Are entrepreneurs born or bred? In the case of Brad Pengelly, perhaps, it’s a bit of both. The Sunshine Coast native is the founder of Investible portfolio company Hoops, an end-to-end business management system, supplier relations and CRM solution for any business that manufacturers or sells custom products.
But Hoops isn’t Brad’s first time around the startup circuit. While at university, Pengelly launched Jamie Fame, a successful streetwear fashion label and also serves as the Director of Budget Screen Printing – a business that led him to start Hoops.
We spoke with the serial entrepreneur about how his experiences have helped him in developing Hoops and to hear his tips for founders who are just starting out.
It seems like you caught the entrepreneur bug early. Have you always wanted to run your own business?
“For as long as I remember, I have always had a passion for business. I joke that my earliest venture was actually in primary school, where I sold pre-cut strings for spinning tops, which were very popular at the time. To this day, it has been my most profitable venture; partly due to supplying the right product at the right time, but mostly due to my parents buying the materials I required while I kept 100% of the profits!”
“While at university, I was still trying to figure out exactly what I wanted out of life, but I quickly realised I wasn’t excited about the careers on offer. So I followed my passion for business, design, and travel and started Jamie Fame. Over the next 10-years, it grew to be a highly-respected label stocked in 85 stores and in six countries.”
“As I learned the ins and outs of the manufacturing industry, I decided to start Budget Screen Printing as a positive cashflow side-project to help fund Jamie Fame’s compounding growth. I built that business in a way that was authentic to me, knowing there was a better way of doing things. It was within running Budget Screen Printing where Hoops began.”
In a sense, each new venture led you to the next, as you learned more about the industry and the challenges that needed to be solved. What problem are you solving with Hoops?
“Hoops came from a dire need within my own business. Most businesses that sell or manufacture custom products are stuck with many different tools and systems that make their operations slow, inefficient and less profitable. That was the case with Budget Screen Printing; we had grown substantially, but the systems we had in place were bleeding our profits.”
“I tried just about every existing solution out there, but they all boxed businesses into either manufacturing things in-house or outsourcing – not both. Our strength was that we were a hybrid business, so I decided to build our own product to suit our needs. Within a year, we increased net profit by 85% simply by making our processes more efficient. The results gave us the confidence to convert the tech to a SaaS model and Hoops was born.”
What have running multiple businesses over the years taught you about yourself and your approach to business?
“Certainly, my approach to business has matured. I’m very confident in my ability to build great revenue-producing businesses and to spot and remove bottlenecks well before they become a problem. I’ve been doing this my whole adult life so it’s become who I am, not just what I do.”
“I’ve also learned about the importance of surrounding yourself with great people. Building software is difficult and expensive, so it is easy to be led down a very frustrating path of building and rebuilding a product to no end – unless you have the right team. That team may consist of great advisors, investors, developers, but as a non-technical founder, I was only able to achieve market-fit for Hoops by upskilling myself significantly, and surrounding myself with people who I could lean on for technical advice.”
“What it comes down to is that execution is absolutely everything. Ideas are great, but it’s how you execute those ideas that defines the results you get.”
Hoops was the first company for which you raised external capital. What was that process like for you?
“I learned an enormous amount, and I met some amazingly intelligent people along the way. The great part of the process is that to be a company worth investing in, you need to deeply analyse your own business, including the market, revenue model, likelihood of success and other factors which are often overlooked for the sheer excitement about the idea.”
“Taking time to look deeper into these factors highlighted major areas of opportunity for the product, as well as the overarching business strategy. As a founder, it’s easy to go into a pitch focussed on only the idea, but to be well prepared, you need to think from an investor’s point of view and doing so really helps sharpen the business strategy. I learned so much that even had I failed to raise capital, Hoops would have had a much stronger position coming out of the process.”
What advice would you give to founders who are preparing to raise seed capital for the first time?
“I would say that founders should know your worth and don’t falter from it. The right investors don’t play a game of drastically bargaining on valuation, particularly early stage investors. You need to be realistic about your valuation, but focus on the value you bring and the right investors will believe in you.”
“I’d also recommend building relationships early, and start connecting with investors six months before you open the round and keep them up to date with what you’re doing. Prepare all of your documents, pitch decks and materials before you open the round, then hit the ground running and approach every single potential investor within the same week. This is the only way to create competition within the round and to reduce the amount of time it can take to raise money.
“Lastly, I’d say however long you think it will take, triple it! This goes for everything in the process, pitching, legals, due diligence – it all takes a long time. The best way to speed it up is to create competition within filling the round.”
What’s next for Hoops?
“2021 is going to be a massive year for Hoops. We’re rapidly building our team and working hard to ensure our customers find their ‘aha’ moment as quickly as possible. The key is making sure our business model is ready to scale. We’re already seeing positive results, with new customers signing up and successfully onboarding themselves without requiring help from our team.
“Perfecting this strategy will help us grow globally without a high-touch sales process and maximises profitability over the long term.”