When we talk about Impact Investing, we’re talking about investments that make an impact on our communities. There are many ways that this can happen, but the two most common categories are social and environmental impact. My intuitive guess was that environmental impact investing would comprise the greatest portion of investment, but what The Global Impact Investing Network (GIIN) and, J.P. Morgan found in their study “Perspectives on Progress: Impact Investor Survey” January, 2013, was that environmental and social impact investing were almost equal, with slightly more investing going to social impacts.
It’s interesting to note that these two areas have typically NOT been addressed by business interests and therefore must be dealt with by governmental or philanthropic organizations. (In fact Rockies Venture Club gets a lot of applications for “Impact Companies” who “create jobs” or further economic development through their capitalistic activities. While it’s great that these companies do impact their communities, we’re looking for the companies that do something materially different than the normal day-to-day companies out there.
Environmental impact companies are often “clean tech” or “green tech” in their approach. They’re addressing environmental needs in many ways such as wind and solar, energy storage and delivery systems, biofuels, alternative energy sources such as generating energy from waste dumps. These companies are now becoming successful at both returning a profit to investors as well as reducing our carbon footprint, reducing energy costs, and furthering energy independence. That’s a big impact that our big oil and gas companies have not been able to effectively deliver in the past – primarily because there was so much money to be made in traditional energy delivery. Environmental impact companies are making a difference by making alternative energy sources economical, often without government subsidies.
Social impact investments are often more difficult to quantify the returns, yet they account for fully 50% of impact investments according to GIIN, J.P. Morgan. Social impact investments that can provide a return often take the form of jobs programs, education with immediate returns in productivity, water and sanitation systems that create jobs and health benefits for communities, healthcare delivery in remote areas and more. Rockies Venture Club has seen tremendous creativity and energy spent in addressing global community needs by companies that are innovating and finding lower costs of delivery and sustainable income that returns profits to investors while benefitting communities.
To learn more about Impact Investing and to hear speakers and pitches from Colorado Impact Companies, consider attending the RVC Impact Investing event Tuesday, December 10th 5:00-7:30PM at the Colorado State University Denver Center Event Atrium 475 17th Street, Suite 200 Denver, CO. Click Here to Register
I like to tell the story of the first time I filled out a questionnaire about Rockies Venture Club’s activities for the Angel Capital Association. When I got the the question about how many companies we present each year, the choices were something like 1-3, 4-7, 8-10, 11-15, 16-20, 21-25, 25+ pitches per year. With over 100 companies pitched in 2012 and 80 in 2013, we are off the charts!
I have a huge respect for the people I’ve met at the ACA, so I began to wonder whether we were doing something wrong. I started looking at how the different angel groups functioned and why we were different. Here is a summary of what I found:
1) RVC is unique in that it serves the whole community and not just investors. We have pitch events with 100+ people watching four pitches every month and conferences with hundreds of people watching 12 or 24 pitches. We reach out to the community through partner groups. If you just have a few dozen angels to depend on for your deal flow, then you won’t see a lot, but if you involve the whole community, then the deal-flow suddenly becomes significant.
2) RVC is also unique in its focus on education. By educating both the angel investors and the entrepreneurs, we make a smarter environment full of smart investors and savvy entrepreneurs. This means that there are more high quality deals available than if no quality educational resources were available. Without Pitch Academy we’ve noticed that most (but not all) of the pitches we see are pretty flat. They’re not only poor pitches, but the thinking behind them is often thin and poorly researched. RVC workshops help entrepreneurs to build a solid logic to their plans, backed up by good research and hard work. This alone is not enough to succeed, but it definitely raises the bar and puts higher quality deals in front of investors who now have the tools to really evaluate the deals that they’re looking at.
3) You could challenge our plan to pitch roughly one in ten applicants. “Why not just pick a few really good companies and go with them?” There are a few problems with this challenge. The first is that in many cases you don’t know which companies are good until you pitch them and get into due diligence. If you just goody-pick the companies with great executive summaries all you get is companies that are good at executive summary writing.
4) What about the 75% of RVC pitch companies who don’t get funded? I’m often surprised about what does and what doesn’t get funded. What I have seen is that something like two thirds of the companies that don’t get funded didn’t make it because they weren’t ready to pitch yet. They still had homework to do in order to back up their plan and to refine their message and build a sharp strategy. Some times these companies give up and other times they go back to the drawing board and come back six or twelve months later with a new CEO on board and the funding falls immediately into place. Giving these companies the opportunity to pitch provides them with the perspective that they need to grow and get funded – or better yet, it teaches them how to bootstrap so that they never have to be beholden to angel or VC investors!
5) Seeing lots of companies is the best way to build your 10,000 Malcolm Gladwell hours as an investor. Some angel groups pitch only one company per month. It would take one of those angels ten years to see as many deals as an RVC investor sees in a year. Which investor do you think is going to have the ability to spot the winners from the losers? Pattern recognition plays a big part in investing and the only way to build that is to see lots of deals.
6) Enterpreneurs benefit by seeing lots of pitches too. If entrepreneurs can see lots of great pitches, they get an idea for how high the bar has been set in our community. They see what investors like and don’t like and they get to see which companies get funded and go on to do great things. In many angel groups, the first pitch the entrepreneur sees is their own. This is a bad way to learn how not just to pitch your company, but to build a winning strategy and team.
After thinking about it, my conclusion is that, like so many things, the best solution is to reach a balance. It’s great to pitch a lot of companies for perspective, exposure and deal flow, but you also have to be prepared to limit the companies pitching to the ability of your entrepreneurial community to produce quality deal flow. Right now we’re seeing 80 quality deals a year, but if things slow down, 60 might be the right number, or if they heat up, then maybe 120!
To see a dozen great pitches – and I mean it – twelve highly investable companies – attend the 25th Rockies Venture Club Colorado Capital Conference. #2013CCC This even will have twelve great companies PLUS presentations from four Colorado companies that have gone big-time and had huge exits this year. Hear from their founders and CEOs to learn how they did it and what to watch out for as either an investor or entrepreneur.
November 6-7 in Denver and Golden. The 25th Colorado Capital Conference
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!
- Go to the Venture Capital for Dummies page on Amazon
- Buy the book or get the Kindle version and read some
- Or read the copy you got at an RVC event
- Now tell the world what you think!
- Done! You are automatically entered to win a year access to free RVC events!
If you came to the Colorado Capital Conference last October you may have seen Governor Hickenlooper’s keynote address. Hick’s good friend Steve Foster gave the introduction. At the time, Steve Foster was the CEO of the Colorado Technology Association. Steve Foster stepped down earlier this year to take over as head of GTRI. Now, after a short executive search, Erik Mitisek has been named the new head of CTA.
Mitisek has been associated with the startup world in Colorado for a long time for such a young man. Most recently, he’s been a driving force for grass-roots operations such as Startup Colorado, Denver Startup Week, and BuiltIn Denver.
This news of Mikisek as the head of CTA should put your mind at ease for a bunch of reasons. First of all, the CTA is the largest and most influential technology association in the state. Aside from networking and business-connecting activities, CTA works to guide public policies that affect technology businesses in Colorado. Since technology moves so quickly, it’s very hard for legislators to keep up with all the new opportunities on the horizon. Laws can hold back startups and larger businesses without meaning to. CTA opens the line of communication so that our state legislature paves the way for technology instead of standing in the way.
One of the biggest issues that faces Colorado is that of attracting companies to Colorado and retaining them once they grow. CTA supports the policies and initiatives that draw national attention to our state as a place where businesses thrive. By educating home-grown STEM talent in Colorado, we foster the ecosystem of growing technology companies. CTA is also highly supportive of initiatives that improve access to capital which is something we think about all day here at Rockies Venture Club.
Mitisek is a highly capable leader who genuinely cares about businesses in Colorado. He has an impressive resume including two stints as CEO (Next Great Place, and Claremont Information Systems) and was recently named one of Colorado’s 25 Most Influential Young Professionals by ColoradoBiz Magazine. Don’t even bother being impressed yet because this is only the beginning.
On Mitisek’s watch, CTA will become fundamentally integrated into the fabric of Denver. He will do exactly what he does best–connect grass-roots everyman needs with the administrative efforts of the state government and non-government community leaders. He will help focus the funding power of local foundations who state in their missions a desire to support economic development.
Most of all, Erik Mitisek will remind us that technology is not just for the proverbial software engineer. We all carry a powerful computer in our pockets everyday. We all need to understand how technology can help our businesses market products better. We all need digital security and data storage for our personal information, photos, address book, and recipes. We are all technologists. There’s no more denying it.
Write your well-wishes to Eric Mitisek (or the tasks you want him to handle first) in the comments and I’ll pass them on to him.
More coverage here:
- Great first interview by Greg Avery in Denver Business Journal
- Denver Post coverage by Andy Vuong
- InnovatioNews coverage by Steve Porter
Article by Nicole Gravagna, Director of Operations for the Rockies Venture Club.
In this edition:
Angel Capital Summit News
The Angel Capital Summit is scheduled for March 19 and 20th at the DU Campus in Sturm Hall. This is the same location as last year. Don’t take that to mean that we are repeating the same old conference! We’ve revisioned the ACS to include suggestions from last year’s suggestion box. All the seminars will occur on one stage. No more choosing between two awesome talks. Just relax and take it all in! Similarly, pitching companies will not compete for attention; they too will pitch on one stage.
Local Legends, David Cohen, founder of TechStars, and Jon Nordmark, CEO of eBags will both be giving Keynote addresses at the ACS. We have confirmation that many angel and venture capital investors will be in the audience. We have a growing list of VCs who will be attending so they can browse our local seed stage companies.
Pitch applications are in Executive Review through February and companies will be invited to pitch in early March. We have seen some hot new companies come through both the Gust and Business Catapult application databases. Companies will be matched with trained Pitch Coaches and the Finalists will be chosen during the week of March 11 after we’ve seen the pitches in person.
No Pitch Event in April
Since the Angel Capital Summit is late in March (corresponding with DU’s Spring Break), we will have a bye in April. Although we won’t have new pitches in April, the investor Forum will still meet in April. This allows the Investor Forum to fully digest the large number of companies that pitched at the Angel Capital Summit. A Bye in April is good for entrepreneurs and good for RVC staff. Whew! We will resume our normal pitch event schedule in May.
New RVC Staff Roster
We’ve been growing! RVC is an amazingly complex organization at the cutting edge of angel investing and private equity community development. We are so thankful to have found some amazing new staff members so we can accomplish our goals this year. As a new non-profit, we are thankful to have the deep experience of executive-level interim staff. We really are lucky to have such a great team! Here’s what our roster looks like right now…
Peter Adams, MBA – Executive Director
Known as the brave soul who took over the Rockies Venture Club in Dec of 2011, Peter is the visionary force shaping RVC today.
Kevin Andresen – Interim Staff
Most recently VP at Urban Lending Solutions, Kevin is experienced with the crazy world we call Private Equity and Venture Capital.
Patty Laushman, MA – Interim Staff
Past CEO of the Uptime group, she now calls herself a “cashed out entrepreneur”, Patty is intimate with the inner workings of start-up operations and knows the path from zero to exit.
Nicole Gravagna, MS, PhD – Director of Operations
Just like the human brain strengthens useful neural connections and removes extraneous ones, Nicole is constantly developing new Standard Operating Procedures to keep RVC running smoothly as it grows.
Stacy Gregg, MA – Communications Manager
With two advanced degrees in education, Stacy is well-suited to managing the constant stream of three-way communications at RVC.
Rebecca Wiedemer, MBA – Events Manager
Senior Financial Analyst at Standard and Poor’s by day and master of Event Management by night. Rebecca is responsible for the high quality of our monthly Pitch Event these days.
Mimi Zheng – Analyst Intern
Soon-to-be-graduate of Metro State University, Mimi is involved with Analysis at RVC this year. She’s taking a deeper look at operations, revenue, and communications to make RVC a sustainable non-profit for Colorado.
Writing Venture Capital for Dummies
We have a confession. We’ve been moonlighting. Peter and Nicole are writing Venture Capital for Dummies with John Wiley & Sons, Inc. publishing company. We were excited to take on the project when Wiley approached us in the fall since we already wanted to build extensive educational curriculum around fundraising. This book will walk founders through the process of fundraising in an easy-to-grasp “for dummies” format. VC’s for Dummies will be on shelves by September 1st of this year.
RVC Classes are a big hit!
Speaking of educational curriculum (see above), we have been thrilled with the quality of education and the amount of energy that arrises from each RVC Academy class. We’ve had a couple of stellar classes so far, A Good Investment Deal, Marketing and Branding, and Due Diligence. Our thought leaders bring specific expertise to the table, and the small setting allows for amazing discussion around the issues facing everyone in the room. We will try to do 2 or three of these classes every month.
- On March 4th we will have a class on Exit Strategies led by thought Leader Tom Caltrider (bio) who is the Managing Director of Corporate Development Capital, LLC.
We’ve had a request for a class on Anti-dilution Clauses in term sheets. These are the sticky clauses that can help early investors feel safe in their investment, but can ruin the deal for future investors if done poorly. Does anyone else want to learn about this topic? Send Nicole an email or mention your interest in the comments section at the bottom of the page.
CFO EVENT ON JOBS ACT – Tuesday, January 15th, 2013
Guest Post by Chris Baron for Rockies Venture Club
The Denver Chief Financial Officers Group met at IMA, Inc. offices in LODO Tuesday to hear a presentation by attorney John Eckstein on the status of the JOBS Act.
The Jumpstart Our Business Startups (JOBS) Act was Act signed into law April 5th, 2012 by President
Obama to provide cost-effective access to capital for companies of all sizes. Finalization of the Act’s
details has been anticipated by both companies wanting to work in the space as well as by those
wanting to raise capital.
The measure would provide a new form of financing to small companies. Through crowd-funding, or the
sale of small amounts of stock to many individuals, companies could solicit equity investments through
the Internet or elsewhere, raising up to $1 million annually without being required to register the shares
for public trading with the Securities and Exchange Commission.
Eckstein, of Fairfield and Woods, P.C., spoke to a filled room, and described the Act as, “the most
important deregulation in securities and finance since I became a lawyer.” “This proposal will allow
small businesses to go direct to general advertising and general solicitation, without any intermediary
whatsoever, and this is for businesses of any size, and it includes hedge funds and private capital.”
Typically crowd-funding attempts to raise capital for new projects and businesses by soliciting
contributions via three types of crowd-funding models: (1) Donations, Philanthropy and Sponsorship
where there is no expected financial return, (2) Lending and (3) Investment in exchange for equity, profit
or revenue sharing.
Eckstein provided a high level overview of the Act’s progress and status. The Act consists of 7 sections,
including Title II – Access to Capital for Job Creators; Title III – Crowd-Funding; Title IV – Small Company
and Capital Formation.
While elements of the Act have been solidifying, everyone is waiting to for the SEC to finalize the crowd-
funding section, expected sometime in 2014.
The main concerns in Congress and the SEC revolve around protecting investors. Eckstein joked that
Congress’s definition of the crowd-funding Act is “Capital Raising Online While Deterring Fraud and
Unethical behavior.” “That’s Crowdfunding from the view of the SEC and Congress but that’s not how
the people in Boulder and the people at companies like Kickstarter think of it,” he said.
About the Crowdfunding Industry
In what is already a multi-billion dollar industry, the equity part is poised for significant growth upon
completion of legislation due to very tight capital markets and the publicity of project success stories on
platforms such as CircleUp and Kickstarter.
CircleUp announced January 10th, 2013 that it had helped raise five food-related businesses raise over
$5 million. It combines the popularity surrounding small-production, high-quality products with the
momentum of crowd-funding. It’s an equity-based platform that enables accredited investors to make
direct investments in up-and-coming consumer products businesses.
Accredited versus non-accredited investors is something that those seeking capital need to be aware of,
as there are different requirements for different offerings.
On January 8th, 2013 Kickstarter, which focuses on creative projects from Games to Film and Music to
Fashion announced it’s Best of 2012, which highlighted $319 million raised for 18,000 projects and 2.2
Perhaps the most publicized project to date was the Pebble watch, which raised over $10 million and is
scheduled to ship early this year after some delays. And earlier today, the world’s thinnest watch, the
anti-Pebble, has raised over $500,000, or 250 percent of its funding goal and the founders aren’t sure
how much they will eventually raise beyond their $200,000 initial goal. The watch is due to ship this
It’s these kinds of numbers that have entrepreneurs excited by what will happen when the crowd-
funding provision of the JOBS Act is finalized. And as crowd-funding leaves narrow niches and becomes
available to businesses of various sizes and industries, it will provide a completely new space for
entrepreneurs and investors to meet.
Chris Baron is a guest reporter for Rockies Venture Club.
Date: Tuesday March 19th and Wednesday March 20th
Location: University of Denver, Sturm Hall, Room 346, 2000 E. Asbury Ave. Denver CO
(Updates added on Jan 28th, 2013)
Angel Capital Summit is a two day conference designed to bring together angel investors and vetted companies that are serious about raising private equity.
Apply to Pitch
Now accepting applications to pitch at the March, 2013 Angel Capital Summit. The ACS has more early stage companies and investors in one place than any other event in Colorado all year!
New Single-track Format
The single-track format brings both sides of the negotiating table together on important legal, financial, and social implications of private equity deals. Entrepreneurs and Investors are faced with different challenges surrounding the same topics. With all the players in the same room throughout the workshops and pitches, we hope that the discussion will powerful and that more connections will be made throughout the day.
Angel investing and raising money from angel investors both require a specific set of skills that are not common knowledge. Experts in each field lead in-depth workshops on topics such as understanding the termsheet, preparing and executing due diligence, vetting exit strategies, go-to-market strategy, and developing the board.
We have access to the best up-coming companies in Colorado and around the country. We will identify the companies that are serious about raising capital, connect with the ones that best suited for angel capital investment, and coach them to begin developing relationships with investors.
The holidays are a time of reconnecting with old friends and much-missed family. Inevitably, over the last month, my conversations have turned to work and how things are going in the new job I began this year. I’ve been with the Rockies Venture Club since the end of January 2012. We’re a small staff (only two until very recently) and the job has been hectic, scary, fun, amazing, and rewarding for all kinds of reasons.
My friends and family don’t really understand what I do for work. I tell them that I run a non-profit that connects entrepreneurs and investors. When I get to the part about helping companies pitch to investors, my friends faces light up with recognition. “Oh!”, they exclaim, “Like ‘Shark Tank‘ on TV!” I generally shrug and make comparisons and differences and wave off the idea that Rockies Venture Club is anything like the Emmy nominated reality show by Mark Burnett.
But then I reflect on the unique vantage point that we have here at RVC. From our small office in Thrive LoDo, we see incredible quantities of early-stage company dealflow. We know the (often secret) identities of the 200+ angel RVC Forum Investors in Colorado and elsewhere. We get to witness the leaps and bounds of improvements made between Friday afternoon at Pitch Academy and the following Tuesday at the Monthly Pitch Event. We are sometimes the first to find out that a company has closed a round, sometimes the last. And we know the truth when three companies in Denver simultaneously think they are the ONLY ones solving a given problem.
There are some similarities between Rockies Venture Club and ‘Shark Tank’. In the television show, the Sharks are angel investors. They are playing with their own money so they can make go, no-go decisions without discussing the deal with anyone. Most of the investors in our RVC Investor Forums are angels too. Their due diligence process can be expedited into a 15 hour study instead of a 15 week operation because they don’t have to answer to principals like Venture Capitalists do.
On the show, the Sharks have stacks of cash sitting next to them on their table. A viewer can get wrapped up in the drama of the stories, pitches, and negotiations and might forget to keep track of the amounts of money pledged by the Sharks to the entrepreneurs. I was amazed to read that it took 3 seasons of ‘Shark Tank’ before the Sharks’ investments totaled $15 million. They aired 38 episodes of the show in those three seasons. Our companies raised the same amount in a single year with only 12 “episodes” of RVC Pitch Events. At the rate we are helping companies raise money, we could have nearly $50 million raised after 38 pitch events!
Obviously, RVC is different than ‘Shark Tank’. We tend to look at early-stage companies, but the Sharks entertain embryonic companies with undeveloped teams and even inventors working alone. We don’t have a panel of investors at the pitch events who banter with each other and the entrepreneur; instead we let the whole community ask questions of the pitching company. Further, our negotiations go on behind closed doors. As for the dramatic focus, we prefer that the entrepreneur revel in the spotlight during the pitch instead of the investors stealing the show.
Shark Tank is in the middle of a very successful 4th season and RVC Investor Forum is wrapping up its very promising first year. We hope that RVC’s investors will continue to be active participants in the fun work that we do at RVC. It may not be exactly like Shark Tank, but really is a blast to get involved with all of the RVC companies. We get to meet amazing, driven, brilliant people who want only to achieve their company’s goals. It’s a pretty inspiring place to be. We’ve had a busy year, for sure, but there’s an upside to what we do. It’s downright entertaining.
Editorial by Nicole Gravagna, Director of Operations, Rockies Venture Club