Get Ready for the 25th annual Colorado Capital Conference!

On November 6th and 7th, the Rockies Venture Club will host the 25th annual Colorado Capital Conference in Denver and Golden, CO. 12 companies will be selected to pitch to investors, and the 2-day event will focus on recent Untitledsuccessful exits from other Colorado businesses.

2013 CCC speakers include Jim Lejeal, CFO of Rally Software that went public this April, and John Spiers, CEO of NexGen Storage, who sold to Fusion-io just a couple weeks later. Congressman (and Techstars founder) Jared Polis will also keynote the conference. A rare breed in politics, the Boulder native earned substantial entrepreneurial success, including multiple exits and an E&Y Entrepreneur of the Year Award, before running for office.

Applications to pitch are competitive, and open until October 15th. Conference attendees and investors can find early-bird discount registration until October 10th. The Colorado Capital Conference is one of the most important events of the year in Colorado both for investors, and companies looking to raise $100k to $2 million. In 2012, companies that pitched through Rockies Venture Club received over $22 million in financing, and this year’s CCC is sure to kick off the last big funding push of the year!

 

Denver Startup Week is over, what’s next?

By Michael Price,

Executive Director of Coalition for a Connected West

michaelprice@connectedwest.org

Innovation takes action. That’s a core takeaway from Denver Startup Week and the APEX Conference the prior week.  Both events were jam packed with amazing entrepreneurs who told inspiring stories of perseverance and anecdotes of how they made their ideas a reality.  Now people are wondering if the energy and excitement generated by DSW will have a lasting impact.  That may be the wrong question to ask.

DSW shouldn’t be looked at in isolation. The event is the culmination of years of hard work and is predicated on the fact that a startup culture already existed in Colorado.  Before DSW there were small meetups in coffee shops, at bars and larger ones like New Tech.  DSW’s existence and subsequent success is actually a sign that Colorado’s startup community is growing stronger.  If the community is going to continue to mature, it’s going to take constant action.

“Do it yourself first,” is a principle espoused by the book Rework by Jason Fried and David Heinemeier Hanson (creator of Ruby on Rails).  Colorado’s most successful startup entrepreneurs are people who embrace this perspective, and it’s a trait that has weaved itself into the local DNA.  Entrepreneurs see gaps in the market, create solutions and provide services that consumers are compelled to buy.  They don’t always need a lot of money or government support, they just do it.

Colorado’s spirit of innovation has grown despite threats to its existence. Using outdated models for managing markets, regulators can stifle innovation or, even worse, stop it in its tracks.  While there’s an interest in protecting consumers from bad actors, regulators can sometimes overreach and prevent great ideas from reaching their full potential.

That’s why it’s important that entrepreneurs be the leaders of the startup community, a philosophy of Brad Feld’s “Boulder Thesis.”

Entrepreneurs are the best vessels to carry the message that innovation can’t be contained and the winners and losers should be chosen by the market.  Those with the ability to take ideas from conception to consumer should be rewarded and allowed to compete.

At the Coalition for a Connected West, we strive to generate a dialogue between entrepreneurs and policymakers so that innovation in Colorado can continue to thrive.  We have a great advisory board of thought leaders, who also happen to be entrepreneurs, and are compelled to get involved.  They are the ones who can have the most impact because they live it every day.

If the startup community in Colorado is going to continue growing, it’ll take a commitment from entrepreneurs to be both leaders of their businesses and of their communities.  Have awareness about the policies that affect your community.  Learn more and work with organizations like CCW, Rockies Venture Club and Colorado Technology Association to make a difference.  Take our future in our own hands.

 

Book Review Contest

Venture Capital For Dummies

Review Contest!

 

Review this book on Amazon.com and get automatically entered into a drawing for a Full Year of Keystone Membership to the Rockies Venture Club.

 

Keystone members have access to everything that Rockies Venture Club does in a year for free!  Classes, conferences, pitch sessions, workshops, socials – all free!

 

Instructions:

  1. Go to the Venture Capital for Dummies page on Amazon
  2. Buy the book or get the Kindle version and read some
  3. Or read the copy you got at an RVC event
  4. Now tell the world what you think!
  5. Done!  You are automatically entered to win a year access to free RVC events!

 

 

Venture Capital for Health Care companies doubles in 2013.

Health care companies are receiving a lot of attention from VCs this year and the trend appears to be increasing.  In the first two quarters of 2013 there were 272 deals completed in health care compared with 163 for the totality of 2012.

These trends in VC investment are a good harbinger for angel investors in health care who often rely on VCs to take on the next Series A round of funding.  When VCs are funding lots of health care deals it reduces risk for angels and provides additional opportunities for growth.

A lot of the growth is in areas that will be presented in RVC’s upcoming “Investing in Health Care” event  (Monday, September 9th 5:00-7:30pm) will be in the hot industry sectors including wearable devices, patient engagement, patient-to-physician, provider to provider and other technologies.  RVC is also presenting non-IT based companies including a new approach to curing breast cancer and is currently in due diligence on a break-through cardiac product that reduces some heart surgeries by as much as 80%.

health care IT vc fundingAn interesting trend in this growth is that consumer focused investments are growing at an even faster rate with consumer-focused technologies representing 112 deals for a total of $416 million – about double from last year while practice-focused technologies represented  56 deals totaling $202 million for the quarter.

Health Information Management companies received the most VC funding at $212 million while mobile health came in at $158 million.

According to a report on Q2 Venture Capital activity in health care funding by Mercom Capital Group llc, Consumer-focused companies specializing in apps, wearable devices & sensors, remote monitoring, patient engagement, rating/shopping, and social health networks for physician-to-physician, physician-to-patient and patient-to-patient were all involved in multiple funding deals this quarter, whereas medical imaging, data analytics and EHR/EMR companies were among the practice-focused technologies that received most of the attention this quarter.”

To see some of Colorado’s most promising angel-stage companies present for investment and to hear about some of the leading trends in health care, be sure to put Rockies Venture Club’s “Investing in Health Care” event on your calendar.  Click here for more information and to register.Register for Investing In Tech Companies event

 

Angels Love Health Care

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.

Investing in Tech Companies – RVC Event

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

The Guppy Tank: A Way To Swim Around VC Funding

Guppy Tank LogoPicture this: Your company has a proven business model, consistent recurring revenue, and an obvious path to growth. You’re making money, but need a cash infusion to get to the next level. You aren’t poised to grow the 10-30X VC’s or angel investors might be looking for, and while you have money coming in you don’t have the balance sheet for a bank loan. What do you do?

Guppy Tank, coming to Galvanize in Denver on September 12th, might have an answer. Born from the idea of TV’s Shark Tank, Guppy Tank is a 1-day alternative lending/investing event to help companies that have revenue but need cash. I was able to talk with Founder and CEO Darrin Ginsberg on the phone, and then catch up with COO Jon Engleking after he was on the Venture Banking panel hosted by Rockies Venture Club that evening.

Alternative lending has a few advantages over more traditional methods of acquiring funds. While venture capital may be the sexy way to raise money, only around 1% of companies ever do, since most are outside of the growth potential VC’s are looking for. Even for the businesses in their target range, we’ve seen the Series A crunch, which can fall around the time that companies have proven their model but aren’t profitable yet. Angel investors as a group fund a wider range of businesses, but they’re looking for similar things as VCs. Bank loans mean the entrepreneur gets to keep their equity and upside potential, but they typically loan against either hard assets, or profitability with a strong balance sheet  – neither of which are common in a startup. While alternative lending may involve higher interest rates than a bank, it can fill a gap in the funding landscape for promising companies that are making money but couldn’t get loans otherwise.

The Guppy Tank team has seen success with this concept before. Their first company in the space, Super G Funding, provides debt financing for credit card processing companies (ISO’s), again lending against residual revenue streams. After getting that up and running, BizCash was next, operating on a similar model of revenue backed installment loans, and serving a wider variety of businesses than Super G Funding. 

Guppy Tank is a combination of the ideas from their other companies and the show Shark Tank. Although the events aren’t televised, they are similar in format, hosting 7-10 entrepreneurs to pitch throughout one day. Denver will actually be their first event open for the public to watch. There are a few differences from the show – Guppy Tank will make decisions as a group, so you won’t see them fighting against Mark Cuban for deals. Instead of having a set panel of investors, Guppy Tank invites local angels to participate in events for each city they host events. Although they’re primarily oriented toward lending $25,000-$500,000 per event, The Guppy Tank is also open to making minority equity investments. They’ve hosted events in both Newport Beach and Los Angeles, CA and now have plans to expand to the rest of the country.

“Denver has good vibes,” Jon said at the RVC event. Maybe that’s why they chose Denver as the first event outside of California, ahead of Chicago and New York. They have chosen Denver for investments in the past, as Darrin is an investor in INCOM Direct, SupportLocal, and Zen Planner. Since SupportLocal offices out of Galvanize, they had already had a good experience, and were excited to host the event there.

Applications are due no later than September 8th 2013, but space is limited so make sure to get applications in early. Since the event open to the public, (and just before Denver Startup Week) if you just want to watch, come by Galvanize on September 12th!

 

Article by Tim Harvey, Regular Contributor to the Rockies Venture Club Blog

 

 

Banking strategies for startups

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.

RVC Academy: Due Diligence

RVC Academy – Due Diligence 

Register for Angel Capital Summit 2013

by Thought Leader: Lauren Costantini, Ph.D. from CID4

When: June 25, 5-7pm

Where: Shift Workspaces, 383 Corona Street, Denver

Investors,

  • Ask the right questions to uncover the risks that could jeopardize your investment.
  • Learn to devote a short 10-20 hours of due diligence and discover what you need to make a smart decision.

Entrepreneurs,

  • Empower your deal by gathering your due diligence materials before investors even ask for them.
  • Close your deal faster by supporting your lead investor.

Taught by Lauren Costantini, Ph.D. from CID4. CID4 is a not-for-profit organization committed to Economic Development Through Innovation Advancement in the life sciences industries, by providing investment capital and management assistance. Lauren also serves on a number of Advisory and Executive Boards for early stage companies.

 

 

Colorado Angels Have Unfair Advantage Investing in Cleantech

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.