Human Demand: A Case Study

Making mobile advertising look good!

 We met Human Demand Founder & CEO Howie Schwartz in early 2013. Howie is a serial (and highly successful) entrepreneur previously having  Co-Founded FundingPost and OfferMobi (which was acquired by Moko Media).  Howie is also an active Angel and Venture investor.  When we met Howie, he was working on his latest company, Human Demand – a DSP and DMP in the mobile advertising space.  Human Demand was conceived with a simple, yet challenging mission – to make mobile advertising “look good” – from our lens we would say he and his team are making mobile advertising “look exceptionally good."

Human Demand has raised over $2 million in equity and convertible notes from investors and owing to its customers propensity to pay rather slowly, also has a very large working capital need.  Human Demand’s working capital need was increasingly acute due to its success and the resulting extremely high growth rate.  The objective was always to find a strategic buyer for Human Demand – one that would leverage its huge potential with scale – but finding the best buyer and also the best value meant that Human Demand had to have the ability to realize exceptional growth all on its own. That is where Fundamental came in.

 We recently sat down with Howie to talk more about Human Demand and its partnership with Fundamental Financial.

 What was unique about the situation and opportunity for Human Demand?

 The growth of mobile advertising it obviously explosive, but the trick is to make it appealing – so that it would work to its potential.  Many companies have been working on this problem for a long time, but it our view the results were modest – at best.  Can you think about a mobile ad that was really memorable – or really made an impression on you? We couldn’t and neither could many of the advertisers we spoke with. That was an opportunity. Making it work – successfully - was our challenge.

 Did you face any special financing or capitalization challenges?

 I’m a serial entrepreneur, and I have some experience in both raising capital and also getting the absolute most out of every dollar we spent. We know how to build great technology products and do so highly efficiently. As a result, we had a good handle on how much capital would be required to get our technology to the place we wanted it to be – and we felt pretty good that it was a sum that we could raise through our Angel network. By raising the equity we needed this way, we were able to preserve both the autonomy we felt we needed from a strategic point of view and also as much of the equity as possible for the founding team. That was the equity piece.

 Once we were ready to launch - and grow, we also knew that we would be faced with a huge working capital requirement. The simple truth is that while the margin we are able to earn on our technology is quite attractive, it is also the case that our customers are accustom to paying their bills rather slowly. We obviously could not afford to float that working capital need if we were going to be able to realize our growth plans. We also knew that it made no sense to finance our working capital need with equity – that in addition to being by far the most expensive capital out there – was also entirely unnecessary. We needed a working capital partner that was flexible, competitive, aggressive with their capital and, very importantly, which we could trust.

 Why Fundamental?

 We were introduced to Fundamental by my FundingPost Co-Founder, Joe Rubin. Joe had known the Fundamental team for some time and suggested that I speak with them. I’m a pretty cautious person to begin with, but I would say that I was exceptionally so when searching for the right working capital partner. There are several firms out there that claim to be terrific working capital providers, but in my experience I had always found their professionalism wanting. Joe is a life-long friend, and I trust him implicitly. Him recommending Fundamental, therefore, really meant something to me. When I met Tim and Roger, I could judge for myself that they got – or were good salesmen. So I continued to be cautious. A lot can be said about how long I took to get to know more about Fundamental, but in the end I can tell you that Fundamental exceeded my expectations on every level. They made clear from the outset how they could work with us and several things which they promised to deliver. When we finally started with them, we were transitioned to their operating team as we knew to expect. That part of the Fundamental team is as professional and capable as the rest. They worked diligently and communicated with us fully all the way through the on-boarding process, and it has worked like charm ever since. I was cautious about the lock box, their ongoing interaction with our customers and many other things – and all I can tell you is that we could not have been more pleased with our decision to have chosen Fundamental to be our working capital partner.