Colorado Life Science Night

Rockies Venture Club and the Colorado Bio Science Association are teaming up for an exciting night of life science information, interaction, instruction, and investing.

This will be a popular event, so be sure to register early. We have an exceptional lineup of life science companies pitching this month.

Please Register for Colorado Life Sciences Night

Tuesday, November 13th from 5:00-8:00pm

Location: 1700 Lincoln, Denver, Wells Fargo Hershner Room

5:00-5:55pm – Networking Happy Hour
5:55-6:45pm- Transitioning Your Management Team with John Kelley, CEO of Cerescan
6:45-7:30pm – Pitches: Neuro Assessment Systems, Securisyn Medical, KromaTid, Willowcroft Pharm, LLC.

Angel Investor Forums:
As always, this event will be followed by investor
forums for accredited angel investors. If you have
been curious about learning about angel investing,
this would be the event for you.
Denver Tech Center Thursday 11/15 7:00 am
Boulder Friday 11/16 10:30am

Peter's 12 Ps of Investment Readiness

Peter Adams, RVC Executive Director, taught two courses during Denver Startup Week. He culminated the presentation with the 12 Ps of fundraising preparedness. Is your company ready to raise capital?

Are you prepared to begin raising capital for your company? Use this checklist to determine how ready you really are. Not all companies will have all 12 of these readiness factors, but the more you have, the more ready you are.

Package – Investors are buying a piece of your company. When you present your investment opportunity to investors be sure that you are presenting the whole package, not just the product or technology.

People – The management team is incredibly important. If your company is still small or can’t afford to hire a complete team, be sure to add people to your deal in the form of volunteer advisors. Can you name 10 people who are willing to publicly be affiliated with your company?

Plan – Failing to plan is planning to fail. Of course you won’t follow your business plan exactly and everything will change next week. Write the plan anyway, then keep improving on it.

Proforma – Investors love to see the numbers. It’s better if you can provide validated numbers that reflect a few of the big decisions you are going to make.

Prototype – Can you put your product in an investor’s hand? Better yet, is it a working prototype? Prototypes show you are another step closer to revenue.

Product – Do you have a finished product? Even better.

Promotion Strategy – You may have the best product in the world and if no one knows about it, your company fails. How are you going to get your product into the world? Provide specifics about your strategy such as, “work with Marketing Company X, beginning March 2013”.

Partnerships – No company is an island. Partner with other companies toward a common goal of increasing revenue. A great example is Zappos which partnered with UPS to provide free shipping. Zappos gained customers through their always free shipping gimmick and UPS increased volume of their shipping business. Obviously, Zappos paid UPS, at a bulk discount, to ship.

Paying Customers – Have you convinced anyone to pay you for your product? Even if it’s only two customers, flaunt all sales.

Proof – Proof of concept and proof that your business model is a valid one comes in many ways. The more proof you have that your company can make money, the more likely you can get investors excited about your company.

Pitch Deck – You have to communicate your business to investors in a short period of time. Your message must be clear or you can lose credibility fast. You really do only get one chance to make a first impression.

PPM –  A Private Placement Memorandum is a legal document that includes an engagement letter, term sheet, and everything your company needs to issue stock in accordance with the Securities and Exchange Commission. The document details the summary of the offering, financial data, industry overview, management, etc. Companies with a PPM tend to close on their rounds faster than those who don’t.

If you are feeling a little overwhelmed at the extent of preparation that is necessary to raise funding, don’t fret. Fundraising is a process, very few companies have all of these when they begin seeking capital. Often companies set aside a year when they decide that it is appropriate to begin fundraising. They spend some time gathering the information for the proforma and PPM, begin to create a pitch deck, and start spreading the word that they are interested in investment. A great investment takes time to prepare.

 


RVC News Blitz – Fall 2012

Table Of Contents

1820 Club
Colorado’s Angel Group Consortium
Colorado Capital Conference 2012
AppIt Ventures named winner of $50K biz plan award!

 

1820 Club
Twenty-seven of the most enthusiastic ladies in Colorado came out for the first meeting of the 1820 Club in October. The 1820 Club is a new gathering of ladies who are interested in the investment world either because they want to invest, or because they are seeking investment. The name 1820 club refers to the birth year of Susan B. Anthony, best known for her dedication to Women’s Rights and the suffrage movement, her life stands as a pivotal mark in time leading to the equal rights women enjoy today. In this meeting we talked about our experiences with capital raises and investing from many perspectives. Investors, entrepreneurs, and service professionals were all present as we discussed our roles in the rebuilding of Colorado’s Economic Development. The group is intended to be an insightful meeting for women managing private equity financing from any angle.

Some of the investors present at the meeting were interested to find out that no investment experience is necessary to attend our Denver or Boulder Investor Forums. These meetings are just as much about educating potential investors as they are about presenting potential investments. For legal reasons, we must limit attendance of these meetings to accredited investors. Those who meet the legal qualifications of an accredited investor 1) had an income of $200k ($300k if married) and expect to meet the income requirement in the current year OR 2) have $1,000,000 in assets not including their primary home.

For ladies who do not meet these requirements, please feel free to attend the 1820 Club meetings throughout the year and/or volunteer with the Rockies Venture Club to get more involved.


Colorado’s Angel Group Consortium

Reaching angel investors in Colorado just got a whole lot easier! Thank you, Elizabeth Kraus (Co-Founder of Impact Angel Group) for making some noise and getting all of the Angel Communities together at the Colorado Capital Conference. Between organizing face-to-face meetings and a regularly scheduled phone call, Kraus is making sure that those who manage Angel Communities in Colorado are paddling together toward a common goal. What does this mean for the entrepreneurial community and the state of Colorado? It means that entrepreneurs have quadrupled their exposure when they approach the managed angel communities in our state. This results in less fundraising time which means a more efficient capital raise. It means that we just got one step closer to making a startup seed round raise an easy experience.

The Rockies Venture Club, High Altitude Investors, Impact Angel Group, Boulder Angels, Colorado Angel Investors, and Unreasonable Angels, are different organizations that help connect entrepreneurs with investors in Colorado. Historically, it has been a challenge to raise more that $1,000,000 in Colorado in a single round. At Rockies Venture Club, we encourage companies to tap their home states to complete a round over $1 Million. Now that Kraus is doing the legwork to connect all of the different angel groups in the state, it should be easier for entrepreneurs to reach or surpass that $1 Million mark.

Should all of the angel groups in the state consolidate into one big angel group? We don’t think so. Angel investing is traditionally a local endeavor. With High Altitude Investors located in Colorado Springs, Rockies Venture Club in Denver and Boulder, and other groups in Fort Collins, Angel Investors have opportunities to invest locally. A regular, facilitated meeting between the groups makes sense more than complete dissolution of the boundaries. One thing is for certain, Kraus is doing our whole state a service by volunteering her time to make sure that deals pass freely between the angel groups in different regions.


Colorado Capital Conference 2012
The Colorado Capital Conference was a great success! One of the pitching companies, SwiftPage, has already closed their round. Congratulations, SwiftPage! We are seeing immediate interest in many of the other companies including those who won the Venture Bucks awards. First place went to BioFeedz, a company with a biofeedback technology platform that could be used for anything from PTSD therapy to biocontrolled videogames. Second place went to Cloud9Express; third place went to urHUB; Swiftpage and Metabiomics get an honorable mention.

Governor John Hickenlooper gave our keynote address and mentioned his own experience as an entrepreneur in 1958 starting the Wynkoop brewery. He pitched his company to Rockies Venture Club way back when RVC was a new organization. He said the room was polite to him but they didn’t jump on board and finance the now historic brewery. We’d like to think that we’d be more interested if he came to us now. Including his initial pitch in 1985 and the keynote address at the Colorado Capital Conference 2012, John Hickenlooper has spoken to RVC three times. We appreciate his support and look forward to continuing working with the state of Colorado to develop small businesses locally.


AppIt Ventures named winner of $50K biz plan award!

The City of Denver raised a $50,000 cash award from private donors, and gathered amazing resources to bestow on one deserving company. As part of Denver Startup Week, Paul Washington, head of Denver’s Office of Economic Development, announced that AppIt Ventures is this year’s winner. Denver is devoted to accelerating economic development though their JumpStart initiative. Through a three pronged approach focusing on 1) business development, 2) investing and lending, and 3) workforce development, the city is devoting funds and effort into supporting small and large businesses with the things they need most. The city’s efforts will develop solutions for strategic partnerships, working capital, and well-trained employees which will drive businesses in Denver for years to come.

AppIt Ventures is a Denver company that designs and builds Apps to specification. They also have client services to help companies launch their new app as a product or business. This company is a smart choice for Denver to support. They have a great business model combining software development with client services. By mixing technology and consulting, AppIt should be able to weather any upsets in the technology sector by leaning on their consulting or vs versa. Further, because the company creates Apps and teaches their clients how to develop their business, AppIt Ventures is essentially a tech business creation machine. This company is one to watch.

Social/Environmental Impact Investing Does Not Have to Mean Low Returns

There is a common misconception that social and environmental (S/E Impact) companies can’t return the same type of investment potential that high tech companies can. In fact, this belief can create limiting behaviors on the part of social and environmental impact companies. When they feel that they are not bound by the same rules as the companies that they are competing with for investment dollars, then S/E Impact companies limit their potential.

The Rockies Venture Club once supported non-profits as a part of the Angel Capital Summit. As a non-profit ourselves, we saw the value in supporting non-profits and yet it somehow didn’t feel “right” in an investment event.  People are in a different mindset when they are pursuing philanthropy than they are when they are investing – even though one person may do both from time to time. Our goal is to create opportunities for investments that have philanthropic outcomes but also return venture-grade returns on investment. These returns allow serial philanthropists to create “evergreen funds” that are replenished by investment returns and which can then be re-invested to do even more good.

There is, in fact, a blurred line between pure philanthropy and some S/E Impact investments. But there is also a blurred line between impact investments and high growth investments. The differences should be based on the investor’s objectives. Impact investors are following a global trend towards enabling communities or producing long-term sustainable environmental products vs. dwelling in an endless cycle of donations that only results in continued poverty.

With a huge global demand for impact investment and a diminishing availability of aid, a revolution in how aid is delivered is needed. Impact Angel Investing is one key to filling that gap.

How we measure the outcomes of our investments is the key to understanding impact investing. Traditional investments looked at Return on Investment in terms of multiples of investment, IRR or other purely financial means.  We now have sophisticated Triple Bottom Line metrics that allow us to measure not only economic returns, but also social and environmental returns. Corporations are increasingly measuring their results using Triple Bottom Line approaches and it makes sense that this kind of thinking should also apply to Angel Investing.

Attend the Impact Angel Investing event December 11th and find out more how we all can benefit from impact investing and see four great impact entrepreneurs pitch their businesses – and you can decide for yourself.

Kindara: Pushing Fertility Awareness Forward

Article by Kevin Davis from REbound

Editor’s note: Kindara pitched at the RVC Summer Pitchfest in August. At the time of printing they’ve raise a significant amount of their round and intend to close the round in October.

Will Sacks and Kati Bicknell are huge supporters of the science behind the Symptothermal Method of fertility awareness. In fact, they’ve successfully used the method as contraception for the past 3.5 years. However, what started as one couple’s natural, data-based approach to avoiding pregnancy now helps millions of couples do just the opposite: make babies.

Will and Kati are a husband-wife team that founded Kindara, a smartphone tool designed to monitor and educate women about their own fertility. Kindara provides a user-friendly dashboard for inputting morning temperature and other fertility signs, all used to monitor where women are in their menstrual cycles so they can increase (or decrease) their chances of getting pregnant. The tool removes the hassle associated with daily monitoring thus enabling Sympothermal Method adoption and the science behind it.

Now, as a 35 year old, bootstrapping entrepreneur, I myself can get behind the benefit of natural contraception. I’m in no way ready for children. I can also see how Kindara would have been a huge benefit to friends who’ve spent thousands of dollars on fertility treatments. However, my true excitement for this product stems from its public health benefits. Kindara’s hidden beauty is the millions of data points aggregated into what Will and Kati hope will be the world’s largest consumer fertility database. That’s information worthy of the medical industry’s attention.

Anonymous data acquired by Kindara will help identify fertility trends based on age, ethnicity and geographical region. This resource could be pivotal for public health groups attempting to solve recurring fertility issues. For example, Kaiser Permanente has a group dedicated to identifying negative, demographic-based health trends and deriving preventative solutions to address them. To Kaiser, this data enables easier trend identification and quicker preventative action, steps that lead to overall medical cost reductions.

Now, according to Kindara, the fertility test kit market is a $500M/yr and the fertility treatment market is worth $4Bn/yr. These statistics clearly illustrate couples are willing to spend on fertility solutions. Adoption of a less invasive, less expensive alternative will be no exception. Kindara is a solution that A) helps couples avoid confusing, fertility kits that don’t tell a couple anything about their cycle and B) provides a natural option prior to expensive medical intervention.

The Kindara application is free, but advanced services will generate revenues. Users can pay for advice on various fertility products vetted by Kindara’s medical advisors or subscribe for personalized email support from the Kindara support team of fertility counsellors. As of October, Kindara has 15,000+ downloads and 5000+ returning users. The Kindara team is currently accepting seed investment during the month of October to expand and monetize their userbase. If you’re interested in investing or just itching to increase your fertility knowledge base, track down CEO Will Sacks at the Colorado Capital Conference. He’ll be happy to chat.

Contact: Will Sacks (CEO), will@kindara.com
Website: www.kindara.com
Funding Round: Seed

Green buildings material manufacturer to pitch at the Colorado Capital Conference

esBITS™, an encapsulated PCM solution for building materials

Article by Russell Muren, Rebound-tech

Editor’s note: PCM Innovations will be pitching to investors at the Colorado Capital Conference on Tuesday, October 9th at 2:30 in the Equus Room.

PCM Innovations develops esBITS™ the encapsulated PCM solution for energy efficient wall, ceiling, and molding building products. esBITS™ (energy storage bits) enable building product manufactures to enhance the thermal properties of their existing products without major changes to their manufacturing or installation processes. These esBITS™ enhanced products, once in buildings, can significantly reduce peak energy consumption by maintaining temperatures in the occupant’s comfort zone.

PCM building materials save energy by decreasing a buildings tendency to change temperature with the weather. The PCM in the buildings wallboard, ceiling, or floor is charged/absorbs energy when it gets too hot outside and gives off energy when it is too cold. It does this by melting and freezing at a carefully selected temperature. Picture enjoying a cold glass of ice water outside on a hot day; the air around the glass is hot, but the water stays very cold until all the ice is melted. The same thing happens with PCM enhanced building materials: as the temperature outside goes up, the inside temperature stays at a comfortable level until all the PCM has melted. During that time, the room stayed comfortable and the air conditioner could stay off.

PCM Innovations got its start in PCM building materials while working with a larger British PCM supplier. After their supplier was acquired, PCM Innovations emerged with no ties to any one encapsulated PCM or building material. Without these constraints, PCM Innovations was free to work on developing a wide array of building products with various configurations and temperatures. This is where esBITS™ demonstrate their value. As CEO Joe Parker puts it, “we can optimize it for a particular application in a particular market place”.

To this end, PCM Innovations has demonstrated a wide array of products including: wall boards, attic blankets, custom molding, direct foam board bonding, and direct integration into 3rd party building materials. These products can use any off-the-shelf encapsulated PCM or a mix of two or more to meet the demands of different climates and industries.

In spite of its product portfolio, pushing the envelope of integrated building PCM technology is not without challenges. PCM enhanced building materials are not well understood in the building material marketplace and they do not match well with the industry’s metrics. For example, esBITS™ enhanced products do not have an R-value comparable to typical foam or fiberglass insulation. This can frustrate building material manufactures that rely on these metrics when deciding what technology to incorporate in their products.

To overcome this challenge, PCM Innovations approach each customer with an educational attitude. The first step is making sure the customer understands, on a basic thermodynamic level, what the PCM is doing and how its different then normal insulation.  Only after the customer understands how esBITS™ work, can they help PCM Innovations determine the optimum product configuration that yields the best performance with minimal changes to the manufacturing or installation process.

esBITS™ offer a new way for building material manufactures to increase the thermal inertia and energy efficiency of their products. PCM Innovations has positioned itself as a supplier to the mainstream building materials manufactures with a versatile, safe, and effective product.

Highlights from August

Every month the Rockies Venture Club meets to learn about topics important to private equity investments and hear a few pitches. A few days after the pitch event, the RVC Investor Forums meet to syndicate on deals.

RVC Summer Pitchfest

We discussed the investor pitch from three perspectives: the investor, the entrepreneur, and the public speaking coach. Peter Adams (speaking left) reminded the room that investors are the horse, entrepreneurs are the wolves, and above all else, wolves, don’t spook your horse!

Vic Ahmed spoke about communicating to investors. Erin Lewis gave a heartfelt and powerful talk about seeking investment. Her point: the highs are as hard on you as the lows. Fundraising is hard work and often comes at a time when you need to budget your time as much as your capital. Eve Fisher prepped the room with a bravery-boosting pep-talk for the six entrepreneurs who pitched in the last hour of the meeting.

The pitching companies were Quantellia, Simplay Sports, Elbow Swing Golf, Rocky Mtn. Vacation Rentals, Kindara, and Rental Kharma. We expect great things from these companies and will update the community in time as they grow and develop.

Register for the next event – Incubators and Accelerators in the Rocky Mountain Region

Tuesday, September 11, 2012 5pm to 7:30pm
Wells Fargo Building, Hershner Room, 1st floor, 1700 Lincoln Street, Denver, CO

5:00-5:30 Networking Happy Hour
5:30-6:45 Roundtable discussion with local Accelerators and Incubators. Who will be there?
Confirmed list: CID4, CSTI, RMI2, Greenlight Labs, Montana Bioscience Alliance, Galvanize, HUB Boulder, Vail Leadership Institute, Clean Launch, Innovation Center of the Rockies, Innovation Pavillion, Fitzsimons Biobusiness Incubator, Cleantech Fellows Institute, Unreasonable Institute, and more to come…
6:45-7:30 Four great pitches: choozle, PrevoTV, Recruiting Sports Network, and Crystal Clear Rx.

For Entrepreneurs There is Power in Partnerships

Rockies Venture Club may be enjoying it’s 26th year of existence, but when you get down to it, we are a startup just like the companies we serve. We have a lot of the same limitations as a startup – too much work, not enough staff, so much to do, so little time and resources. The answer to all those trouble is to join forces with other folks. If you can’t beat ’em, join ’em! To that end, we have been partnering with lots of groups in the Front Range. Here are the highlights.

Until mid August, we were virtual, popping in and out of coffee shops between the DTC and Boulder with such frequency that I personally feared caffeine overdose on a few occasions. That has all changed with our new relationship with Thrive Lodo. This place has all the comfort of a home office without that nagging feeling that you should go do some laundry or wash the dishes. Seriously though, what I find amazing about this place is that they have created sound walls. Co-working spaces often conjure up the images of echo-y warehouse spaces where you overhear everyone else’s business while attempting to get on with your own. Not this place.

Charlie and Chad Johnson, brothers and the owners here, have used their vast knowledge of architectural design to create invisible and effective ways of preventing conversations from traveling very far. Other bonuses? We can take more meetings with entrepreneurs since we aren’t running all over town anymore. We are considering the idea of open office hours, but the best way to get free consulting out of RVC is still our Entrepreneur Mastermind meeting at RAFT every month.

We’ve been pretty busy plugging into the entrepreneur-focused groups in Colorado. Who else did we talk to recently? Innovation Pavillion, Rocky Mountain Innosphere, Vail Leadership institute. But you are going to have to wait and see what comes of those relationships. We’re still working out the details!

We can share our partnership with Colorado Bioscience Association. In November we will be focusing our Nov 13th event on lifescience companies in Colorado. This is an event collaboration between the CBSA and the RVC. There are some great life-science companies out there and it’s going to be hard to choose between them. If you know a lifescience company that is raising money, please encourage them to apply to pitch.

We are creating collaborations every week and we will outline them for you under the tag “partnerships” as they develop. I hope that all companies consider partnerships. These are relationships that are often non-monetary, but are hugely valuable for both parties. Gather partners for market research, testing your product, or distributing your product. The trick is to be upfront about the expectations for both groups and to create MOUs (memorandums of understanding) free of legal jargon. Just spell it out and then be a good partner. Give, give, give!

Are you financially sophisticated?

What do crowd-funding factoring, carbon fiber guitars, and designer seeds all have in common? No, this is not the start of a goofy joke – they are all companies who closed funding rounds this summer: P2Bi, Viktorian Guitars, and Evolutionary Genomics.

We’ve seen 12 companies secure angel funding so far this year and we’ve started to notice a pattern. Companies who are able to seal the deal with investors are generally more sophisticated than those who are still waiting. Is that a big shocker? Probably not, but how can your start-up get on the path to financial sophistication quickly? Here’s three points to consider:

 

  1. Plan a financial structure that is friendly to early investors – If you are raising a seed round of $500k now, and will still need to seek significant follow-on funding, your initial investors run the risk of getting diluted. Dilution renders their investment much less valuable than it was initially. Many RVC Investor Forum Angels have had this experience; it’s unpleasant and off-putting. Sometimes it’s enough to cause an Angel to hang up their investor shoes for a while. Do your best to keep your initial backers’ investments strong and let them know that dilution is just as much your concern as theirs.
  2. Term sheet – Have the term sheet structured ahead of time. Many investors might be interested enough to participate in your deal, but few are willing to put in the time to help you structure your deal. Make the job of your lead investor easy by having all of your legwork done ahead of time. What if you don’t have the first clue about a term sheet? Start with a tool like the WSGR Term Sheet Generator. Really do your homework and aim to understand the term sheet that pops out of the generator. Next steps, tweek, change, modify, and improve it!
  3. Valuation – Really think hard about this. There are many schools of thought about what gets factored into a valuation. David Fein from ValuSource will be discussing this topic at the Colorado Capital Conference. Do you have a product on the market? Revenues? A Patent? Or is your valuation based solely on the three years of backbreaking 90hr weeks you’ve put into the business. Here’s a good rule of thumb. If you can grow organically and will be able to continue momentum without outside investment, then go ahead and keep that valuation high. But if your venture requires outside investment to survive and grow, then lower that valuation and sweeten the deal. We’ve seen a few valuations drop from $4M+ to little over $1M. Sometimes, that’s what it takes to get the job done!

Two reasons why the 24th time is the charm

The 24th Annual Colorado Capital Conference. 24th Annual. That’s a lot of years holding the same conference in the same town for basically the same purpose. Rockies Venture Club has been supporting entrepreneurship in Colorado for a really long long time.

I’m 35. When the first annual Colorado Capital Conference was launched, I was 11. I was living in Maryland with my parents and all I knew about Denver was that it was where my dad went on a business trip once and brought me back a clear plastic box filled with polished stones. He also told me as he tucked me in under my frilly pink bed spread how I’d like to live in Denver someday. He was right. Anyway, the point is, it was a long time ago.

How many companies have been funded after pitching at a Colorado Capital Conference? One? Ten? Fifty? Frankly, I don’t know. I haven’t found any metrics about this conference in any of the dusty boxes in the storage unit that houses two decades of Rockies Venture Club history. To be honest, I haven’t looked very hard. I’m just trying to make the 24th Annual the best year for this conference.

This year we are doing things a little differently. We will choose great companies to pitch and we will coach them so that they are sure to put their best foot forward – all that is the same. We can promise two big changes that will hopefully get solid relationships forming between investors and entrepreneurs.

 

  1. Our Preview Gala on Monday Oct 8th. Companies will each occupy a cabaret table and investors will be able to mingle between them, match names to faces, and talk with founders over drinks and appetizers. Good for entrepreneurs- investors who are interested will pack into your pitches on Tuesday. Good for investors- no need to use the coin toss method of deciding whose pitch you will watch.
  2. Investor Forums on both Thursday 11th and Friday 12th. Investors only please! This is the meeting where investors discuss deals, create alliances, and syndicate on deals to cover rounds. Without the Investor Forum, nothing gets accomplished. We currently have 50 Angels in the RVC Investor Forum and have partnered with both High Altitude Investors in Colorado Springs and NoCo Angels group from the north end of the state. There’s even some talk about a new Women’s Investor Group and Vail Investor Group.

We hope you can join us for both the Gala and the Tuesday Conference!