There’s a running joke in the investment world that, when an entrepreneur says that her company has no competition or is “ahead of the market,” it’s an immediate red flag to steer clear. After all, if the company truly has no competition, is it even solving for a problem that customers will care about? Will the customer acquisition cost be too high to justify solving the problem in the first place?
But there’s an exception to every rule, and for the “market-maker” rule, Cincinnati-based Ahalogy has proven to be that exception. Here’s how they leveraged Ohio’s entrepreneurial resources to do it:
- They plugged in early.
Founder Michael Wohlschlaeger came up with the idea for Ahalogy after realizing how difficult it was for brands to leverage Pinterest as a content marketing tool. After recognizing the wealth of business resources available in the Cincinnati startup community, he decided to move the company from St. Louis to Cincinnati to take part in The Brandery’s 2012 accelerator class. From there, the company secured seed funding (and Michael brought on a cofounder, Bob Gilbreath) through connections at CincyTech, followed by seed capital from Ohio investors like Vine Street Ventures and North Coast Angel Fund and debt financing through JobsOhio. As Ahalogy VP of Finance Ryan Watson said, “I think a quick glance at our cap table should give a pretty clear picture of how the Ohio entrepreneurial ecosystem has helped our success.”
- They aligned with early strategic partners—and leveraged the connection to find their investors.
According to Watson, Ahalogy has closely aligned itself with Pinterest from the beginning—a decision that could have been a huge risk or a key to the company’s success. For Ahalogy, it proved to be both. “We were in a somewhat unique position in that we’d aligned with a fast-growing emerging market in Pinterest. For investors that clearly were more comfortable with large, traditional markets, it was quick and easy for both parties to realize there wasn’t a fit. As for investors that were interested in emerging markets and believed in Pinterest, we found quick alignment on the problem and strong support for our solution.” By largely tying their success to Pinterest’s traction, Ahalogy scored in not one, but two ways: not only did they find investors who closely aligned with their mission, but they also joined the inaugural group of Pinterest’s official Marketing Developer Partners.
- They knew how to educate their audience.
One of the pitfalls of working in a new industry is articulating value propositions to customers who may not understand your solution’s benefits. In Ahalogy’s case, Pinterest was still an untapped market for many content marketers who either didn’t understand the platform, or didn’t see the value in allocating resources to leverage it. “For any new platform or channel, marketers work themselves through four stages – from denial that that the platform will be relevant, to acceptance that it is relevant, to investment in said platform, and then from investment they either accelerate the investment or fade. For us, the sweet spot is the moment when a brand or marketing department has moved from acceptance to investment in Pinterest. When we began Ahalogy, nearly every marketer with whom we worked was moving from denial to acceptance. So our role was more about education and facilitating this transition than it was about selling software at scale.” Fortunately, thanks to good timing and a solid capital foundation, Ahalogy was able to wait for the market to mature until most of their brands were in the “acceptance” stage.
As Ahalogy shows, running a successful market-making is part science, part good fortune, and all leverage. By moving to Cincinnati, the company was able to integrate into a well-connected, collaborative startup ecosystem from its earliest stages, securing world-class resources and investment dollars along the way. While Cincinnati’s resource-rich startup economy is full of potential for any startups, plugging into any local startup ecosystem—just as Ahalogy did in Cincinnati—pays dividends in the end. Whether you integrate with local accelerators and incubators, a regional angel fund, or your city’s talent pool, building a solid foundation in your community can help you weather the storm until the market is ready for your company’s solution.