Inside HPA’s Latest Investment
The Hyde Park Angels “New Investment Series” profiles the companies we most recently funded by examining the investment process and the future trajectory from the perspectives of the new portfolio company’s CEO and the HPA leader who made the deal happen.
This month we invested in Luxury Garage Sale, an omni-channel consignment startup, in a Series A Round led by Data Point Capital with participation from Chicago Ventures, Pallasite Ventures, and Trunk Club CEO Brian Spaly. We sat down with Lindsay Segal, Founder and CEO, and HPA’s Deal Lead, Chris McGowan to gather their insights on raising a round and what the future of this partnership will look like.
Getting right into it, Lindsay, what is the main piece of advice you would say to entrepreneurs who are going to raise capital?
Lindsay: It’s really important to spend a month or two in the discovery mode of your business, really understanding the core metrics that drive your business, what’s important to scale and grow, what you’re actually looking to use the capital for. I think a lot of entrepreneurs just get in this cycle of wanting to raise more capital, but I think it’s really important to sit down and make sure that the capital is actually allocated appropriately.
I would also say make sure you’re very tunnel-focused on closing that raise. We [my COO and I] handled the fundraise, and for a period of three and a half months, it’s all we were really focused on – taking meetings, having discussions with people who might not be interested in investing, but could be good connectors.
Following up on that, how do you run your business when you’re spending ninety percent of your time raising capital?
Lindsay: You’re working kind of 24 hours a day, so when you’re done with your meetings you’re going home and making sure that you’re catching up on email. But, to be honest, you really can’t give one hundred percent to both, so I would say you have to have a great team who’s able to step in while you’re out and execute on aspects of the business.
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Chris, what drew you to the deal as an investor?
Chris: LGS fills a very interesting niche in the retail segment, which is a sector I have been an investor in for some time. The unit economics and value proposition are quite compelling, both for the LGS consumer and for LGS itself. They’ve taken a unique approach in the luxury consignment space by creating an omni-channel [online and offline] business model. And they’ve developed a sophisticated system to track their inventory and customers. The best part is that it’s all brought together by a fantastic management team led by Lindsay, Brie, and Kelsey.
What’s interesting about this deal, Chris, is that you had your own experience in terms of the consumer retail markets in the past. Were there any past experiences you were drawing from when you were making your evaluations?
I was a consumer-retail private equity investor starting in the late 90’s and early 2000’s and have seen a number of offline, online and hybrid business models, so I learned early about the type of return metrics that one should have on new store locations. Also, I’d learned about the type of data used to make optimal decisions on when choosing new store locations, as well as what were healthy customer metrics – and LGS scored very highly on those points. Simply put, I was very impressed with LGS’ operating metrics and the way they’ve made decisions.
Lindsay, in working with your other investors, did you think about how they could help you during your fundraise, or even just in growing your business overall?
Lindsay: The first thing I did before I even brought the deal to market was to meet with all of our previous investors and present them our deck, and present them our pitch and get their feedback. I asked if they had any questions, concerns, connections that they could facilitate for us, or introductions that they could facilitate for us.
Using Hyde Park Angels as an example, is there any one thing that makes you excited to work with HPA as a new investor moving beyond this fundraise you just closed?
Lindsay: The breadth of knowledge and all the people involved in the deal. How many strategic advisors there could possibly be and that I could lean on, and that so many of them had been operators in the past.
To be able to sit in front of someone who’s built their business, I think is really valuable, and I’m excited just to be able to utilize the network of individuals involve in Hyde Park Angels.
Chris, do you have any advice for entrepreneurs that can help them achieve the kind of success Lindsay has seen with LGS? Is there something you specifically look for as an investor?
Chris: That is a really good question. Like many investors, I look for tangible traction and sustainable advantage. Once a company achieves traction, I would then analyze their economics to make sure the business model is scalable and they’ve got a depth of talent on their team or have identified their next set of key hires to be able to grow the business and meet market demand whose growth is clear. So, if you have market demand and a business model with good economics being driven by a good team, like we have at Luxury Garage Sale, that’s what I would look for, both for myself and for Hyde Park Angels.
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About Hyde Park Angels
Hyde Park Angels is transforming early-stage investing by taking a people first approach. The organization is the largest and most active angel group in the Midwest. With a membership of over 100 successful entrepreneurs, executives, and venture capitalists, the group provides critical strategic expertise to entrepreneurs and the entrepreneurial community. Nearly 40% of our members have founded a company, 88% are CEO’s, top executives or corporate board members, and 100% invest in startups. By leveraging the members’ deep and broad knowledge of multiple industries and financial capital, Hyde Park Angels has driven multiple exits and invested millions of dollars in over 40 portfolio companies that have created over hundreds of jobs in the Midwest since 2006.
About the Author
Alida Miranda-Wolff
Alida Miranda-Wolff heads up communications and strategy at Hyde Park Angels, crafting and disseminating the organization’s brand in all forms across all channels. In addition to single-handedly building HPA’s integrated communications plan and executing its core elements, Alida manages membership, partnerships, portfolio company support, and all community engagement.
Prior to joining Hyde Park Angels, Alida served in a variety of journalism, marketing, communications, and management roles, specializing in creating spreadable multimedia content for tech-enabled businesses at all stages. Alida has run several Kickstarter campaigns, including one of the most successful in Chicago history, and still mentors companies running their own campaigns.
Alida graduated Phi Beta Kappa from the University of Chicago in 2014 with multiple honors and awards. She remains active in the university of alumni network, serving on five advisory boards and committees. Alida is also a published author and poet, with two poetry chapbooks currently in print.
