Pitching the OC – An Evening of Entrepreneurial Spirit in Irvine
May 29, 2009 Leave a comment
A sketchy economy has one very positive benefit – it drives creativity and innovation. Thursday evening (28 May 2009) the Tech Cost Venture Network/TCVN met in Irvine, once again opening the stage to a new crop of entrepreneur candidates, and provided a great seminar on the topic of “Raising Money – Friends, Family, and other Early Capital Sources.”
In the fast pitch segment, 10 companies were given 30 seconds to impress a panel of 3 venture capital professionals from the Tech Coast Angels . The “fast pitch” guidelines are pretty simple, you have 30 seconds to present:
- Name, title, and company name
- Market pain or need you will satisfy
- Your solution
- Size of your market
- How you plan to make money
- Why you believe you and your team can execute
- What you are seeking (funding, staffing support, or introductions)
Last night the audience was introduced to several great ideas, including new ideas for coffee making, solar power, online shopping for executives, mobile and PDA phone applications, and a new vegan restaurant. The VC panel selected three finalists, and drilled further into their business plan, asking for clarification on pitch elements, as well as further exploring their business plan and ideas. The winner, the vegan restauranteur, won $100 and some one on one time with the VCs.
The fast pitch process may seem brutal, as it is always tough to pitch an idea in front of a large audience of people you don’t know. However it is a good indication of how your product or pitch will be received when bringing your product to market, or going for formal funding.
Nothing tests your product or idea better than public opinion, and the TCVN community is a low threat, friendly forum. Most of the audience are either entrepreneurs, or soon to be entrepreneurs, and are inclined to be more nurturing to their peers, rather than simply mocking an idea or presentation that did not meet their vision or expectation. The TCVN has a “mission of education,” measured by their ability to help bring entrepreneurs together with investors and create successful companies.
The second half of the night brought a distinguished panel of successful entrepreneurs together, discussing the topic of finding funding from friends and family. Thursday night brought
- Brent Collins CEO, AccioNet, LLC
- Jeff Greenberg CEO, Tech Coast Works
- Tim Case, Business Banking Specialist, Wells Fargo
- Mike Fontana, CEO, OnePitch, Inc.
together to discuss sources of early stage funding to kick a new company or idea off the ground.
Some sound bites from last night’s panel discussion include:
Key aspects in preparing for friends and family funding
- You must have a process that learns. Each time you talk with a friend, family member, mentor, or advisor, ensure you take good notes and incoroporate those ideas into your pitch and plan.
- Refine your Unique Selling Point/USP
- Even engineers must have a good grip on the business model of their idea. Nobody wants to fund a great idea that cannot be sold.
- Startups should avoid opulence in building out offices – direct your limited capital on business development.
- Have a great story or pitch on how your idea or product will make money and ensure funding will not be wasted.
How do banks look at investments and funding?
- The bank does not really care about your idea or product.
- The bank is concerned with recovering their loan or investment as quickly as possible.
- Small Business Administration loans are slightly different, requiring additional visibility into intellectual property and product valuation.
Who to approach for funding
- Find a source who understands your business
- Find a source with whom you can maintain a working dialog
Key elements of an investment – from the investor’s viewpoint
- Does your product or idea include a recurring revenue model?
- Is this a nice to have product, or a must have product?
- Can you scale up with a minimal additional investment?
- Is there an exit to the investment?
Building the management team
- Look for diversity
- Reject “yes” people
- Select the best quality people
- Ensure you have strong legal representation from the beginning
Important items to understand during the funding process
- You must have a real need for the money – this is not cash for the bank account, but rather funding to meet business plan objectives
- “No” answers can bring you a lot of good information on business plan or presentation shortfalls
- You must be able to simplify the technical aspects of your plan – not everybody is an expert in your field
- If your plan gets hung up in technical details, you will lose your chance for funding
- Keep your business plan in binary format – you will need to adapt, modify, and change
- Everybody will want to know what is in it for them – everybody is selfish with their money
A final bit of advice from the panel. The more people you know, the easier it is to get funding. Professional networking is an essential part of every new venture. Don’t let your idea die because you cannot find people to pitch or go to for advice.
The TCVN is a great example of how the southern California business community comes together to help fellow business people bring innovation and energy to the investment community. A great group, where even the most seasoned business person will find a useful professional networking and learning experience.
John Savageau, Long Beach