Practicing your pitch is one of the most important parts of presenting to a group of investors.  While some people can do a pitch with relatively little practice, no one can just wing it.  So how do you know when you’re ready to pitch and you’ve practiced enough?   Here are a few quick tips:

1)       Practice at least ten times before you pitch in front of someone else.  You should get to the point where you’re not having to think about what you’re saying – you have key phrases that you use every time.

2)      Time your pitches.  If you have more than ten seconds of variation between the pitches,  that means you’re making up new stuff each time.  Practice enough times that you can hit the same amount of time within ten seconds each time you present.

3)      Memorize your slide order.  If you have fifteen slides, you should be able to recite the titles of each of the slides in order.  This way when you’re on your “problem” slide, you’ll know that the next slide is your “solution” slide and you can transition smoothly and powerfully from one thought to the next.  Have someone quiz you for the complete order and starting at random slides so that you always know what is coming next.

4)      Be smooth even if you have distractions.  Use the TechStars method and have people throw wadded up balls of paper at you while you’re pitching.  Have someone unplug the projector and then practice dealing with that smoothly and without dropping a beat in your presentation.  Things often go wrong in a pitch, so be ready to roll with the punches.

If you do these things, your pitches will be more professional and confident and you will be better prepared to communicate your ideas most effectively to investors.

At the Esprit Entrepreneur Conference in Boulder this week a question was asked about how we can make Colorado more than a flyover state and attract more out of state investment.

Given that Boulder and Denver are in the top three cities for startups on a per-capital basis, it’s clear that we don’t have a problem with developing an entrepreneurial community  and the great high quality deal flow that comes from that.  I’m continually impressed with the ability of the Front Range ecosystem to turn out high quality companies.

But, if we want to attract more out of state investors, we need to have more Colorado exits that we can celebrate and make public.  This year has been a great year for Colorado exits with the IPOs from Noodles & Company and Rally Software.  Both companies have more than doubled since their IPOs and are doing great.  We’ve also had a number of great $100 million plus acquisitions including LineRate and NexGen Storage.

Colorado needs to get the word out more about these great exits.  We’re well known for startups, but investors know that without exits, there is no way to get their money back.  In short, exits are what investors care about.  When investors see that our community is sophisticated and is thinking about how to best position ourselves for exit, even if it is an acquisition by an out-of-state firm,  that there is a greater chance of attracting those coastal dollars to Colorado.

Rockies Venture Club is celebrating Colorado Exits with its 25th Colorado Capital Conference November 6th and 7th, 2013.  www.coloradocapitalconference.org  We will be hosting twelve great startups whose pitches will ALL include a description of their exit strategy so that investors know how they will get their investment back.  The theme of the conference is Steven Covey’s Second Habit of Highly Successful People – “Begin with the End in Mind.”

We will also have speakers from the top companies who have had exits this year who will tell us how they positioned themselves, how they decided on IPO vs. acquisition, and when they actively started the exit process.  The fact that the founders are still with the companies shows that an “exit” is really a liquidity event where money is returned to investors, not an actual exit where the founders leave a company.  This year’s CCC is a must-attend event for investors and entrepreneurs alike.

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!

 

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.

 

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

 

 

Crowdfunding has been a growing force in the financial industry, disrupting sectors each time it reaches a new one. p2biMicroloan platforms like Kiva and peer-to-peer lending such as Prosper have proven to be a quickly growing alternative in debt, and have increased access and choice for those looking for financing. Companies such as Indiegogo and Kickstarter have given rise to donation and pre-sale based funding for a wide range of people and businesses, and with the implementation of the JOBS act, equity can be sold over similar platforms as well. New technologies that connect people in meaningful ways have a way of changing the world, and P2Bi plans to be a part of that.

 

One area of financing that has not been disrupted by crowdfunding (yet) is the business receivables market. The idea of a business selling its invoices (accounts receivable) to a 3rd party to raise cash isn’t a new idea, and was even established in the Code of Hammurabi nearly 4,000 years ago. However, this $136 billion industry (in the US alone) has been quiet with relatively little innovation. Transparency has been an issue in the factoring industry in the past, and since it usually involves business-to-business transactions, it isn’t found in a public light very often.

P2Bi (Peer-to-Business Investor) is working to change this. As the first crowdfunded business receivables market, they have opened up a new and transparent path to finance growing companies, and have been connecting investors with small businesses since early 2012. This is an increasingly important gap to fill – according to a Pepperdine report, nearly 2/3 of small businesses in the US were recently unable to secure bank loans, where many had the ability and desire to repay loans but not the credit for a traditional bank to provide funding to them. With P2Bi, business owners are able to find competitively priced loans, and accredited investors can buy into portfolios of asset-backed business receivables, which are likely to generate a higher interest rate than cash instruments that are currently returning closer to 0 than even 1%. P2Bi works with a wide variety of small businesses, with the exception of transportation and construction.

P2Bi recently raised a Series A investment round, including investors from the Rockies Venture Club and John Spiers (who recently exited NexGen), among others. This follows their August 2012 seed round, and will be used to help the business scale. Among other activities, they will be hiring for multiple positions (LINK) and relocating from Louisville, CO to Denver. “We’re really excited about moving to Denver. It makes the most sense with the density of businesses and the finance industry in Denver,” said Krista Morgan, co-founder and CMO. P2Bi will also benefit from local investors and connections in the community. “Peter Adams (of RVC) was really instrumental in getting investors there and convincing them to come on board, Krista said.

Congratulations to P2Bi on closing their Series A, and best wishes helping small businesses grow while creating value in Colorado!

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.

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.

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

 

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.

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