Biz Girls 2013 Recap

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BizGirls CampEvery year Biz Girls gets better and better.  We’ve evolved from the first year’s amazement that the girls could actually complete the program and get their companies live within the tight time limits of the program to this year’s re-branding of the program from “Biz Girls Camp” to “Biz Girls CEO Development Program.”

While the Biz Girls CEO Development Program works on the same values and principles as the “camp”, we’ve raised the bar on what is expected of the girls – and interestingly – they have raised the bar on what is expected of us.  In response to this, we implemented three new parts of the program this year.  We couldn’t have done this without the volunteer effort of Louise Campbell-Blair, who joined us as Biz Girls’ CMO to get our marketing program in place, but who ended up doing much, much more.  The three new programs include a Mentorship program, advanced workshops and sponsorships to help with tuition, allowing us to achieve our diversity goals.

Mentorship Program:  Each girl is given the option to have a mentor who will work with them after the program has completed.  In the past we’ve had challenges with getting continuity and providing a way for the girls to continue their businesses on into the school year.  We’re hoping that by providing a mentor who can give advice, help set realistic goals and monitor progress, will improve the chances that these young companies will continue to grow and thrive well after the summer ends.

Advanced Sessions in Web Design, Pitch Development and SEO.  This year we brought in a number of experts who helped by offering afternoon programs on three of the program days with advanced sessions covering web design, pitch development and marketing the web sites.  The results were amazing.  The pitches this year were great and included full powerpoint presentations.  The web sites were much more sophisticated and filled out with graphics and logos, especially in Boulder where the girls decided in their strategic plan that developing logos was important to them.  And finally, the SEO worked better than anyone had expected with Rachel from casetaste.com getting her first order the day after the program ended!  Rachel ended up on a CBS TV program as a result of her success!

Finally, we added a program for donors to sponsor a Biz Girl.  This was a tremendous success as it allowed us to pursue our objectives for diversity and make sure that no girl was denied a spot in the program because of an inability to come up with the tuition.  Thanks so much to the generous individuals who supported these girls!

For those of you who haven’t been involved, here’s a summary of the companies that we formed this year:

Denver:

Casetaste.com
Denverdusting.com
Tealpoppies.com
Tenniscoachfinder.com
Upcyclethreads.com
Boulder:
Writerslam.com
Bocodesigns.com
hannimals.com
inspiralook.com
fandomcentral.com

Investing in Tech Companies – RVC Event

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title picPost by:  Adam Holcombe

On July 9, another strong showing from the members of Rockies Venture Club appeared at a monthly RVC event in downtown Denver. The discussion included a number of the startup community’s elite members to include: Erik Mitisek – CEO of Colorado Technology Association moderated the event which featured Chris Onan – of Galvanize, Andrei Taraschuk – of Boulder and Denver New Tech, and Jenny Slade – of National Center for Women & Information Technology (NCWIT).

Chris Onan opened up by defining Denver’s current grow engine as more arriving millennials than in any other US city. This growth in the city will ultimately lead to increased quality and quantity of ideas going forward. Chris also mentioned that a potential problem facing Denver is that there is a lack of strong tech bellwethers to build the community around. However, in his own words “money finds good ideas”. This challenge goes out to those looking to pave the way from idea creation to the launch of a new value-creating venture. Chris also highlighted a key point that leads entrepreneurs to success “you must give to get”. This important concept highlights the importance of patience as yet another virtue necessary for entrepreneurial success.

Andrei Taraschuk was next to speak about the business ideas that have been most prevalent in the local community as of late. Andrei has seen more hardware along with Smartphone related devices recently due to the increased usage. These “small screen” devices are rising in popularity across the globe, and “growth is expected to continue at a 10% compound annual growth rate through 2016”1.  Andrei also highlighted that it takes a long time to build a community for start-ups and explained the importance of fostering the relations between entrepreneurs and venture capitals. Andrei highlighted an interesting dynamic between himself and Chris Onan, as Andrei had pitched a business idea to Chris as a potential investor about six years ago and Chris didn’t invest at the time. Andrei’s key point was to focus one’s efforts on building a business and don’t worry about the cash. He, along with other members of the panel, went against the conventional wisdom of viewing the attraction of capital, as definite start-up success by describing, “Don’t celebrate dilution”.

Jenny Slade gave the closing comments. Her data driven comments were core to what drives her decisions to play a significant role at NCWIT. She forecasted significant growth in tech jobs in the next 10 years with only 18% of current computer science majors being female. This undoubtedly leads to her next point that “we are missing half of the good ideas”. Her true goal is to ensure the startup community leverages diversity and all that women bring to an organization. Many tend to agree as the change in business dynamics lend more favorably toward collaboration and multi-tasking, women are viewed as more equipped to keep pace than their male counterparts (For More). One key point Jenny made was that women tend to await an invitation versus interject themselves into a start-up. In her words, one clear way to keep women from applying to a job is by putting “ninja” in your job description as women are generally less inclined to desire to be viewed as a ninja versus men.

This successful RVC event is yet another example of how a bonded community can truly leverage its strength in strong, local organizations to enhance growth and value creation. The key concepts included give in order to get, build the business and don’t worry about money, and finally don’t miss out on half the good ideas by not inviting women into your organization. I truly appreciate the “lessons learned” from a group of true business leaders in the community, and I wanted to share the insight gained from the event. I look forward to being apart of more RVC events like this in the near-term.

 

About the Author – Adam Holcombe is a partner of Cohort Capital, a Venture Capital Firm in Denver featuring a group of young professionals out of DU and CU’s MBA programs coming together to find and fund great opportunities. Although we source our deal-flow from across the country we have a love for Denver and the regions budding entrepreneurial ecosystem. We believe the city is poised to become one of the country’s top regions for start-up activity.

 

1: http://www.fiercemobileit.com/story/global-smartphone-market-growth-estimates-vary-among-research-firms/2013-06-03

Generic Go To Market Strategy: Startup Killer

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taxi

A detailed, focused, and feasible go to market strategy is a critical distinguishing feature between the majority of startups that fail and the few that achieve great success.

As an example, imagine you are an angel investor listening to a pitch from a company developing an aftermarket add-on to improve automobile gas mileage. Its go-to-market strategy consists of identifying early adopters of efficient automobile technologies and targeting them at auto shows in environmentally conscious and heavily regulated states like California and Massachusetts. The company will sell products directly through its website while building relationships with aftermarket auto parts chains and independent retailers. The emphasis will be on young professionals, targeted through a massive web-based campaign to build awareness and drive adoption. Conversations with early customers will inform product improvements and enable the startup to refine its marketing pitch.

With a few minor changes, this generic and high level go-to-market strategy could apply to almost any technology in any market. As an angel investor, you’ve heard it many times before, and you’re skeptical: activities like “identifying and targeting early adopters”, “building awareness”, and “driving adoption” are easy to talk about but difficult to do well.

Now imagine you are an angel investor listening to another company that is at the same stage of development for an almost identical product. In this hypothetical example, the company tells you that it has identified automobile emissions reduction programs in three major US cities, with the largest in New York City (NYC).

NYC’s program offers attractive rebates for devices that reduce particulate emissions in cars. Although not the primary function of the startup’s device, the company was able to tweak its design slightly to take advantage of the little-known incentive. The company found a chain of aftermarket auto parts dealers in NYC that cater to environmentally conscious car owners, and it has engaged them in discussions about the product’s design and price point while exploring the potential for a distribution agreement. Additionally, a “green” NYC cab company is interested in advertising the product on the roofs of its cabs in exchange for discounts on the startups’ devices.

Based on the attractiveness of the market, the startup has decided to launch its product in NYC and quickly follow with launches in other major cities, starting with the other two that have automobile emissions reduction programs. It will use what it learns in NYC to refine its rollout in the other cities, which are already being planned to coincide with the ramping of the company’s manufacturing capabilities.

Which company would you have more confidence in as an investor? The second company is already doing all of the things the first company was only talking about: it has identified retail partners and early adopters, it has located the market where its offering has the lowest cost to consumers (thanks to the rebates), and it is focusing on a small geography where it can maximize the impact of every dollar spent on sales and marketing by taking advantage of network effects. It has a well-defined expansion plan linked to its manufacturing capabilities, so that it can grow at a fast but manageable pace. As a potential investor, even if you don’t agree with the plan, you know the company is thinking strategically and you have a starting point for suggesting changes.

Putting together a go-to-market strategy is easy, and every entrepreneur has one. Often it relies on the development of a product so great that it essentially sells itself: all the startup has to do is build it and let people know they can finally buy it. By the time entrepreneurs in this mode start thinking about the details of their go-to-market strategy, competitors may have already established themselves in the most attractive market segments and with the most valuable partners. This will make every future sale more difficult, because the startup is forced to pursue customers and partners less interested in its products. Additionally, if a pivot is necessary, entrepreneurs more focused on the technology than the market may not realize it until they have wasted major time and money. The final drawback of this approach is that savvy investors recognize its limitations, and that could make raising money difficult.

In an environment where the vast majority of startups fail, entrepreneurs with such a poorly defined go-to-market strategy are taking on a significant and unnecessary risk. How do you know when your strategy is detailed and focused enough? Ideally, you should be able to list the top 15-20 potential customers (for business to business startups) or the top 3-5 channel partners (for consumer focused startups) based on the features that distinguish your offering from the competition. You should be able to make a compelling argument about why these customers are more promising than those in other market segments, and you should be able to describe how you’re going to sell to them and how you will move beyond those initial customers to the broader market.

It takes time to figure out these details, so it is important to start early. It is much easier and faster to change an existing plan based on new information than to develop a plan from scratch at the last minute. With so many ways to fail, it would be a shame to let one so predictable kill your company.

Jay Holman is Principal of Venture to Market LLC, a Boulder based consultancy providing go to market services for new ventures in the cleantech industry.

1,000,000 New Reasons to Take Advantage of NREL’s Free Assistance for Cleantech Entrepreneurs

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Visualization Lab, ESIFSince 2010 the National Renewable Energy Laboratory (NREL) has offered up to 40 hours of free assistance to U.S. based small businesses with fewer than 500 employees through its NREL Commercialization Assistance Program (NCAP). The Program is designed to “help emerging companies overcome technical barriers to commercializing clean energy technology”, and it does so by providing limited free access to NREL’s facilities and the technical expertise of its scientists. With the imminent opening of NREL’s new Energy Systems Integration Facility (ESIF), the scope of capabilities available to participants in NCAP and NREL’s other industry partnership programs is about to take a giant leap forward.

At its most basic level, ESIF is a collection of 15 laboratories covering everything from power systems integration, to electrical and thermal storage, to smart power, to materials characterization, to manufacturing, and more. You really have to see ESIF in person to fully appreciate the scale of the facility, and during my recent tour I was struck by the huge amount of space available for equipment testing and systems analysis. The only facility in the U.S. equipped with megawatt-scale (1,000,000 watts) test capabilities, the space is designed for large scale equipment and big experiments. The labs are interconnected with two AC and DC ring buses that allow experiments to expand beyond the walls of a single laboratory, and the facility has a SCADA system in place to monitor and control it all. Petascale computing at the on-site high performance computing data center and powerful data visualization tools round out the facility’s capabilities. The image above shows NREL Senior Scientists Ross Larson and Travis Kemper examining a 3D molecular model of PTMA film for battery applications in ESIF’s Insight Collaboration Laboratory.

The best news is, these laboratories are not just for NREL’s scientists: NREL actively encourages partnerships with industry that provide access to the lab’s facilities and technical experts. If you are a cleantech entrepreneur and haven’t yet familiarized yourself with NREL’s capabilities and industry partnership programs, it’s time to do so. Colorado based startups would be particularly remiss if they didn’t explore NCAP, the free commercialization assistance program mentioned above. The idea is pretty simple: if you have a technical or market related challenge in an area where NREL has some expertise, and you have a project that requires 40 or less NREL labor-hours to complete, you may be able to get support for the project for free.

According to Niccolo Aieta with NREL’s Innovation and Entrepreneurship Center, about 40% of companies interested in an NCAP project actually undertake one. The other companies typically find that their challenges aren’t a great match for NREL’s capabilities, or they have an issue that is too large or complex to be resolved in 40 labor-hours. However, don’t rule out a project until you’ve spoken to Dr. Aieta about the details, even if you don’t see relevant capabilities on NREL’s website (which I’ve found a bit challenging to navigate). Also keep in mind that projects are limited by the amount of time NREL employees can spend working on them, not by equipment or lab time. So if you need to leave a piece of equipment in place to test for a few weeks, then want some quick help evaluating the results, you won’t be excluded automatically due to the long test time.
If NCAP doesn’t work for you, and you are able to pay for support, NREL also works with companies through technology services agreements (TSA) and cooperative research and development agreements (CRADA). These are flexible arrangements that are customized on a project by project basis, so the best approach is simply to contact NREL and start a discussion. One nice feature about these programs is that partners pay NREL’s costs with no markup, which helps keep out of pocket expenses in line.

Besides the obvious benefits of working with a local world-class laboratory, there are additional reasons to engage with NREL that may not be apparent at first glance. Venture investors are still skittish about cleantech, thanks to the industry’s capital intensive nature and the long, risky time to market for cleantech innovations (note the recent rebranding of the Cleantech Fellows Institute to the Energy Fellows Institute). Increased emphasis is being placed on the value that large, well-established energy equipment firms can bring as strategic investors in cleantech startups. Clearly, the more visibility a startup can get with these companies the better, and NREL’s laboratories are great places to rub elbows with their technical staffs. ESIF in particular, with its unique capabilities related to megawatt-scale equipment and grid-scale integration, will be a magnet for large energy equipment companies and should present great opportunities for small local companies to engage with them.

Yes, the cleantech industry is difficult, but that only increases the value of the deep technical and market expertise that entrepreneurs can find in Colorado. Investors and entrepreneurs alike should take notice as the state’s cleantech resources experience a major expansion when ESIF comes online.

Jay Holman is Principal of Venture to Market LLC, a Boulder based consultancy providing go to market services for new ventures in the cleantech industry.

A big problem launched a new company

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cancer center

Entrepreneurs John Slump and Jared Garfield have gotten it right. They founded their company for the right reasons and are holding fast to those principles. Many medical device companies have technologies that come out of the lab and go in search of a problem. Not these two. They identified a large clinical need and built their company to solve it. As the company evolved through a tough economy, changing investor environment, and development challenges, they maintained the focus of their efforts. Corvida Medical is dedicated to enabling the safer, more efficient, and user-friendly preparation, delivery, and disposal of hazardous pharmaceuticals. As John and Jared told me, “We are passionately committed to making cancer care safe for healthcare workers”.

Like many entrepreneurial stories, this one starts out with a personal ordeal and the persistence to do something about it. John’s sister who lives in Denver was diagnosed with melanoma, and he saw first- hand how dangerous the administering of chemotherapy drugs was to hospital staff. And like many entrepreneurs, John and Jared were not encouraged to create the company necessary to address this clinical need. They wrote their first business plan as students at the University of Iowa, receiving a B+ and “not viable”.  Undaunted, they pressed on with business plan competitions from around Iowa and then nationally. John told me, “The one thing you have to understand about us is that the best way to get us to do something is to tell us we can’t do it”. They researched the clinical need further, they talked to clinicians and hospital staff, they dug into the market opportunity, and they refined their business plan, which culminated in several awards totaling $100,000.

Here is where they realized they might have something. But it’s a huge step from there to start a company. Around that time, they held a focus group at a clinical pharmacology conference with the leading cancer treatment clinicians in attendance. The feedback was so positive and so unequivocal they took the plunge. They knew if they got the clinical need right, then the solution would follow. To get started, they secured funding from friends and family, the state of Iowa, and angel investors.  That is no small accomplishment for two students with no experience but what is really unique is that they submitted a grant to the National Cancer Institute (NCI, http://www.cancer.gov/) under the SBIR program (http://sbir.cancer.gov/funding/omnibus) only about a year after starting the company. NCI doesn’t care about what the business opportunity is, it cares about solving real clinical problems and sees small business as a way to develop innovative solutions to those problems.  They contracted an experienced grant writer, a pharmacologist to be their Principal Investigator, and built a scientific advisory board to assist them in preparing the application, but like most start-ups the majority of the work fell on them. “One of the most pivot events for us was being awarded the NCI grant. It validated the clinical need, and as the title of the grant indicates, it validated we had an innovative device to improve the safe administration of chemotherapy”. Two years later, Corvida Medical was awarded the Phase 2 grant.

With the Phase 1 grant and subsequent additional Series A funding, the two entrepreneurs built a team, further developed the device, and engaged many of the leading cancer centers in the US to test their device.  Since then they have brought onboard Kent Smith in 2012, a very experienced medical device executive as President & CEO, they have been granted 5 patents, and they are working on their FDA 510k submittal. But they continue to focus their efforts on getting the device optimized in the clinic. Asked what they are looking forward to in the near future, they said looking forward to the Phase 3 bridge award to complete their clinical studies.  Like I said, they got it right, and it looks like they continue to get it right.

You can learn more about Corvida Medical (www.corvidamedical.com) by contacting John Slump, at john.slump@corvidamedical.com, or Kent Smith at kent.smith@corvidamedical.com

 

ABOUT THE AUTHOR

Bob Luzzi is an experienced medical device R&D executive and entrepreneur. He currently is working on his own early stage venture, and consults for medical device companies in new product and intellectual property development.

Banking strategies for startups

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Article by Bryant Burciaga, Guest Blogger

Essential tips for budding entrepreneurs seeking funding

Despite banks inability to enter into a Series A round of venture funding, banks can offer the essential “make or break” capital needed during the Series B or C rounds for many early stage companies. The Banking Strategies for Startups event that the Rockies Venture Club hosted on June 11th featured an array of banking professionals’ give insight into how entrepreneurs should strategize when forming a relationship with a bank.

The panel format event featured Charlie Kelly of Silicon Valley BankKen Fugate of Square 1 Bank, Adam Glick of Vectra Bank, and John Engleking of The Guppy Tank.

The four panelists offered an interesting diversity in banking backgrounds. Both Silicon Valley Bank and Square 1 Bank are considered Venture Banks, while Vectra Bank is a more traditional commercial bank, and Guppy Tank isan alternative lender that provides equity investments and loans for select entrepreneurs.

Ultimately the goal of obtaining financing starts by finding what type of bank serves your startup best. As such, the questions were posed: How does your bank serve entrepreneurs? And how are venture banks different from commercial banks? “Square 1 Bank serves entrepreneurs better than traditional banks because our bank is focused solely on offering services to entrepreneurs and venture capitalist that may not qualify for lines of credit or SBA loans,” said Fugate, founder and Senior Vice-President of Square 1. “While investors can also help, one day they want to invest in cloud service technology, another day something completely different, we have the ability to raise money when angel investors and VC’s can’t,” he added.

Adam Glick, now Vice President of Vectra Bank Colorado, used to work for Silicon Valley Bank and made sure to counter by mentioning that despite venture banks having the ability to make loans for receivables and equipment, they still oftentimes command an interest rate on top of stock purchase warrants securing their risk. “We can offer SBA loans with a variety of packages that offer benefits like extended repayment terms on the loan covenant, plus a traditional interest rate and we sometimes will ask for personal guarantees,” Glick said, noting that it might serve entrepreneurs better to have this type of structure in their financing instead of yet another source digging into small companies ownership of shares.

Jon Engleking of Guppy Tank offered a third alternative. “We are not government regulated, we are private, we have higher interest rates, and our average loan size is $100,000,” he said, “But we offer ‘Shark Tank’-like program where you can obtain money when you don’t qualify for all other sources of capital, so you go to the other guys first then come to us,” he added. With this selected by application only program, Guppy Tank receives on average 55 deals a month, taking in 15-20.

Finally, the panel discussion led to dialogue on how to form a relationship with a banker. Adam Glick gave the advice of knowing several bankers—well in advance of asking for funding—to ensure that at least one will be willing to work closely with you when the time comes. “I want to learn the most I can about a person, to properly have a strong relationship,” he said.

As final words of advice, Charlie Kelly vocalized having cash and receivables on a good standing to ensure no problems arise and to keep things running smoothly, and as a tip to always keep in mind the ability to give out more shares to investors, “When investors want more shares it benefits the founder so that ownership percentage isn’t diluted.” Ken Fugate’s final words of wisdom where stating that Square 1, “Doesn’t want to be the largest equity holder,” and supplemented that by adding “ please ensure that you can at the very least pay interest payments.”

Ultimately the final verdict of the night was that entrepreneurs should closely examine their options and figure out what direction will be most beneficial for their company growth.

For those seeking more information on debt structures and convertible debt come meet Jennifer Rosenthal and Carlos Cruz-Abrams, Business Attorneys at KKO law at the RVC Academy: Convertible Debt event on Thursday, June 20th from 5-7pm.

5 Reasons Your Pitch Stinks (When Your Startup Doesn't)

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before and afterYour pitch is often the first impression your company will make with an investor. The company can be amazing and if your pitch is still rough, your company looks rough too.

When you are in front of VCs or angel investors you know it can make or break your fundraising efforts. Combining two of the most challenging things someone can take on (entrepreneurship and public speaking) your presentation can be anywhere between enlightening and embarrassing for both you and everyone in the audience. Here are some ways I see people screw up the pitch of otherwise good startups. This isn’t an exhaustive list, just the most exhausting things I see on a regular basis. 

I’m only talking about the pitch itself here; assuming that you have a company with a real product, a solid team, and traction in the market. You know what you’re asking for, your valuation is reasonable and defensible, and you don’t look like an idiot. Perhaps you even have over a million dollars in revenue and strategic partnerships in place – even those companies can mess it up. Whatever the case, you’ll probably have a short 5 -15 minutes on stage, and only a few slides (at most) to make a first impression.

Don’t blow it! Be mindful of what the audience is here for, and you have a much better shot at closing your round. 

Here are 5 ways to screw up your pitch: 

  1. Too narrow of a talk. Frame the problem you’re solving and why it’s important, and go from there. Hold off on the technical aspects – while they may be easy for you to talk about, it’s not so easy for someone who hasn’t heard of your startup to understand. Most of the time, scientific or detailed answers are best left to the Q&A, or (even better) one on one with the prospective investor after the pitch. Get out of you own head, and make sure you put your idea in context of the problem you’re solving and the ecosystem in which it operates.
  2. Forgetting what investors do. Keep in mind that they are investors, so they want to hear about the investment. Unfortunately, that sense in that isn’t as common as it should be. Know what investors want to accomplish, and learn from CEO’s who have raised and exited successfully before. Understand your valuation and think about the exit, because that’s how investors get paid, and many entrepreneurs forget that. Talking about the cool idea you have without any numbers to back it up might work with an unexperienced angel or a rich uncle, but it won’t work with people who know what they’re doing. 
  3. Acting like you’re in business class.  Avoid industry-specific jargon and MBA-speak. Your audience is smart, but it’s your job to make sure they can understand you. They may have already heard 20 pitches that day, with the same acronym in 3 different contexts, and once you lose their attention it’s very tough to get it back. Also, trying to appear impressive with something other than actual accomplishments may give the audience a signal that you’re not coachable, which is a big red flag. Investors also won’t care about your 50-page business plan like a marketing professor would – be concise (in large font) in your deck and save the business plan for due diligence.
  4. Not practicing enough. It’s okay to feel nervous about the pitch. It is not okay to ignore what makes you nervous. The single best thing you can do to reduce fear is by practicing what you’re going to say, many times over. Practice on your own, in the mirror, and in front of real people. I joined Toastmasters when my career led me to frequent public speaking, and it’s the best thing I could’ve done to improve my presentations. Public speaking wasn’t brand new to me (I had probably spoken to over 1,000 people in public at that point) but the difference I saw was dramatic. I’m still not an expert, but it was a steep and useful learning curve. Not all CEOs will have the time to join a public speaking group, but you at least need to dedicate ample time to practice.
  5. No feedback. Learn all that you can from your practice. Record yourself on video and watch it – it’s probably humbling. Feedback from other people is extremely valuable as well. Toastmasters does a great job of this (on the technical speaking points) and it’s one of the most best parts of the program. Rarely in life are we given honest, realistic feedback (even if it stings) so soak it up when you can. Ask knowledgeable people in the industry like angels or other CEOs to watch and critique both your business and the presentation. If you’re able to get a pitch coach to work with you through the process, be thankful and take advantage of it.

Overall, make an effort to be more aware of what your investors are looking for, and how you communicate most effectively on stage. If you’ve gotten to the point where everything else in your business is solid enough that the only thing holding it back is the pitch, consider yourself lucky. This isn’t an easy process, so learn as much as you can. Then go out, get more feedback and practice, and keep polishing!

 

Article by Tim Harvey, regular contributor for Rockies Venture Club blog. 

 

 

BioCare Thinks Infrared Light Heals People

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Jon Weston is convinced that his company’s product can help take away pain, help the body heal twice as fast in some cases, and even save lives. It is particularly interesting to see a former pharmaceutical executive get so excited about a non-drug, non-invasive therapy that helps people use less medication. After I saw him pitch, I had to find out more.

I was first introduced to BioCare’s product when Jon presented at the Angel Capital Summit in Denver earlier this year. He showed the LumiWave, a powerful and safe near-infrared light therapy used to relieve pain and promote healing in many tissues in our bodies. The device uses rectangular pods of LEDs a couple of inches wide to emit a frequency of light, which provides pain relief, increased blood flow, and even the growth of new blood vessels when applied to an injured area. This means that in addition to relieving chronic pain like arthritis, it can cut healing time by more than 50% in some injuries – and in other cases can re-start healing where the body has been stagnant in an injured state for years. The science is fascinating, but too involved to go into on this site – check out my explanation here. (coming soon)

I had heard of (and played with) infrared light therapy before, since my father, a MD in Michigan, had been using another device in his practice for the better part of the last year. He’s been finding profound and sometimes unexpected success, especially in curbing or curing a variety of chronic ailments for patients who weren’t responding effectively to traditional medicine. My mom tried it on her arthritic hands, and the pain all but disappeared after a few weeks of sessions. My dad calls pretty frequently to talk about the latest treatment or a cool new medical device, but it meant more to hear my mom talk about how a light therapy took away pain that has invaded her life for years.

While that device certainly helped people heal well, they have some limitations. They’re not as easy to use, and not cheap, either – the units he’s purchased have cost over $2,000 per light. BioCare’s product was entirely different from the other infrared treatment devices I’ve seen (and dramatically less expensive) so I had to take a closer look.

I gave Jon a call to hear about it in more detail, and we were able to grab coffee by DU, where he got his MBA, and I got my bachelor’s degree. He is a molecular biologist by training; a former pharmaceutical executive who spent years bringing products from R&D to market for companies like Searle (now Pfizer) and Gambro. While some of these medications went on to do very well, he’s convinced that infrared can be safer and more effective than traditional drugs for some problems. A number of years ago he met BioCare co-founder and Chairman Sherry Fox, who worked with her late husband (a biomedical engineer with 15 patents) to develop the initial technology for the LumiWave. Jon came on board as COO in 2005, and stepped into the CEO role in 2009.

It’s no secret that medical device companies need a longer runway than other startups due to the intensive R&D process. Techstars CEO David Cohen joked at a Silicon Flatirons event this week about a “17 year accelerator” if they were to have one in the biotech industry. Many investors aren’t comfortable with or don’t understand the R&D process, so thankfully BioCare has been able to bootstrap the company so far. Before opening it up to investors, they wanted to make sure the biggest risks were taken care of – the technology was sound, real units were selling and being used extensively, and strategic partnerships were in place. They’ve also had the chance to acquire patents, an over-the-counter FDA clearance, and they’re sailing toward the next approval level. Their patents and years of progress in these areas provide particularly high barriers to entry for even large medical device companies.

While IP is great, it doesn’t make money… well, until it actually makes money. That’s why it’s so valuable to have product sales and revenue while rounding out the R&D process. Aligning with lean startup practices, they signed high value, paying customers (who generated real market feedback) as early as they could. They’ve made some pivots, and their open-mindedness has allowed them to find some of the fastest growing sectors of their potential market.

It can be both a blessing and a curse to have a product that can be used so widely. Pinpointing not just the largest markets, but the ones most motivated to act on their literal pain points was of key importance. Perhaps the most common use of infrared light therapy is for the treatment of osteoarthritis or other types of chronic pain, like my mom had, so that was BioCare’s first major application. While the chronic pain segment may have the largest number of people and dollars in it, Jon saw early on that the only way to really make a difference there is with widespread adoption by the health insurance companies, not known for moving quickly and fairly preoccupied with legislative items at the moment.

While the insurance companies are still moving toward adopting infrared, he wasn’t going to wait for permission. The sports medicine and physical therapy industry was another reasonable market choice, and once they tried, he saw considerable traction here. This segment is especially motivated to pay for faster healing times, especially at the highest levels of competition, where there is also often significant pain with injuries. Thankfully for BioCare, the U.S. Olympic Training Center in Colorado Springs was only a short drive from Denver, and the Olympians took to it very quickly. The effects were so dramatic and positive that the Manager of Sports Medicine and Training for the US Olympic Centers offered to be on BioCare’s advisory board. She’s joined on the board with others who have volunteered after seeing the device in action – a few top orthopedic surgeons, three professors of medicine, and a trainer for the US Naval Academy, among others.

While sports medicine seems to have done very well for BioCare, they’ve kept an eye out for other substantial markets on the horizon. The most exciting and revolutionary development recently is the treatment of injuries that are less obvious and often more damaging – traumatic brain injury. As a neuroscience nerd, this was particularly riveting for me. More of the science here (coming soon)

For the treatment of traumatic brain injury (TBI) BioCare is partnering with Cerescan, an industry leading, Denver-based brain imaging company. I was able to tour Cerescan with CEO John Kelley, who told me they have tested literally a team’s worth of NFL players for the diagnosis of TBI, some after suicide attempts. There is another group terribly affected by TBI – our nation’s military. BioCare and Cerescan joined with the Tug McGraw Foundation for the Invisible Brain Injury Project to study just that. This project will continue remarkable pilot testing they’ve done with veterans so far.

The military experience often adds a dangerous element to a volatile situation in the brain – the high prevalence of PTSD upon returning from service. The number of deaths from combat is horrifying and significant – and the increasing number of veterans who take their own life is a sad, and unfortunately frequent tragedy. It is made worse by being poorly understood, with few effective treatments and no real cures available – so far. In the initial round of testing, they’ve seen remarkable success with every patient they’ve tried it on. One particularly moving story involved a vet with TBI, PTSD, and a few recent suicide attempts. After a brain scan confirmed his neurological issues, and then a number of weeks in treatment, he was off all of his psychiatric medications. He had a follow-up scan, and then went back to work for the first time in a year and a half. Other participants have had similar stories, and while this treatment still needs to be validated in a study with a larger sample size, all signs are pointing in the right direction.

If these treatments continue to work so effectively, how much value will someone place on getting their life back? What will the family think as they watch a loved one go from nearly dead to “feeling like their old self again”?

I see a fair number of startup pitches. Most have at least pretty good ideas, and nearly every entrepreneur projects a hockey stick-shaped growth. A few have the chance for real traction, and it’s rare to find a company that claims such a big impact on the real quality of life for its customers. Biotech is hard to launch, but when it works, it can return big. It will certainly be interesting to follow BioCare as they attempt to change the world by healing the people in it.

 

 

Colorado Angels Have Unfair Advantage Investing in Cleantech

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Colorado has a lot to offer cleantech entrepreneurs, from targeted grants, to easy access to NREL’s technology commercialization resources, to cleantech focused entrepreneurial programs at top research universities, to name just a few. There is no more supportive place in the country to launch a cleantech company, which gives local angels a distinct advantage when investing in this growing, and complex, industry. Colorado knows about investing in cleantech.

The only way the community could do more to support cleantech would be to scour the country for experienced, successful entrepreneurs, bring them to Colorado and immerse them in the local cleantech ecosystem, then provide guidance from industry experts as they develop business ideas around one of the numerous innovations emerging from local government labs and universities. Enter the Cleantech Fellows Institute, a Colorado Cleantech Industry Association (CCIA) program established to do exactly that.

The Institute kicked off in 2012, with a class of 5 Fellows who had considerable entrepreneurial experience outside the cleantech industry. The Fellows knew how to start a business, but they didn’t know cleantech, so they spent 175 curriculum hours listening to 160 speakers, and took almost 30 cleantech related tours, to come up to speed. Each Fellow undertook a capstone project centered on a new cleantech business idea, and in the Institute’s inaugural year this exercise led to the creation of two seed-stage companies and one non-profit.

Under the direction of Executive Director Steve Berens, the Institute is now accepting applications for its second class of Fellows. This year the program is undergoing some changes based on lessons learned from the first class, including an expanded international component. The program will include a week during which delegates from around the world descend on Colorado to participate in the Institute’s activities and make connections between the cleantech communities in Colorado and their home countries.

Clearly, Colorado is putting a lot of effort into stacking the odds in favor of the Fellows and the cleantech companies they hope will emerge from the Institute. The VC community has taken notice, as evidenced by the 19 venture capital partners the program has brought on board to date. However, there is room for additional engagement from Colorado based angels, who have an advantage in their ability to participate throughout the process since the Institute is based in their own backyard. Interested angels can send an email to mailto:info@cleantechfellows.comto learn more and sign up for regular email updates.

Even with all of the support Fellows will receive through the Institute, cleantech remains one of the most challenging industries in which to start a new venture. The Cleantech Fellows Institute provides access to critical knowledge and a great support network, which will reduce risks in my opinion but it certainly doesn’t come close to eliminating them. The real determinant of the program’s ability to spawn successful cleantech startups is underway right now: the Fellows application process. The quality of the Fellows accepted into the program will have the greatest influence on how successful it is, and the ability of local angels to get to know the Fellows over the course of the program is an opportunity that should not be missed.

Jay Holman is Principal of Venture to Market LLC, a Boulder based consultancy providing go to market services for new ventures in the cleantech industry.

 

 

The End of the Rainbow: Bootstrapping a Business to Gold

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Fundraising for start-ups is a popular topic these days. There is a lot of glory in receiving big money from investors. After all, there must be promise in your company if Angels or VCs are willing to invest.

Have you ever tried to reach the pot of gold at the end of a rainbow? Literally. Like, have you ever seen a rainbow and tried to walk or drive to the end of it? It’s impossible. The end of the rainbow is elusive. And its location fluctuates and often disappears altogether. This is a fantastic metaphor for fundraising.

An entrepreneur is sometimes more likely to  grow a company by financing it themselves and working hard to build their business from the ground up. What’s more, the bootstrapping entrepreneur will gain better control over the future decisions–something that may disappear with big investors on board.

Sure, some start-ups do gain a bit of notoriety when they become venture-backed, but at what price? If someone is going to give you loads of money, they don’t do so without expecting a lot in return. Fundraising is “really like celebrating someone going into debt. Even equity investors expect a payback.” Does a business founder really want to owe everything to backers?  If you have a strong notion of how you want to build your company, it can pay to make your way independently.

So what exactly does bootstrapping a business involve? Bootstrapping in business means building a start-up by using internal cash flow (as opposed to money from family, friends, or investors) and little to no external help.  This method of growth is undeniably slower than big investments up front, but the time and effort can pay off. As “angel investor and wine entrepreneur Gary Vaynerchuk has said, ‘My dad taught me that when you borrow money it’s the worst day of your life.’” The bootstrapper can obtain financial independence and pursue the mission of her start-up unabated if she is willing to go the distance. Nobody will be knocking on her door looking for a return on investment except herself.

What are some ways bootstrappers can keep the company afloat in this entrepreneurial journey? After all, it’s not easy by any means, and there will be perils around many a corner. Startups can grow by reinvesting profits in their own growth if bootstrapping costs are low and return on investment is high. The entrepreneur can also continue working otherwise to fund the new venture. Or the business model might require customer financing – asking for payment up front before the service or product is delivered. And of course, there are an unlimited amount of other creative solutions for bootstrapping, ones to be determined most useful on a per-company basis.

What are some examples of successful bootstrapping? You might see somebody with experience in start-ups creating a new business. Nick Denton is a good example –after leaving his first company, First Tuesday, this guy worked out of an inexpensive storefront to build Gawker, a company now valued at $150 million.  On the other end, you have Sophia Amoruso who worked inconsequential odd jobs until she earned profitability and $30 million in annual sales with her clothing start-up, Nasty Gal. She bootstrapped her way to success in five years of sales on Ebay.

All of this bootstrapping talk isn’t meant so much as a deterrent to fundraising as it is used to suggest an alternative method for more securely and independently building your business instead. Nobody can deny the allure of that pot of gold at the end of the entrepreneurial rainbow. I mean, who would say she doesn’t want her idea or product to hit it big in all senses of that phrase? It’s just that very few ventures will actually end that way so easily and without consequence. If you want control, financially and structurally, of your company, it just might be better to spend the time buying a pot, finding gold bit by bit to fill it, and then painting the rainbow yourself.

 

Stacy Gregg is an educator, runner, reader, and mom to two energetic pre-schoolers. She joined the Rockies Venture Club at the end of 2012 to support the communications side of the organization.