivey classmate, then working at Apple – to help build the technical
side of the operation.

Then came the tricky part: raising the money required to move beyond the pilot stage and start producing and marketing this plugand- play platform to retailers, restaurants and the like. Wright approached banks, venture capitalists and the BDC, but the response to his pitch was skeptical. He recalls, “They said, ‘That was great, but what about LTE and data? Why would anybody need to use WiFi?’” Wright realized that he would have to take another route. “I called every single person I’d ever met, basically, and I ended up getting 35 friends and family to invest over $1.1-million.”

One of those investors was yet another Ivey classmate, Ryan Freeman. Freeman had been working in the Netherlands for Accenture when Turnstyle launched, but he had been keeping track of the venture from afar. When he returned to Toronto in the summer of 2013, he reconnected with Wright and Hunter. Over beers, the conversation turned to business.

Freeman says that for him the decision to invest “in the tens of thousands, but less than $100,000” was purely a financial one. “I didn’t do this because I wanted to support my friend.” However, the fact that the two were friends – and could speak openly and honestly with each other – did help to cement the decision. “He was totally comfortable expressing his true level of passion and emotion for the project,” says Freeman. “And an entrepreneur needs passion.”

Taking money from loved ones can be tricky. These are people who you see at birthdays and holiday dinners, after all, and it’s not always easy to separate business and pleasure at those gatherings. “There definitely has been tensions,” says Wright. “They expect a lot from me, especially around updates on their investment.”

Overall, though, the experience is positive. This arrangement has actually pushed him to become a better person. He wants his investors to see him as someone they can trust as an executive, not just as a friend. “That’s pushed me to bring professionalism to my life outside of work,” says Wright. “I’m waking up earlier, committing to earlier nights and making social sacrifices. It’s helped me grow as a person and as an executive.”

He’s also realized that separating the professional and the personal isn’t as big of a deal as some people make it out to be. Freeman agrees. “One pieces of advice I got from a couple of mentors is that it’s important to separate business and pleasure. But from my perspective, one of the telltale characteristics of a great entrepreneur is that they live and breathe their business,” he says. It would be difficult to keep things separate even if he wanted to. Of the 35 friends and family who invested in Turnstyle, about 10 are actively involved in the company. Freeman has become one of the business’ most trusted advisors.

As the world of WiFi technology has taken off, so have Turnstyle’s fortunes. In May 2013, the company counted four employees, today it has over 20. This January, Turnstyle received $1.5-million from an institutional round of financing.

While this new investment does dilute Freeman’s take in the company, he’s “quite happy” with how it turned out. And if he didn’t approve? Freeman would have said so. “What makes going out with Devon so enjoyable,” he explains, “is that even though we’re talking about business and it’s a difficult conversation, it’s an easy conversation. You can give the critical feedback.”

- Matt O’Grady / Illustrations by Erich Mohr