Sramana: When you were starting Silverlink, did you envision it being a consumer-facing product?
Stan Nowak: Yes, we envisioned it being a consumer product that we could sell through channels. Unfortunately, at that time in the marketplace there were no well-developed channels. There were no social media channels, and consumer markets were very expensive to penetrate. We were looking for channels, and unfortunately for that product, the channels were not effective.
Sramana: How did you get this company off the ground?
Stan Nowak: We quickly changed product direction. In pursuit of this overall mission, we came into contact with family caregivers, assisted living companies, and whole healthcare entities. It really intersected with the problem of medication compliance among seniors. We networked our way to people who were aggregators in that business, such as big pharmacy companies and pharmacy benefit management companies.
Those companies had a problem of medication benefit consistency, or basically getting prescriptions refilled on time. They had the challenge of scale. We had to pivot quickly into that market because at that time we were a sweat equity company and had a little bit of angel money.
Sramana: How did you get the angel money if you had not validated the concept?
Stan Nowak: Angel money is really invested on the basis of relationship. These are folks I had worked with in prior companies. They had invested on the basis of the team that we had put together. They invested in our founding team.
Sramana: Our thesis on angel investment is not necessarily that. That investment certainly happens in some scenarios like yours, but professional angels these days are really looking for validated businesses, not just concepts. Tell me more about what you did with that money since your first round of validation did not work out.
Stan Nowak: We had a plan when we went to the angels. We did have a business plan related to the initial product idea. They were investing based on the plan as well as the people we had around us. We went after that market, and we ran a parallel market next to that. We looked at the adjacent markets and realized that those were the ones where we could find urgency, scale, and willingness to pay. We went after those markets in parallel.
We raised two rounds of angel money. These were not organized angel groups. They were individuals. The first round was about $400,000 and the second was $240,000.
Sramana: How many angels did you have in the first round?
Stan Nowak: We had 15 angels in the first round. The second round brought in another 10 angel investors.
Sramana: You had $640,000 in angel money. How much of that did you spend trying to validate the original idea?
Stan Nowak: That initial funding took us through the validation of our second business model.