Denver Startup Week was huge for the Denver entrepreneurial scene! It was vibrant with a ton of activities and wide participation from the Denver area. Also in Denver during the same week was the Rocky Mountain Life Science Investor and Partnering Conference, put on by the Colorado BioScience Association. For a bio nerd and startup junkie like myself, it was a very rewarding week. I enjoyed both events, I’m thankful to have been able to IMG_2471participate, and I’d go back next time they come around. CNBC even covered both here and here. My perspective is on the intersection of the events – or more accurately, the lack thereof.

I’m beginning to obsess over this idea. How do we connect the parallel universes of Colorado startup industries? Life Science/Biotech isn’t the only silo, but outside of tech it’s the only one I’m immersed in. Brad Feld talks about the issue in his book Startup Communities, and specifically highlights an unsuccessful interaction with a Boulder biotech group. I won’t say that any person or any group is to blame for the current split – only that we’re here now, and it needs to get better.

Denver Startup Week has been successful twice in two years, and grew significantly from 2012 to 2013. It was not quite, as their signs suggested, a “celebration of everything entrepreneurial in Denver” but it’s getting there, and I only expect the event to grow and become better. It is led by inclusive entrepreneurs, so there is significant community support.

IMG_2473The Colorado BioScience Association’s conference also stands on multiple years of success. Launched in 2009 as a biennial (every 2 years) conference, it brings startups from 5 states: Colorado, Utah, New Mexico, Arizona, and Montana. The 1-day event featured 30 big investors from Colorado, both coasts, and in between: VC’s, public company venture arms, and Angel investors. 30 startups also presented, pitching for everything from angel rounds to getting ready for an IPO. InnovatioNews has a great review of the day here.

Within their own communities, both events were huge. However, almost everyone I talked to at DSW about the biotech conference had no idea it was going on, and many at CBSA’s only found out DSW was going on from the signs on 16th St, since Basecamp was only 4 blocks away. It was close enough that I walked over from the Ritz during a networking break.

There are bright spots in the gap, however. Rockies Venture Club leadership, volunteers, and a few of their top Angels were all over both events. The fact that RVC was founded in 1985 and serves a variety of industries probably helps in that area. There are other people building connections and bridges between the parallel universes, and we need to encourage and cultivate that. This year DSW added a manufacturing track, and I have every reason to believe they’ll keep growing the events. Denver did have a broader focus than Boulder Startup Week, in comparison. BSW was also a great event this year, albeit primarily focused on software and internet. I attended and loved it, and I’ll proudly wear the BSW t-shirt with the 1’s and 0’s logo, even though I can’t write a single line of code.

The noble idea that brings entrepreneurs, creators, artists, and (good) investors together is the belief that we can always make things better by creating value. Startup communities grow organically and tend to be messy, and that breeds collaboration and innovation. I have no doubt this chasm will be bridged; entrepreneurs will lead the way, and the process will add value to anyone involved. The Boulder and Denver startup communities were once pretty segregated, and we’ve seen incredible progress there. Connecting the parallel universes within the Denver/Boulder area is a positive sum game and must be seen that way. It will not be an easy or quick process, but it is worth the effort.

Tim is a regular contributor to the Rockies Venture Club blog and a Master’s of Engineering Management student at CU-Boulder. He holds a bachelor’s in cognitive neuroscience from the University of Denver, and has worked for startups since he left his corporate life as a licensed investment advisor.

Twitter: @taharveyconsult

 

 

It is awkward to ask people for money. Whether an entrepreneur or fundraising for charity– most people are not used to asking for cash from other people. They’re obviously not the same, though – investing in an entrepreneur (hopefully) produces a financial return. If you’re talking to an angel or VC and you feel like you’re just asking for charity, you need to get your head right. Your frame of mind determines much of your life and other people’s response to it, so feeling confident while raising money is obviously important.

If you feel like you’re asking for charity from investors because you’re not sure about your business, stop. Save everyone’s time and money and change something before you ask for money.

If you feel awkward fundraising but believe in your business, you have some room to work with. When raising money, your mindset should be closer to “This money will allow me to better grow my company and my investors will benefit”, than “I need this money so I don’t go out of business.” Both statements may be true, but focus on the positive. I’m not saying your business should only be chasing money – I believe the goal should be to create value for your customers, and if this is done well profit will follow.

Whether you’re nervous or not, here are five questions you need to be comfortable with. Think of them as “elevator answers” where you can get the main point across in 15-30 seconds, with the ability to expand on them as necessary.

1) How much is your company worth?

Simple question, not-so-simple answer for a startup.

There are a number of different ways to value your company, and the Angel Capital Association has a great post on methods here. The important thing is to use a few, because they take into account different factors and can demonstrate your ability to think from multiple perspectives. Be able to explain why you used the methods you did, as well as underlying risks, assumptions, and caveats in your models. It’s not as important to come up with the “correct” valuation (not a multiple choice test here) as your approach in finding it. You don’t really define your company’s value anyway; value here is determined by what investors are willing to pay for equity. Also keep in mind that valuation is not necessarily the most important thing on the term sheet, and that a high one means more growth necessary to generate the same return.

On a very basic note, know the valuation inherent in your ask. If you ask for $1 million for 20% equity, you’re valuing your business at $5 million pre/$6 million post. If you’ve taken the “college business plan” route so far and came to your valuation by “here’s what I think I need and how much equity I feel like giving up” go back to the drawing board.

2) What are you going to do with the money?

Be specific, and ready to explain each aspect of your plan. Whether it’s to fulfill a huge backlog of orders of widgets you’ve already been selling at a high margin (great!) or you need to hire programmers or a sales team, know the specific reasons and why they’re important.

3) Can you make this work with less?

Genentech is a great example – in 1976 they originally wanted about $3 million from Kleiner Perkins, and were persuaded to prove the concept first. A $250,000 investment helped accomplish this, with much less upfront risk for the entrepreneur and investors. Genentech had a $300 million IPO in 1980, and was fully acquired by Roche in 2009 for $46.8 billion.

Know all the finances. You should already have your current and projected numbers down pat, including revenue, EBITDA, margins, etc., as well as your hopes for an exit. Also, know as much as you can about your industry’s numbers and how other valuations were determined, such as with a financial multiplier or number of users. While many entrepreneurs like to think they’re the only startup in their space, even risk-prone investors like angels or VC’s get wary of moving into virgin territory. It’s useful to have industry comparisons, but be able to distinguish yourself and why you are more likely to succeed.

4) What does it cost to acquire a customer?

This is an important and often-overlooked metric but is increasing in popularity. What does it take to produce your product and get customers to pay you for it? Once you have a customer, do they stick around? Sticky customers lead to scalability.

5) What will this investment cost me?

Last, but perhaps the most important question: ask yourself – what will this investment cost me? For the investor, this is a straightforward answer: usually a check, or a check and time on a board. (On top of due diligence – your potential investors have to pay for that, too)

For the entrepreneur, it is not so easy to answer. Raising money is not making money, and it means you have more to build to generate the same return on value. As a startup ecosystem we have a tendency to celebrate dilution, but more funding is not always better. If you get a high valuation early and need more money before the company’s value has grown, you’ll be facing a painful “down round”, where the share price is lower on a subsequent round. Last quarter, (Q2 2013) 22% of the VC deals in Silicon were down rounds, while 14% were flat rounds – the un-sexy side of high valuations.

 

In the wisdom of Notorious B.I.G. – “Mo’ money, mo’ problems.”

Having excess cash in your pocket can lead to an unnecessary burn rate and not validating customer traction. Even successful entrepreneurs can fall into the over-funding trap, especially after exiting their first company with a windfall. If fundraising, diluting founder’s equity to the point where it impacts your motivation is dangerous as well.

Raise money only if you need to. If you do, start the process 6-12 months before you actually need it, and make sure you’re on top of your game.

 

Tim Harvey is a Master’s of Engineering Management student at CU-Boulder and a regular contributor to the Rockies Venture Club. He has started a few businesses (nothing big yet) and most recently worked as a Fortune 500 marketing consultant with a neuroscience-based startup. Prior to that he was an investment advisor for individuals and corporations, holding FINRA Series 7 and 66 licenses.

0326_health-care-investing_400x400Angel investors put their money into all kinds of early stage companies with the goal of helping entrepreneurs and getting great financial returns.  There are misconceptions out there that angels shy away from health care investments, but nothing could be farther from the truth.

Health care investments can carry the traditional market and execution risks that any company has, but they can also have extraordinary regulatory risk if FDA approval for a product is required.  The FDA process can take years and millions of dollars to complete.

Most health care investments that Rockies Venture Club Angels look at don’t have FDA risk, or if they do, the process is minimal and takes only two years or less from the date of the investment. All FDA approvals are not the same and as a group we’re learning about the kind of FDA processes that we can accept as a part of an angel risk profile and those that are better left to large Venture Capital funds who have both the money to get through the process and the time to wait it out.

Angels typically like investments that can exit within five years or less.  There are a lot of Health Care companies that fit this profile.  One trend we’ve seen is that companies can exit earlier now since they are no longer required to build a sales channel as part of their proof of concept.  Once they can show that their innovation works and that people will buy it or that FDA Phase 1 trials are successful, they are ready for exit.

Smart founders will have a target list of acquisition targets identified before they even raise their first angel round.  By the time their concept is validated, they should already have relationships established with the major acquirers in their industry and be ready to negotiate a deal.

To see four examples of companies that can have profitable exits with 10x investor return in five or fewer years, check out the pitch presenters at this year’s “Investing in Health Care” event put on by Rockies Venture Club.

  • RXAssurance, Bob Goodman, provides a platform for patients and providers to keep each other informed about whether medications are being taken and that they are effectively treating the patient.
  • Six One Solutions, Ginny Orndorf, an innovative targeted method for blocking breast cancer.
  • LeoTech, Steve Adams, a wearable system to detect and report hydration in patients, athletes or others for whom hydration is important (ie. Everyone)
  • ExchangeMeds, Anand Shukla, rovides better ways for pharmacies to manage their inventories by sharing with others across a network.

To learn more about these companies and trends in investing in health care, you may want to consider attending the RVC “Investing in Health Care” event, Monday September 9 5:00-7:30 in Golden.  For more information, or to register for the event, please Click Here.

 

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

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

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.

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.

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.

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.

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.