Derek Hopfner, DMZ alum and Co-Founder of Founded, gives an inside scoop on the motivation behind building the startup and getting acquired, along with advice founders should consider to achieve a successful exit someday. 

When Founded launched in 2017, co-founders Derek Hopfner, Shane Murphy and Travis Houlette were driven by the company’s mission to make the legal side of business an effortless experience for entrepreneurs. 

Within a few short years, thousands of dedicated business users joined Founded. Fast forward to this year: the company made the announcement that they had been acquired by RBC Ventures!
In the coming months, the platform will merge with Ownr, RBC’s existing platform for small business incorporation – but the whole Founded team is staying intact and moving under the RBC Ventures umbrella, together.

Getting acquired is what many young startups hope and dream for one day, but many overlook the meticulous planning and strategic considerations that need to happen at an early stage. We spoke with Derek Hopfner about the experience of scaling Founded, and what startup founders can do early on to position themselves for a successful exit.

Take a look at our Q&A with Derek to hear what he had to say. 

What does Founded do?

Founded is an online legal platform with a focus on making entrepreneurship easy. When starting a business, there is an endless number of things that entrepreneurs need to think about early on, so taking away the legal components and making it really simple for them was something that was really important to us. 

An entrepreneur can join Founded (soon to be Ownr) and can use the platform to navigate various legal tasks as their company grows. This includes anything from preparing an employment agreement for a new employee to creating website terms of use and privacy policy. You can even create an employee stock option plan, something that’s gaining popularity from startups.

It sounds like the platform is valuable to companies at all stages of growth, not only young startups looking to get incorporated?

That’s true! Many entrepreneurs start their company on Founded, but we also bring on companies that have incorporated elsewhere and want to benefit from using Founded’s technology for legal work going forward. 

A nice way to think of it: there are a lot of programs in the accounting field, like Quickbooks, that help entrepreneurs with the accounting side of things. Founded is like that, but for the legal side of things.

What was the motivation behind creating Founded? Were you ever an entrepreneur who experienced similar challenges with getting legal support?

I’m a former lawyer, so I actually saw it from the other side where I did a lot of corporate commercial work with businesses. Oftentimes, legal work was expensive for startups or they saw it as complicated. They didn’t want to meet in a lawyer’s office – they wanted to do things electronically, quickly and seamlessly.

Two out of the three of our founders are lawyers: myself and Shane. Travis is our CTO and Head of Product, and he had the experience from an entrepreneur’s standpoint. Shane and I saw the problems through a lawyer’s lens. We’ve got a good combo between the three of us!

What was the process of scaling the company? Did you have a funding strategy?

We launched in October 2017, so we were in operation for about three years before getting acquired. 

We were really lean on funding. We had some angels that supported us but never completed an institutional round of venture capital funding. We also had support from the Ontario Centre of Excellence and government programs like IRAP.

We grew our sales and revenue and always reinvested it back into the company. That meant hiring for sales, marketing, developers – but we have always had a lean team. 

Our primary marketing strategy involved using Google Ads, high-quality blog content, and partnering with local entrepreneurship centres like the DMZ, MaRS and Enterprise Toronto. That’s really what allowed us to scale. 

We also had a really strong product, so word of mouth helped a lot. People would use the platform, have a great experience, and go on to encourage their friends to use it.

How did joining the DMZ help Founded?

During our time at the DMZ, the company got to a profitable state, which allowed us to continue growing without having to rely on funding.

There are two big things in particular that come to mind that allowed us to do this: we gained a stronger understanding of how to accelerate our sales processes, and learned how to read and analyze our data to then base our strategy around it.

Everything was super helpful – marketing was great, product was great, the programming was really holistic.

Many founders’ biggest dream is to get acquired and get that big exit. Was getting acquired a goal you were working towards from the early days?

It wasn’t necessarily the goal. When we started the company, we were really driven to make entrepreneurship easy.

When you decide to take money from funders, you have to realize they’re not doing it purely to support you and your goal to build a company – they do expect some sort of return to the investment that they’re making. I think most entrepreneurs realize there needs to be some thought towards an exit strategy.
We had been working with RBC for two years. It was never our goal to get acquired at this exact time – it was pretty organic. 

I think it’s helpful to start thinking about it early on when starting a company. That being said, if you were to ask me five years ago if the largest bank in Canada were to acquire a legal technology company, I would have never imagined that!

What advice would you give a founder that is interested in getting acquired? What are some important things a founder should consider? 

It’s important to understand, early on, what the implications are if you’re taking funding, especially from VCs. Understand how dilution works. Angels are one form of funding, but once you move to institutional funding, there are strong expectations for returns on their investments – to the tune of 10, 15 or even 20 times the initial investment. You need to find a path to hit those metrics. 

Next, in the early stages of building a company, take a look beforehand at the exit opportunities that may exist in your particular industry. It’s not a bad idea to look at each industry and understand the valuation multiples which exist. In most cases, you’re putting your whole life into your business – likely a lot of financial resources. So, if you have two choices that you’re equally passionate about, why not go with the industry that has a multiple exit of traditionally 15x revenue, versus another that might only be 2x or 3x. 

Now that you’ve gone through most of the acquisition process, do you have any important lessons learned to share with other founders?

Be open to business opportunities as you are growing the company because you don’t know where they’re going to lead. I don’t think it was really on our radar that RBC was going to be our acquirer when we started working with them a couple of years ago, but that turned into something real this year. Where you start with a company is not where you’re going to end up, and I think being open and fluid about that is important. 

If you’re having discussions about an acquisition, it’s going to take a lot of your time – a lot more than you’d think. It’s so important to make sure your team is still focused on delivering value each day with the acknowledgement that this acquisition might not go ahead.

Also, don’t put 100% of your time and efforts into the acquisition, or you’ll leave your business behind. You need to continue to drive value to your customers and keep building a strong business. That’s really the best counterpoint to any negotiation. If things fall through, you can then walk away at any time and continue pursuing your business.

When should a founder communicate with their team that an acquisition could be in the works? 

I think it depends on the team and its size. Because of COVID and everything that was going on in the world, we kept our team focused on building the product and helping customers until the later stages of the acquisition.  That was the right decision because of the uncertain environment the world was in

Communication strategies will differ from one company to the next. Do what’s best for your company, for your team, and for the environment you’re in.

Thanks, Derek! Now, what’s next for you and the Founded team? 

We’re all now RBC Ventures employees! The whole team came over, which I’m super happy about. We get to pursue the exact same thing that we were doing before, but with a much bigger budget and more resources.

I’m as excited as ever to continue to deliver on the same mission to help entrepreneurs all across  Canada, and ideally look to new jurisdictions as well.  We’re lucky in that everything is kind of the same for us, but now we just have more opportunities and resources to deliver!

Congrats to Derek and the entire Founded team on your success, and thank you for your commitment to helping entrepreneurs at every stage of their journey. Keep up with Founded over the coming months as it integrates with RBC Ventures’ Ownr to bring the best business formation and legal tools together under one roof.

Hop In’s CEO and Co-Founder, Erich Ko, proves why adaptability is key to entrepreneurial growth

Hop In is a DMZ Incubator company that provides logistics software services to offer customized corporate shuttle solutions for the daily commute. The startup helps companies retain more talent and access a larger hiring pool while providing employers with a comfortable and efficient commute to work.

Erich Ko is the CEO and Co-Founder of Hop In. What started as a business idea discussed between a few friends has evolved into a startup with a real purpose: to improve economic development issues and make transportation more accessible for workers everywhere.

We asked Erich about what fuelled his interest to become an entrepreneur, his experience in the Startup Certified program, how Hop In was conceptualized and how the company has pivoted its strategy this year.

Here’s what he had to say.

Let’s talk about your personal entrepreneurial journey. When did you join Startup Certified? How did you hear about it? 

I was a student working at Ryerson’s Legal Innovation Zone Law Practice Program in the same building as the DMZ. By working at the front desk, I was introduced to startups, and through that, I was connected to the Sandbox. 

Natasha, Sandbox’s then-Director, introduced me to the Startup Certified program. It seemed really cool and had a structured approach. I joined in the Fall of 2017 and wanted to learn as much as I could!

I joined a startup called Curexe at the time. They have since been rebranded as Cevnn Payments.

What was your role within the startup? What areas of the business were you working on?

It started as a marketing role, and I worked on content marketing and organic growth. However, there were only three of us at the time, so I did everything and anything and developed my skills that way.

After that placement was complete, I ended up going back to consult with them for a few months. I helped them grow the team and scale up a little bit as well.

What made you interested in pursuing entrepreneurship?

Before that placement, I had been working for the government for six years. I ran into the “red tape” problem – something that you hear about, but don’t believe it until you see it. I figured that there has to be a faster way and a better way for me to have an impact. I turned to startups. It seems to really be the best way to change something in the world.

I’ve also been restless my entire life! I got in a lot of trouble as a kid and I was doing some things I wasn’t supposed to. Entering the entrepreneurial world helps you channel that energy. I know it sounds cliche, but it really does. 

I can work 40-50 hours straight without sleeping and nobody will say anything (besides my mom!) You’re constantly solving problems; it’s challenging. You never know what the day holds for you, so this was the perfect fit for me. 

This, I know, is what I’m going to do with my life.

Let’s talk about Hop In. What was the story behind creating the company?

I actually grew up with my two co-founders! One of them is my best friend, and our CTO was my brother’s best friend growing up. 

One night while drinking at the bar, we were discussing how we had all lived every problem possible when it came to commuting. That’s when we decided we would try to build an app to solve commuting issues.

Fast forward to today, we’ve snowballed into a bigger problem that we didn’t even know was there in the beginning. There’s a huge economic development issue that is the root of these commuting problems. 

There are these gaps left behind by transit in areas that are outside of the Torontos of the world. Workplaces in these areas aren’t always accessible. We provide a last-mile solution to connect them from the transit system to the workplaces. 

We also realized recently that we can help people from marginalized communities and the shelters, so we are actually working on different job programs to help people get access to better opportunities that they normally wouldn’t have. 

Hop In provides more than just transportation – can you explain how Hop In helps employers?

We help companies expand their hiring pools. One of our companies is Maple Lodge Farms in Brampton. We helped them hire their first employee from Scarborough, which is really not a possible transit route if you don’t have a car, right? That’s the value we add to the companies.

We go to a company and do a needs assessment for free. Employees tell us all about their commutes and schedules. Then, we plug that information back into our internal software system and design customized routes and schedules based on the employees’ needs.

If employers have issues with retention, it’s something that Hop In can also help with. The employer usually covers the cost completely. 

We work very closely with recruitment agencies and staffing agencies. We’re members of the Brampton Board of Trade as well and work closely with all the bodies that contribute towards the development of a city, development of commercial properties, and management of all of those work sites. Hop In works with everybody in that spectrum. 

Our operations are primarily based in the York Region, but currently, we are working on programs with 107 municipalities across Ontario! Our main areas are GTA-focused, and now we are getting out to the rural areas and small towns. 

How does the shuttling aspect of Hop In work?

We work with chartered bus companies that normally do events. For them, working with us is a no-brainer. It’s a new stream of revenue for them, especially during COVID as no one is going to events.

With our bus operators, we are constantly looking at data: tracking rides and optimizing routes. For example, if there were a Raptors game or Leafs game or a parade, we can reroute instantly.

The bus companies we work with are also certified to provide accessible transportation for people with disabilities. We just finished up a pilot with Durham Deaf Services to transport their learners to the facilities.

You mentioned that there has been less of a demand for bus services due to COVID-19. How has the pandemic changed how you operate?

For the first couple of months, everyone was just trying to figure out their place in this world now. We took that time to help those in need. We realized we weren’t going to generate revenue for at least a few months, so we figured we might as well do something productive with the time and help out. 

Hop In paired up with restaurants in Vaughan, Markham, and Brampton and we delivered around 100 meals and free rides to work for healthcare workers. We’ve actually now donated over 20,000 disposable masks across Canada!

We also had to shift the focus of our customer demographics. We had been working with tech companies, but they all started to work from home, so we doubled down on the essential factories and manufacturing facilities that had to stay open.

We did pivot, but nothing too big for us. Our core model stayed the same.

What advice would you give other university students or other aspiring entrepreneurs if they want to start a business?

I have three things. The first one is you just got to go for it. It’s going to be tough, things don’t always go as planned. 

If it’s something you really want to do, then there are a lot of opportunities and you can find help from places like the DMZ. The DMZ taught me so much about design thinking – that was the biggest thing for me to understand how to actually validate this thing!

My second piece of advice is to listen to your customers. I really didn’t understand this point until last year. Build what your customer needs – not necessarily what sounds nice.

The last thing? It’s all about perspective. Especially during times like this – with COVID and the economic crisis happening at the same time – there is always a way. The situation that we’re in is creating a host of problems, but the reason why we exist as entrepreneurs is to solve problems.

A lot of people thought we were dead because we are a transportation company, but we pivoted and we became an essential service to a lot of industries. In times like these, take a look from every different angle and make sure you leave no stone unturned.

I’ll be honest… we are not without our freakouts! But it’s been really, really fun because we’ve just been throwing pasta at the wall and seeing what sticks, right? Every day we are throwing something new out there to see what happens. It’s been kind of fun experimenting that way.

Want to learn more? Visit Hop In’s website and follow them on LinkedIn, Twitter, Instagram and Facebook.