Daniel Scalisi is the President of Los Angeles-based MobileCause (www.mobilecause.com), a startup focused on the mobile, nonprofit fundraising area. We spoke to Daniel last week to learn more about his firm.
What's your startup all about?
Daniel Scalisi: MobileCause is actually a company we acquired, and reorganized in January. It was founded three years ago, and hadn't been succeeding. We came in and reorganized the product, team, and mission, and redeployed it in June of this year. We've now been operating for five months, and have become the leading web service for mobile fundraising in the country.
What is mobile fundraising?
Daniel Scalisi: It's the ability to solicit donations using a cell phone, where those donations are billed to the cell phone bill or a credit card. Those donations are mobile initiated.
What kinds of customers are using your service?
Daniel Scalisi: We've got many nationally recognized organizations, including the Children's Miracle Network, the National Breast Cancer Association, the Humane Society, which are just a few of our customers. We've gotten over 80 paying customers in our five months we've been deployed.
How does your service work?
What we've done, we've made this as simple as Google. It's a simple web service, where a customer can log in and can simply create and deploy any level of mobile donation or messaging campaign. Once a campaign has been created, there's some level of marketing and call to action, which can be through traditional media, or the web. That allows our customers to solicit and collect donations into an online account or system and track how they're doing.
What's your background, and how did you get into this?
Daniel Scalisi: I've been in the mobile market for fifteen years. I'm a serial entrepreneur, and have started five companies. I have two successful exits, mostly in mobile and teh web, as well as social media. I spent the last year at a venture capital fund, helping people to prepare broken businesses. The perspective from the venture side has been a really good combination with my mobile and web experience.
What attracted you to this particular business?
Daniel Scalisi: I noticed that the company, although it had been around for three years, had only five competitors. 2008 was the first year that mobile donations surfaced in the U.S. Mobile donation's first year also outpaced online giving' first year with over $500,000 raised. This was our signal to jump and take advantage of an emerging market. Thankfully, the company had spent a significant amount of time educating the market, and we though the timing was perfect. Once we stepped in, we were able to accelerate to become number one in the market in just five months, and have over 80 paying customers. We're three quarters of the way to breakeven, which we think we'll reach within five months.
What's the attraction of the mobile market, and why the quick update of your solutions?
Daniel Scalisi: There's been a perfect storm of problems for nonprofits, including the bad economic environment, and too many donations coming from single, large donors. When they disapper, so does the ability for these groups to operate. There's also been a generational shift, from older donors to younger activists and micro donors, who aren't donating very large amounts. There are more people, doings things en masse, but in smaller amounts. Plus, there's been a massive, communications shift, where voice is being outpaced by SMS. Email is becoming ineffective, and by 2011 there will be three times more smart phones than computers. All of these issues has created a tremendous opportunity for using communications to reach donors. But, groups don't know how to go about it, and are being crushed by this perfect storm of problems. Our web software platform lets those groups address a younger generation, deal with micro billing and donations, and communicate in the new medium more effective than they used to. If you map it against online gifting, mobile is on a similar path. Online gifts are now $15 billion a year out of a $300 billion donation market. The question is, if in 2008 and you've got 500,000 in donations, where will you end up in 2018--$15 billion or more?How is the company backed?
Daniel Scalisi: The company had gone through a half a million dollars prior to when we came in and acquired the company, on a deferred cash basis. We invested our own money, about $150,000, and took $150,000 in bridge financing. In September, we took $250,000 in an equity investment round, which was an interesting combination of investment plus acquisition of the assets of another company. The total round was $250,000 in cash plus $170,000 in assets. The company we acquired developed iPhone applications for the nonprofit market. Now, we have this great platform for mobile messaging, and a fundraising iPhone application, which was part of the reason for making the acquisition. Now, we're in the middle of a $500,000 equity round, with $250,000 invested and closed at the end of September, with another $250,000 in the process of closing.
Finally, what's the business model here?
Daniel Scalisi: We charge a monthly service fee, and we also charge a percentage of mobile bill donations. It's 50 cents a transaction, and when we provide the text pledging service, we take a percentage of the collected amount, whether that is mobile initiated or credit card billed.