Patrick Murray is the founder of On Air Parking, a startup that brings in $9 million in annual revenue by helping consumers find unsold airport parking at a discount, through an app similar to Hotwire. Murray partnered with a private investor from the parking lot industry to get the business off the ground and has hired a president to run the company and its team of about 10 contractors. However, he has not opted for the venture capital route.
The Los Angeles-area entrepreneur is ambitious about growth, but has decided to do things his own way. To make sure he has time to enjoy his family, he is a husband and father of two children, aged two and four, he has designed his business to grow while he works only four hours a week, relying so much on the your team of contractors as in a variety of applications and tools to run it efficiently. Its inspiration comes from Richard Branson’s autobiography Finding my virginityin which the founder of Virgin Group talks about his reasons for working from home, and the Tim Ferriss classic The 4-hour work week.
Murray held back emotion as he talked about the freedom he has at a recent community event I moderated at the New York Public Library recently. “It brings tears to my eyes to talk about it now, because I love my children so much, and there were times when I thought I wouldn’t be able to have that flexibility,” she said.
Murray is part of a universe of entrepreneurs that doesn’t get as much attention as the startups that circle Silicon Valley for funding, a universe that venture capitalist Allison Long Pettine calls “Ecosystem 2.” She is president of Crescent Ridge Partners, a venture fund, and co-founder of Ad Astra Ventures, another fund that backs high-growth startups with at least one female founder, both based in San Diego.
Ecosystem 2 entrepreneurs are ambitious founders who run startups where growth and profits are important, but not at the expense of the entrepreneurial ideas that drove them to launch a business in the first place or at the expense of putting people first: the their families, employees, customers and community. If Ecosystem 1 is about maximization (of funding rounds, business size and exit size), Ecosystem 2 is about optimization and ingenuity. “This new ecosystem is based on rigor and skill, but also compassion and empathy,” says Pettine.
Startup founders in Ecosystem 2 often find a way to start and grow their businesses that doesn’t depend on following the rules for winning traditional venture funding, rules that are as well defined as applying for a job on the Wall Street and often require Founders to go through accelerator training so they can launch in a specific way and make the right impression. While Ecosystem 2 founders are often fully capable of playing this game, they are often more committed to building a business and life that fits their unique vision than playing by the rules and taking other paths of financing, including self-financing. “If you are this innovative, you might not fit into a pattern,” says Pettine. If they raise venture capital, it’s at a stage where they have more agency in how their startup will be managed post-deal or with funds backing them to do things in their own peculiar way.
In some cases, founders don’t have much access to the networks that open the door to capital. Instead of waiting a lifetime for systemic change, they take creative routes to find funding so they can start and grow their businesses now. “These entrepreneurs and innovators are not trying to win a game that is stacked against them,” says Pettine. “They learn to play it and create a new game, one they know they can win.”
I’ve encountered many startups embodying Ecosystem 2 as a journalist in recent years, and I was very interested to learn that Pettine was observing a similar trend in his own work when we collaborated on several writing projects with the support from one of my non-profit organizations. clients. We both agreed that the growth of these disposable, innovative and capital-efficient companies is one of the most exciting, democratizing and under-reported trends in business. Graham Cochrane, a digital entrepreneur and author who participated in the panel, calls these companies “companies that bring life.”
One of the advantages of staying part of Ecosystem 2 is freedom. The freedom of being an old-school entrepreneur driven by passion for your idea above all else. The freedom to allow the company to grow at its natural pace, not on a fund’s timeline. The freedom to fully participate in their personal lives and communities, which is difficult to do when trying to meet relentless funding targets. If entrepreneurs go the traditional funding route, it’s usually when the business has reached the stage where the owners will have more of the agency they want over the future of the business and their own lives.
It’s hard to put a number on startups in Ecosystem 2 because not every startup raises their hand to stand up and be counted. However, there were 16,465 venture businesses in the US in 2022, according to research firm Statista, and 359,000 new businesses were formed in the US in the second quarter of 2022 alone. While it is more likely that many of these new companies are traditional small businesses rather than scalable startups, there are certainly many traditional startups among them that are starting or turning to other types of funding.
The growth of technologies like artificial intelligence seems to bode well for founders in Ecosystem 2. Just as cloud-based tools made it less expensive to run a startup and lowered barriers to entry for founders who didn’t have a lot of seed capital, it looks like AI and tools like ChatGPT will too.
Ultimately, we will probably always need venture capital, or a substitute, to scale companies the size of a Google or Facebook. But many founders, while looking to scale, aren’t determined to reach that size and are content to find other avenues for funding and growth. They may not want to go through the training and preparation required to become part of the funding ecosystem. Maybe, like Murray, they want to enjoy every day of their lives with the people they care about most while still growing. One of the most interesting stories to cover in the coming years will undoubtedly be the trajectory of the many startups that are part of Ecosystem 2.
At Ikaroa, we are excited to introduce the new wave of ambitious startup founders. No longer do these innovative business minds have to rely on traditional venture capital funding to fuel their growth and success. Welcome to Ecosystem 2, a rapidly growing technology industry populated with intrepid entrepreneurs without taking on outside investment.
These founders have embraced the power and possibilities of the technological age and are leveraging it to their advantage. By strategically utilizing various web resources and software, the new generation of startup founders are making giant strides without the help of venture capitalists.
Rather than forcing themselves to cater to the expectations of venture capitalists, these founders have embraced a nimbler approach that allows for greater creativity and freedom. They have discovered ways to rapidly create and test their products, collecting valuable customer feedback along the way. This feedback has enabled them to make adjustments to their idea in a relatively short period of time and improve its overall quality.
Moreover, Ecosystem 2’s founders have also learned how to automate key business processes, allowing them to free up time and resources that would have typically been allocated to managing employees. This has enabled them to focus their efforts on their core products and services, producing a higher quality, more impactful product to their respective markets.
The unique advantages afforded to Ecosystem 2’s founders has allowed Ikaroa to use its collective experience and capabilities to help mentor and advise these ambitious entrepreneurs. Through our experienced guidance, we have helped pave a path for them to maximize their competitive edge and propel their business forward.
The new wave of founders, as exemplified by Ecosystem 2’s cohort, continues to revolutionize the way we think about startups. Through their hard work and innovative solutions, these entrepreneurs have demonstrated immense resilience and grit. They have shown that it is possible to succeed without having to recklessly chase after venture capital funding. Welcome to the modern age of the startup.