K. Clarence Lawrence, a Little Rock, Arkansas-based entrepreneur, launched ecommerce product video provider Prodeo360 nearly two years ago. His four-person executive team brings a combined 30 years of experience in both tech and video production. The company’s first year was marked with incredible growth—it worked with brands like Casio, OverBack.com and MadeInMars.com—which has prompted Lawrence to move the business out of a garage and into a large space in Bentonville, Arkansas. Oh, and they’re hiring more than a dozen full-time workers to wear various hats. He’s proud of the growth that his startup has experienced, but along the way, he dealt with some roadblocks. We talked to Lawrence about the challenges of securing funding for minority-owned startups.
Q: First of all, let’s talk about Prodeo360. How does Prodeo360 work? Who are your target customers? What makes Prodeo360 unique and competitive?
A: Our mission at Prodeo360 is to make the process of getting premium, professionally made, custom 360-degree videos simple and affordable—specifically for eCommerce stores selling physical products online. Currently, it’s a three-step process. Our customers go to our site and select the quantity of product videos as well as the style. Next, they decide whether they want the products picked up or if they’d like to drop it off to any local FedEx, USPS or UPS. Lastly, once we receive the products, we produce the videos in our studios and then send the completed, custom digital files to them for them to use on their website, social media, email marketing and more.
As you can imagine, dealing with thousands of large video files, customizing them all and delivering a high-quality product within days is not something that normal production houses face. Prodeo is about high-volume, low-priced video services. So to pull this off, it takes a lot of proprietary technology to make this happen. Our internal technology is just as important as our video production skills to be competitive. It’d be impossible to do what we do without our technology.
Q: Before we talk about funding, do you face unique challenges as a black founder that a white founder might not face? If so, what are they?
A: I think all founders face an uphill battle due to the risky nature of startups in general, regardless of their background and skin color. But also, by being African-American, I think it’s a little tougher to be taken seriously and trusted because there aren’t a lot of proven African-American companies out there. I think it’s the same for women-run companies, too. It deals a lot with the terms of how the due diligence process works and giving founders the benefit of the doubt. One of my mentors from college taught me long ago, “Investors don’t invest in ideas; they invest in people.”
For instance, I know some peers who were able to secure large amounts of funding with literally no revenue coming in. Which means that the investor trusted their vision enough to back them without any real evidence of demand. In my experience, we had to present everything from income statements, pro formas and more to show that there was not only a demand, but also that we could also sell our value to customers. This in itself isn’t a bad thing, but again, most founders I know were not required to do all of these things to get investors behind them.
Investors by nature are very pragmatic, which in some ways they should be—but it does bother you a bit when you have a clever idea that you’ve proven through bootstrapping before fundraising and hearing about others who have zero revenue securing twice the amount you need in half the time.
Q: When did you start trying to find funding, where did you ultimately get funding, and at what point did you realize it was going to be more challenging because you’re black?
A: It goes back to the nature of investors and investments and being taken seriously. Also, with investors being pragmatic. I can’t say that being African-American was the exclusive reason why it was tough to get funding because I know a lot of caucasian founders who are having trouble raising funding as well, but I can say that we were turned down by all of the major funds in my state. Some would say “You’re too early” or “You need more revenue”—the same funds that were investing in firms with equal revenue and sometimes no revenue at all.
We were never turned down based on the idea being bad or inconceivable in terms of potential growth. It was always along the lines of “Come back later when you have more proof” when in reality that’s not how startups work. Startups are about seeing an idea at seed or early-growth stage and believing in the team to grow it into maturity. So to say the least, it was very frustrating to hear how good the idea was but not have anyone write a check at the end of the day.
Q: How did it make you feel to know that you were facing additional roadblocks based on the color of your skin? How did you respond?
A: I won’t act like it didn’t bother me, but I’m blessed to have had a father who, before he passed, taught me a lot about being focused and having conviction in what you believe to be true. I also have a few mentors, like Jeff Amerine, CJ Duvall, Jeff Stinson, Ted Dickey and Mike Smith, who saw potential in me and Prodeo and were always open to talking and advising. Lastly, I had the feedback from our actual customers, and while raising funding seems like the only way to grow, paying customers who value you and your service or product is always enough motivation to keep on going after you get a no. After each no, I would try to understand why they said it, learn as much as possible and keep it moving.
Q: As part of our #entrepreneuriALL initiative, we’re trying to understand the difference between diversity and inclusion. Do you think there’s a difference, and what is it?
A: Both inherently mean having a range of different skill sets, but I think inclusion implies actual effort in trying to have a range of skill sets and backgrounds. Diversity is more so the consequence of that effort. I think diversity is too passive because there’s no real implication that you have to try, whereas Inclusion is measured by the effort you put into having a range of skills, races, genders, etc.
Q: Is the entrepreneurial ecosystem that you’re a part of diverse and/or inclusive enough? Why or why not?
A: It’s actually both Little Rock as well as Fayetteville-Bentonville for me, which interestingly enough just got ranked as the second best place for minority founders by Fast Company. I think they are getting there for sure and it’s understood by the important people in this ecosystem like Jeff Amerine, Jeff Stinson and the guys over at Innovate Arkansas. I don’t think it’s a standard just yet, but it goes both ways. Just as there needs to be more efforts from the investor and supporter side to find diverse companies for both female and ethnic minorities, diverse companies also have to put themselves out there to be seen so that they can be included. And more importantly, create valuable ideas that people can get behind.