Are You Looking for an Environmentally Friendly Dry Cleaner?
BY Shivani Vora
Greenopia can help you out.
The Pitch: "The idea behind Greenopia guides is that there is an eco-friendly choice to most of the things we do. Our guides rate the greenness of 52 different types of businesses, including restaurants, nail salons, and clothing stores. We don't accept money from listed businesses, and we hire field researchers in each city to find the best choices. Guides are currently published for New York City, Los Angeles, and San Francisco, and are sold in retailers such as Barnes & Noble (NYSE:BKS) and at Amazon.com (NASDAQ:AMZN). We are looking to raise $2 million to expand to at least 15 more metropolitan markets. We also want to invest in technology so we can develop our website and make Greenopia available to download on PDAs and cell phones."
Founder: Gay Browne, 48
Location: Santa Monica, California
Year Founded: 2005; first guide was published in April 2006
Clients: Eco-conscious consumers
2007 Revenue: $180,000
2008 Projected Revenue: $1.2 million
Investment Needed: $2 million to roll out the guides to more cities, expand the website, and hire additional employees
Recent Buzz: Appearances on The Big Idea With Donny Deutsch and Good Morning America. Browne received the Environmental Protection Agency's 2008 Climate Protection Award.
The Experts Weigh In
A complicated business
This is a great concept. It capitalizes on growing consumer preferences for sustainable products and services. But accurately assessing environmental impacts is very complex and expensive. This goes beyond a subjective restaurant review ("The pasta was overcooked") into much more objective scientific territory ("The CO2 emissions from cooking the pasta were excessive"). Browne may create legal liabilities for herself to the extent that she uses estimates. I suggest she add locations methodically, focus on working out the problems as she grows, and scale up as she learns how to do so profitably.
Maurice E.P. Gunderson Senior partner CMEA Ventures San Francisco
Build a Web presence first
Having a strong Web presence is critical, possibly even more important than publishing books. This is because content will need to be constantly updated, which is best done in a Web model. Also, the Web can provide an advertising revenue stream that may prove to be more valuable over time than selling books. Until the company has a successful, growing website that is providing value to customers, it is difficult to see how this type of business could generate the types of returns that venture investors seek. Greenopia may be better off raising a smaller round from angel investors.
Ullas Naik Managing director Globespan Capital Partners Palo Alto, California
Use capital wisely
Greenopia's timing is great, since consumers are making more decisions based on vendors' environmental impact. The books give readers something tangible, but they have a high cost of distribution. Also, the company needs to pay reviewers, which makes the model more expensive than other rating businesses, which rely on unpaid contributions from consumers. That will require the company to raise more capital, and thus it needs a larger outcome to justify the investment. Websites are cost efficient, so Browne should focus on building the company's website before expanding to more cities.
Eric Hjerpe Partner Atlas Venture Waltham, Massachusetts