AzTech: Founders First Capital Partners

AzTech: Founders First Capital Partners

By Fred Grier

Meet Kim Folsom, a serial entrepreneur and investor whose mission is to empower underserved groups of business owners by providing them access to capital and resources to build sustainable companies. 

Folsom, a former tech executive and veteran entrepreneur who has built six technology startups and exited several of them, including showUhow (acquired by Sellpoints), DriveCam (now Lytx), and Seminarsource. She has raised more than $30 million in institutional venture financing, created over 500 premium wage jobs, and served as a key executive for multiple successful ventures.

Before transitioning to entrepreneurship, Folsom, a San Diego State University alumna, was an executive at National Dispatch Center, Luce Forward, and Great American First. Her seventh and current venture, Founders First Capital Partners (FFCP), is a revenue-based investment and advisory support investment platform.

FFCP is the largest private provider of growth funding for service-based businesses and the only minority and women-led, revenue-based venture platform with $100 million in committed capital.

Fresh Brewed Tech chatted with Folsom, Co-Founder and CEO of Founders First, to learn about her experience being an entrepreneur and journey to successfully launch her platform.  

Founded: 2015

Key Players: Kim Folsom (CEO), Mike Jacobson (COO), David Heuy (Credit Officer), Oralia Alvarez (Director of Development).

Headquartered: Sorrento Valley

The Problem: Lack of access to capital is often cited as one of the primary barriers facing minority entrepreneurs and those in underserved markets. More than 83% of entrepreneurs do not have ready access to bank loans or venture capital, according to a report by the Kauffman Foundation  -  access to capital presents an even greater challenge for people of color, women, and individuals with limited incomes.

Minority-owned firms are disproportionately rejected when they apply for additional credit and, on average, new black-owned businesses start with almost three times less capital than new white-owned businesses, according to a study analyzing the impact of race on entrepreneurial success. 

The Solution: With Founders First, Folsom aims to invest in early-stage startups led by underrepresented founders that are too small for a bank loan and are outside of the sectors normally targeted by venture capital companies. 

Although, access to capital is not the only thing you need to succeed as an entrepreneur. “If you ask most business owners or entrepreneurs, especially the ones that have little experience, hey think that all they need is capital in order to achieve success and it’s way more than that,” said Folsom. 

$100 Million Investment Fund: Founders First recently secured a $100 million credit facility which it plans to use to make 500 investments over the next five years. 

Revenue-Based Financing: The firm provides revenue-based financing to early-stage startups led by underrepresented founders. Entrepreneurs receive a loan of up to $1 million and pay a fixed percentage of their company’s revenue up to a predetermined cap. 

The goal is to grow these businesses to the point where they bring in $5 million to $10 million in recurring revenue.

From left to right: David Huey, Oralia Alvarez, Kim Folsom and Mike Jacobson. (Courtesy of Founders First).

Unique Advantage: While most investment firms focus on building companies around exits, Founders First takes a unique approach. “We are building companies that are built to last and that will build wealth for the founder,” Folsom said, “If you help that founder, generally everyone else wins too. Whereas, that’s not the typical model in venture capital.”

Requirements: Founders First borrowers are generally generating $500,000 to $5 million in annual revenue to provide them with flexible and non-dilutive funding, expertise, and resources. If a founder’s business is struggling, Folsom and her team work to create a repayment plan that works for both parties. In addition to providing access to capital, the firm also has expectations around growth, social capital, brand equity, human capital, and more. 

Zebra Status: Founders First aims to help entrepreneurs build zebra ($5M to $50M in annual revenues) companies. Understanding the difficulty of this, the firm offers three programs to develop the founder’s growth mindset and put them on the path to unicorn status.

Programs: The current tracks offered are the Challenge Program, Intermediate Program, and FastPath Program. 

The Challenge Program introduces founders on how to have a growth mindset and keys to being a growing employer-based business, typically serving women founders and people of color needing assistance growing their business to seven-to-eight figures. 

The Intermediate Program is an online program that focuses on building playbooks so that founders can build and implement a growth playback for a job-creating company.

The FastPath Program is designed to help small businesses generating $1 million to $5 million to be successful with financing and growing to become mid-market businesses. In addition, companies who complete this program may qualify for up to $1 million in non-dilutive, revenue-based financing.

Early Success: To date, the firm has served 20 cohorts, worked with over 250 companies helping increase their revenues by 25 percent on average, the firm said. In addition, the portfolio companies have raised almost $13 million in venture funding from outside sources, creating roughly 150 premium wage jobs (salary wage at a minimum of $50,000). 

Kim Folsom

What’s Next: When asked what lies ahead for Founders First, Folsom said, “When we first started the vision was to fund and grow a thousand companies. Now that we’ve been in business for five years, we’re positioning ourselves to be working with 1,000 (net new) companies each year and reach a $1 billion dollars in funding.”

San Diego Tech Ecosystem: Folsom, spent significant time contributing to other tech ecosystems, including Silicon Valley and Los Angeles, before coming to San Diego. She provided her insight into San Diego’s growing startup economy. “San Diego embraces what we are, how we are different, and how unique some of our industries are. On the flip side, in places like the Bay Area you have more access to people who actually built unicorn companies, whereas San Diego doesn’t have as many.”

Advice to Entrepreneurs: When asked to give advice to founders looking to build their startup for the first time, Folsom’s advice is three-fold. “One, you will need more money than you initially think; Two, it usually takes four times as long you think it will take to build your idea; And three, it will cost you three times as much as you think it will cost.”

Apply: Interested companies can apply to Founders First loans (and its accelerator program, FastPath) on the company’s website.

Keep up with Founders First on social through Twitter, LinkedIn, and website.

Editor’s Note: AzTech is an original series on San Diego State University created by Fresh Brewed Tech that showcases the innovative ideas born in the halls of academia that are making a great impact on our ecosystem and beyond.

Fred Grier

Fred Grier

Fred is a technology and startup writer and a UCSD alumnus. He is interested in writing about seed and early stage startups and the networks that boost them to become successful companies.

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