When I first met Bill Clerico and Rich Aberman last fall
, the two fresh Boston College grads were just starting to talk to local investors about WePay
, their online payment start-up. They had an idea -- helping groups of people make payment easier for collective projects like renting a ski house or throwing a bachelorette party -- and they were working to build a prototype.
Fourteen months later, Clerico and Aberman are living in San Jose, and they've just raised $1.65 million from Menlo Park-based August Capital
and a group of angel investors including Eric Dunn, a former chief technology officer at Intuit, the maker of Quicken personal finance software. (Here's a recent SEC filing
.) Earlier this month, they moved into their first office space on University Ave., the main drag in Palo Alto.
The office's former tenant? Another company started by Massachusetts émigrés: Facebook.
So what happened? I had coffee with Clerico and Aberman recently to catch up. They were in Boston over the Thanksgiving holiday, mainly to recruit a few Bostonians to help them build the company. (They were successful, hiring two Boston-area software developers who're heading west. "There's great talent in Boston," Aberman said. "And you're not competing against as many sexy companies as you are in the Valley.")
Clerico, who helped start the business plan competition at Boston College, told me that they'd met with more than a dozen venture capital firms and angel investors around Boston. "They told us we were too early-stage, mostly," he said. "They pointed out that we hadn't yet nailed down the cost of customer acquisition, which was true."
The two applied to various entrepreneurship programs earlier this year, including the new Tech Stars Boston
boot camp, and Y Combinator
, a program that was once based in Cambridge and Silicon Valley, but now operates year-round
in the Valley. Y Combinator accepted them into its summer program; Tech Stars didn't. Last May, they drove west and rented a house in San Jose. They shared it with three other teams that had been chosen by Y Combinator.
Over the summer, Y Combinator gave them the chance to hear from vaunted Valley entrepreneurs like Max Levchin, a founder of PayPal, and LinkedIn cofounder Reid Hoffman. Over the summer, they opened the WePay site to a small number of beta users. In August, they took part in Y Combinator's Demo Day
, presenting the technology and business plan to investors like Ron Conway (a prolific angel investor who put early money into Google), tech execs like Bradley Horowitz of Google, and representatives of Facebook's in-house investment fund
. They plan to open the site up to all comers early in 2010.
There's a clear cultural difference between Boston and the Valley, Clerico told me over coffee: "It's accepted as normal to have started a company -- you feel like a normal member of society. People ask you things like what your pre-money valuation was. Here, I think they wonder if you're involved in some kind of pyramid scheme."
"All of my friends in California are start-up founders, and here [in Boston] my friends are investment bankers, accountants, and lawyers," said Aberman, who himself chose the entrepreneurial path over law school. Both of them were raised on the east coast: Aberman in Florida, and Clerico in New Jersey.
But what lured the pair out to the Bay area was the acceptance into the Y Combinator program, which is run by a group of now-former Bostonians, including Paul Graham and Jessica Livingston. (Clerico said that if they'd been accepted by the Tech Stars program, they'd still have chosen the more-established Y Combinator.) And what is keeping them there, much like Facebook before them
, is the fact that they found investors willing to put money into a still-nascent idea targeting consumers.
To celebrate the close of their financing deal, Clerico and Aberman went to a Palo Alto wine lounge
and split a bottle of vino.
Early next year, they're looking forward to hosting a group of students from their alma mater, as part of BC's annual Tech Trek
trip to Silicon Valley.
Here's the video I shot last fall with Clerico and Aberman on the campus of MIT: