William Stringer
Topics of Interest: FinTech, Finance, Startups, Entrepreneurship
Canfield BHP Alum, William Stringer, is the co-founder and CEO of Chisos. A Dallas/Fort Worth native who transferred as a sophomore to Canfield in the fall of 2011, Will later graduated with a dual-degree in business honors and finance in 2014. After graduating, Will moved to Houston to start a career at Bank of America Merrill Lynch in the oil and gas investment banking division. After banking, Will built his chops as an analyst on the investment team at the Cockrell family office in Houston where he spent four years working under the CEO gaining valuable experience he would use in his near-future endeavors.
According to Will, “I worked all types of deals, it was an excellent experience. I got to meet a lot of people and build my network. I then left there to go work at one of the [Cockrell] family’s portfolio companies called Emergent Technology Holdings out in California, where I spent a little under a year working as a product manager for a supply chain tracking system in the precious metal space.”
It was in California where Will met his future co-founder and CTO at Chisos, Stephen Grinalds, a colleague he met while working on the supply chain tracking system project at Emergent Technology Holdings.
So what is Chisos? Chisos is a FinTech firm that provides early-stage entrepreneurs with the funding they need to succeed. Their main goal is to “democratize entrepreneurship”. As their website reads, “We look for companies that don’t fit the “grow at all costs” venture capital funding model or the predictable 5-year growth with hard asset collateral model usually required for bank business loans. Instead, we look for ideas, founders, and companies with potential and an actionable plan. When we find them, we connect them with the capital and community they need to succeed.”
We caught up with Will to hear more about his experience at Chisos and his vision for the company. Read on.
How did the idea for Chisos come about?
I was figuring out what I was going to do next and always had the entrepreneurial bug. The idea for Chisos came from trying to solve a problem of my own, which was, “I want to start a business, how do I set myself up financially to be able to start that business, give myself a little bit of runway?” I’ve had a little bit of early career success and presumably have some future earning potential. Could I use that to raise some money in some kind of debt-equity, hybrid fashion? About that time – this was late 2019 – income share agreements were in the news with regards to Lambda School and other coding boot camps, and these income share agreements, which are basically investments in people, to me, seemed like the perfect idea. So that was kind of the kick-starter for creating Chisos and creating the convertible income share agreement, which is an instrument that helps to get capital into the hands of early-stage entrepreneurs.
What does it mean to “democratize entrepreneurship”?
I had a background in a family office so I wasn’t a total outsider to the investment world, but from the perspective of Silicon Valley and the venture capital club, I would say I was a little bit of an outsider – growing up in Texas, not California – never having worked at a venture capital fund. There’s that little bit of an outsider mentality. When I was thinking about raising money for a company, I didn’t have a strong network in that early stage ecosystem. I didn’t exactly know where to start. A lot of my experience had been more private equity, or maybe a little bit later stage than just the very beginning of startups and starting businesses.
So, when I solved this problem for myself and started thinking, “could this be a new financing tool for others?” I very quickly realized how big of a problem that I could potentially be solving here. The stats that we like to throw out are from Kauffman Foundation, which had a report that stated, “of all new businesses in the US less than 1% receive venture capital funding, less than 16 percent receive banking financing.” There’s this 83 percent in the middle, that either they have to have personal wealth, or some kind of personal nest egg, or friends and family, some kind of network type wealth to actually help them get their business off the ground, and more often than not, that’s not available. People have various situations in their life, where they can’t come up with $40,000 that they can put into an entrepreneurial, risky, unknown entrepreneurial venture, right?
That’s where our thesis comes in. It says, “Hey, we’re going to underwrite you, as a person, as a founder, we’re going to do some type of venture diligence on your business, we’re also going to do some type of personal diligence on you, including some credit information, and look at the entire package, the entire opportunity to potentially fund you, or provide that early-stage capital that can either supplant or, augment your friends and family capital raise or even replace your friends and family capital raise to get you from zero to one, from starting to that minimum viable product, or the prototype that allows you to then either start generating some revenue or at least hit some traction milestones to then raise that next round of funding.”
You mentioned 83 percent of the market is in the middle. How much of that market do you envision Chisos capturing?
Yeah, it’s a tough question, because it’s a little bit, and not at all comparing us to Uber or anything, but you look at the way the market dynamics are today and that 83 percent are people that had the ability to use some personal wealth or some friends and family wealth to start a business. That number doesn’t include probably the hundreds of thousands of entrepreneurs that never even gave it a try because they didn’t even have any capital available to even start.
Now, it’s hard to prove what didn’t come to pass but I would imagine that it’s a bigger number than that. As we think about the part of the market that we can capture, our conservative assumptions that we’re using, say, “Hey, we’re better than high-interest credit cards, we’re better than home equity loans”, or some of these other traditional credit products that are out there. So, let’s say we can easily supplant those types of venture instruments, let’s say there’s a number in that 83 percent that’s using personal wealth that can probably use an extra 30, 40, $50,000 to complete their prototype. When it comes down to that entire pie, we think there’s probably 25 percent, conservatively, that a convertible income share agreement could be useful for.
What do you mean by “Tech-enabled, but not tech-exclusive”? What are some of the types of businesses Chisos is looking to fund?
We’re purposely keeping the funnel pretty broad. We’re not excluding industries but what we do say, and what we do try and find are scalable businesses and capital-efficient businesses. So what I mean, by scalable, is someone looking to just open up a local restaurant – probably not a good fit for us. We are looking for the potential for some of that larger growth upside and that being said, we’re not the same as a venture capital firm where we need the billion-dollar unicorn to succeed. We’re in between there but we are looking for businesses that can continue to grow and can continue to, hopefully, reach 10, 20, 30 million in some type of enterprise value eventually.
On the capital-efficient side of things, really what we mean there, and what we’re looking for (since our check sizes are small) is to understand how our $40,000 will be used to reach that next milestone. Whether that’s starting to generate revenue or starting to generate whatever traction number is required for that business, to then raise that next round of capital. Oftentimes, that leads us to look at software businesses, web apps, mobile apps, maybe food and beverage-type businesses, maybe some media-type companies, companies that can move the needle with $40,000. That usually will exclude any kind of biotech or metals and mining or anything that takes a lot of capital upfront.
Canfield BHP students are self-starters and have the entrepreneurial spirit to build great companies. What are some of the best pieces of advice you can give our students?
Everyone’s got their own opinions but because of my pathway in my career, I like to advise people to go get a little bit of corporate experience or some kind of experience at a business – that could be a startup – just to set some building blocks for knowing how to do things. Whether that’s knowing how to evaluate a company or knowing how to launch a product or going out to market something, those building blocks are important and give you a stable base for if and when you decide to go start a company.
The other piece is if you want to start a company, just do it. There’s never a good time for it. It’s always going to be scary. You’re always going to feel like you don’t know what you’re doing or that you’re unqualified. There are still times where I feel like I don’t know what I’m doing or I still feel unqualified, but you just keep pushing through, you just keep solving the problems, day after day. Eventually, you end up building something real and that is working. I think that’s part of the problem that we’re looking to solve at Chisos, that “just start” piece. You’re in a very privileged position if you can just jump in headfirst and start a company, and quit your job. We’re trying to provide a tool to help people just jump in whenever they’re ready. So yeah, get a little bit of experience, and then don’t be afraid to give it a chance if you’re going to start something.
Chisos has currently raised approximately $479K in a recent round of funding on its WeFunder campaign as of this writing. For entrepreneurs looking to start a business, Will encourages you to seek them out and apply.