D.C.’s business ecosystem needs more entrepreneurs as early stage funders and fewer doctors and lawyers, the CEO of Public Relay says.

Eric Koefoot says one of the main things holding the region back is “really the makeup of the funding system — particularly at the early stage.”

As a member of multiple angel investor groups over the years, Koefoot noticed “a high proportion of doctors, lawyers, accountants, consultants, lobbyists… there’s a much smaller percentage of true entrepreneurs.”

With a lack of product-based entrepreneurs at the helm of investor groups, unlike places like Silicon Valley, D.C. struggles to fund and supply high-risk, product-based jobs that, when successful, make a lot of money. Instead, the region’s investors generally stick to stable platforms.

“It’s hard, then, to pitch those folks an idea — which is a little more esoteric and ‘out there’,” Koefoot told What’s Working in Washington.

This is something that needs to change on the angel investor level, said Koefoot.

“They’re bright people, I’m not knocking their intelligence, but what they’re expecting in a business when you come in and pitch — they say ‘show me your revenue stream’… They’re analytical, they want hard numbers,” he said. Angel investors need to become less risk-averse, something that D.C. has been criticized for before.

However, product companies still survive and thrive in the D.C. area. Public Relay is a data analytics company for Fortune 500 brand management.

“A very important trend is in our favor on this, and that is the lowered cost to start up a company,” said Koefoot. Services like Amazon Web Services and the gig economy in general have opened the door for potential entrepreneurs and freelancers.

“This does make it possible for entrepreneurs here in D.C. to do more bootstrap,” Koefoot said.

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