jbrasunas

This is a difficult subject and an easy one to understand at the same time.  Just like so many of the challenges that confront an entrepreneur: conundrums and enigmas are everywhere.   Take the issue of how you should spend your time today: refining your marketing strategy or trying to hire a new programmer?   Which should you do?  There's only enough time to do one or the other.  So what's the answer in most such cases?  The answer is "Yes."   You must do both of them even though you aren't able to.  And the consequences could very well spell the difference between raging success for your venture on the one hand, and figuring out what went wrong as you shut things down and start looking for a job on the other.  Welcome to our world!

Well, now that I've cheered you up with that opening paragraph, let's take a look at some of the things involved in raising money for your venture, and also how ITEN can help you be successful at doing that.

First, let's look at the "easy part to understand," and that's looking at it from the point of view of the investor........although let me assure you, being an investor is no easy matter unless you don't care if you make money or not.  There aren't a whole lot of those kind around, so suffice it to say that investors are a challenged bunch these days and for good reason: many of them have lost a lot of their wealth over the last couple of years.  But for you, the entrepreneur, it's easy to figure out how to get investors to write you a check: give the them a compelling deal in a space they know something about, with a management team that convinces them they can execute, with a reasonable (read: very low) valuation, a large market potential, a growing number of happily paying customers, and an exit strategy that looks like a slam-dunk.  Deliver all of that and your chances of getting their money isn't too bad.  The more investors you find like that, the better your chances of getting a deal done.   If you simply assume that investors are looking for a fail-safe way to make a lot of money, then you'll understand how they're likely to view your opportunity: the closer your deal comes to being perceived as risk-free, the better your chances; the more risk they think will be involved, the harder it's going to be to close them.  

I know, I know, you say if they want a fail-safe investment they should bury their money in their backyard or put it in the bank.   Point well-taken....except for the fact that everything is relative, and in the uncertain world of early-stage funding, investors are still looking to reduce their risk.  They're looking for a high return so they know they will be taking chances, but your deal is going to be evaluated and compared against all of the other deals that investor is looking at.  They're not going to invest in every deal; so the challenge is to be the one they really like.  

So now let's look at how ITEN helps companies navigate these waters and what are the underlying assumptions that have led us to create the C-Level, mentoring and Mock Angel programs, which are focused directly at many of these challenges.  In other words, how can you work within ITEN to create a deal for investors that is perceived to have lower risk?

Almost every entrepreneur believes their deal is a great opportunity for investors, and why not?  If they didn't believe that, they'd be doing something else.  There are many reasons, however, why your "great" deal might not be seen as such by an investor.   For example, there's a big difference between a product and a company.  Sometimes an entrepreneur has built or is building a wonderful widget, app, or what have you.  But an investor does not invest in a product or service; they invest in a COMPANY.  A company is a whole different animal than a product or service.  The company (read: management team) is what's going to ultimately deliver value and return to its shareholders/investors.  Question to ask yourself:  is the management team of your company one that will inspire confidence in an investor?   Confidence arises from a compelling perception that the company's management is going to deliver what the business plan says it's going to deliver.  Put together a well-rounded management team with proven experience in most of the key areas needed to develop a company that will effectively deliver your product or service to the market.   Sales, marketing, finance, technology, customer fulfillment, etc. are almost always among the key management capabilities that need to be in place for a company to generate some level of success.  Are you expecting investors to put their money behind a venture that has gaping holes in the leadership?  If so, do you at least have a very clear plan about how you will fill those holes asap after the investor's money comes in to the deal?  Do you have the people identified and are they committed to joining you as soon as you get the money? 

We've recently launched the C-Level program and have had 3 candidates go through that process.  It is so surprising how few companies have realized what an opportunity this is.   So many ITEN ventures need additional management talent, yet relatively few have expressed interest in connecting with these folks.   Building a credible management team needs to be at the top of your "to-do" list if you hope to get your hands on other people's money.

Keeping our eye on the track of raising money (as opposed to self-funding ventures, which we'll look more closely at in the future), our group of about 85 mentors are another key resource for ventures.  There is among them an incredible wealth of knowlege and experience that is open and available to ITEN companies through the Mentor Match.  The mentors can provide all kinds of important information, advice, connections, and perspectives that come from their own hard-won experience.  A very short way of stating it is that the mentors will tell you what they would do if they were you, and why they would do that.  If this is your first time around as a founder or senior level exec in a start-up, wise use of mentors can help you prevent making so many mistakes, and take advantage of situations and opportunities that you might not otherwise even recognize.  ITEN's mentoring program is enabled not only through the Mentor Match on the website, but also now through our Second Thursday events (see "Events").  The main thing to understand is that no mentoring happens without the entrepreneur taking the initiative and making the connection with a mentor and establishing a relationship.  It's just like real life, folks: entrepreneurs who are persistent, focused and eager to learn have a better chance of success than those who hesitate to make a move.  So reach out to mentors and ask for their assistance.  That's what they expect you to do and why they've volunteered to be mentors.  If you're someone who has a difficult time reaching out and connecting with the help that is available, then find yourself a partner for your company who can do it.  Again, build your company with the aim in mind of creating a management team that can execute and that knows how to take advantage of the help that's offered.

Make full use of the information available in our "Links" section having to do with building your company and raising money.  Then, when things are beginning to come together and you're getting ready to position yourself for funding, it's time to apply online for the Mock Angel Training program.    When they hit the funding trail, most ventures get multiple rejections before ever finding an investor to say "yes," but rarely do the reasons for those early rejections get clearly explained to you.  Most often, you'll get a "you're not in a space we invest in," or "you're too early stage," or just "we think you're not right for our portfolio," or even just, "sorry, not interested."   Rarely will you get the kind of useful feedback and suggestions to help improve your pitch that you'll get from the Mock Angels.  A number of our Mock Angel mentors are not "mock" and others are serial entrepreneurs who've raised money for  start-ups of their own.  As the reputation of ITEN has grown within the community, graduation from Mock Angels is becoming perceived as an indication of a more credible venture having less risk associated with it. 

You only have one chance to make a great first impression with a potential investor.  Why not take advantage of the Mock Angel Training to really focus on addressing all of the issues that would otherwise cast doubt on your deal in the investor's mind?  The Training is not easy; only one company so far has "nailed" graduation on their first try, but the rigorous screening and tough love from Mock Angel Training is an unsurpassed preparation for a successful funding search.

ITEN is sometimes asked by companies who have not yet graduated from the Mock Angel program to connect them with potential investors.   Please understand that the Mock Angel program is ITEN's way of preparing companies for investor discussions and as such is the pathway to investor introductions from ITEN.  ITEN is quickly building a reputation with local and national investors based upon the quality of the deals that are coming out of the Mock Angel program, and it's important for ITEN as well as for the accelerated success of future Mock Angel graduates that our positive reputation continues to grow.

Last year a number of ITEN companies including graduates, current Mock Angel participants and a few other companies were invited to an Investor Speed Dating event.  We got a lot of positive feedback from that event along with constructive suggestions.  One such suggestion that came from a number of investors was to make sure all of the ventures participating were well-prepared for investor discussions, since less developed companies were of little interest to them.  If we do Speed Dating again, we will follow that advice from the investors and limit participation to Mock Angel graduates and some of the others enrolled in the program. 

Here's the wrap-up and conclusion:  Learn to look at your venture from the eyes of an investor; ask for help; take full advantage of the help that is offered; build a great team, and execute with haste and with excellence.  Success comes more often to those who work hard and learn quickly.  Best of luck!!

Tags: Director

jbrasunas

When it comes to trying to predict if a start-up is going to succeed or not, there's no shortage of opinions on what are the key factors that point to success.  Passion of the founders, adequate capital, market focus, protected intellectual property, catching the current trends, well-written business plan, and experienced management are just some of the more popular elements that are named.   Trouble is, it's not too hard to find exceptions, and point to successful companies that lacked one or more of those elements and still made it.   

So, what the hell, I've come up with my own list, based upon what I've seen and experienced.   And I've made it a really short list so it's easy to remember.   I truly think that if a company embodies both of these things, they're going to find success.   So here they are:  Demand and Execution.   Customer Demand for the company's product or service, and Execution meaning meeting that demand consistently and with excellence.   The greatest widget that no one wants, the compelling app that people yawn at, or a service that misses the mark.........try building a company around any of those and you'll fail.  On the other hand, if you've got a widget that a lot of people want but you can't deliver it, or service it, or find a channel to market for it......well, that's a big problem too.

The faster a company can prove that there is market demand and the faster the company can figure out how it can satisfy that demand, the sooner all of the other good things start to happen.  Find a way to get a prototype built and into the hands of who you think will get excited by having it so you can find out beyond a doubt if they are or not.  It's much better spending your time getting that done than spending precious hours doing another iteration of your business plan.  If you find the demand just isn't there, then move on!  Change your product, change your company or change your career.  It's much better to fail sooner than to fail later.  Valuable lessons from failure will serve you well in your next endeavor.   

All of that other stuff, like customer service, financial projections, valuation consideration, marketing plans, etc. are all very important when their time has come.   But it's all make-believe until you really begin delivering value to customers.    Create a very focused plan for yourself that has one objective: getting your product into the hands of a few would-be customers as soon as you can.   Execute that plan and then listen.  Listen to what your first few customers have to say about what you've given them.  They'll tell you how much they'll pay for it, they'll tell you how you can make it better, and they'll tell their friends about it.  That's the quickest way to know whether or not your start-up has a chance or not.  And then you've got a real story to build a business plan around...........and just maybe a real success on your hands.

Tags: Director

jbrasunas

Now that it's December of ITEN's first full year of operation, we've got a lot to be thankful for and a lot more that we can and will do.   Having over 100 companies involved in ITEN is quite an accomplishment, and one we can all be proud of.   70 volunteer mentors are active in ITEN, bringing a very high level of quality advice and insight to the ventures they work with.   We've staged some cool events; the Investor Speed Dating in November was probably the most innovative and one that we'll do again next year.   That event marked a rite of passage so to speak, in that it marked the beginning of our inclusion of investors into the Network in a formal way.  Investors are the third necessary "ingredient" after mentors and start-ups, for creating the kind of network that can really help bring up the level of entrepreneurial activity in our region.  I don't think I'll surprise anyone by saying we don't have a huge number of early-stage investors here in the region that are actively investing in IT/internet/software companies; so we'll be working to bring out of town investors into ITEN via the website.   Among other things, investors registered on the site can connect with the graduates from our Mock Angel Training Program.  We've got 5 graduates from the program now, and all 5 are making significant progress getting their ventures off and running.

We've got some major enhancements to the program that will be made in 2010.   The first one, which is just now available for use, is a new option for companies to select mentors.   When a company selects "Mentor Match," they will have the option of requesting help from a volunteer team by selecting **Help Me Choose**.   Companies will get advice on which mentors the volunteer team thinks would be a great fit for the company requesting a mentor.  **Help Me Choose** will be an available option for any requested expertise chosen in Mentor Match.   Jeff Zimmerman is leading this new initiative, that also includes  Francis Chmelir, Tom Dopheide and Jing Wang.  They're beginning to make the rounds to meet the mentors they don't personally know in order to help companies make great mentor selections.

The next addition to the Network is going to be enabling C-Level candidates to have a formal way of joining the Network.  These will be people who, because of their training and experience are candidates for becoming the CEO, COO, CFO, Board Chairman, etc., of a start up company.  Many ITEN companies need such expertise in their companies, so the C-Level interface, coming soon to the website, will be a way companies and investors can connect with these experienced individuals.  Besides a separate portal into the website, C-Level candidates will be pre-screened by ITEN in a way that will be clarified soon.

We've begun the early work on a new program that will complement our Mock Angel Training and our Beta Program.   This will be a B2C program, designed to directly help ITEN companies that need to reach segments of the consumer market.  We will be assembling a great group of mentors who have significant expertise in advertising, search engine optimization, marketing strategy and other skills that are critical for success in the consumer marketplace.   We hope to roll out this program in Q1.

After we've got those enhancements stabilized, probably sometime in the second half of the year, we'll create a new portal that will enable access into the website for universities and corporations who have developed intellectual property that they'd like to see a company formed around.   Exactly how and when this will be enabled is still to be determined, but we see this as a logical extension of the development of the website and of the ITEN Network.

We're proud of what we've accomplished so far, and as you can see, the fun is not about to stop anytime soon!  We'll keep at it, assuming resources are made available, remaking the image of St. Louis into one that is a vibrant center of technology entrepreneurship, and one that is the envy of many.   Thanks for being a part of the Network, and for your continuing participation and support!!   I believe 2010 will be a break-out year for ITEN and for a number of our ventures.

Tags: Director

jbrasunas

     We've got more good stuff coming to ITEN, and I'll start with the growing interest on the part of service providers to get involved.   I encourage everyone who is connected with ITEN, and particularly our start-ups, to check out our Preferred Service Providers when you're looking for help.   If you need legal advice, office space for your growing company, your website built or any other services, please check out who's listed on the ITEN website under the green Service Provider bar.   The service providers listed support ITEN, have great references, and offer discounted prices if you are a part of ITEN.

     I'm getting positive feedback on results from companies that have posted their job openings on the site.   An ITEN start-up can find the "post a job opening" submenu item under the blue Start Up bar.   It'll take a day or two for us to post it after we receive your posting request.   Even though there are a lot of great folks out there looking for opportunities, give yourself plenty of time to find the person with the right fit for your company.  It's a good idea to be doing occasional informational interviews before the immediate need to bring someone on forces you to settle for "best available" instead of the ideal fit.

     As mentioned in my last blog, we've got a great line-up of events coming up, starting with Strange Loop the third week of October.   It's being pulled together by Alex Miller, of Lambda Lounge and Pure Danger fame (see "Links").  ITEN is a co-sponsor of the event and we encourage everyone to check it out.   I'm putting together a panel for a discussion on entrepreneurship that will be sometime around the noon hour on the 23rd.   Tom Niermann, David Karandish and Bob Lozano will join me on stage for what should be a great discussion with plenty of audience interaction.

     On November 17, we'll be having our 3rd Start-Up Connection.   If you haven't been to one of these yet, you're really missing a lot of fun and great networking.  The first one in January focused primarily on connecting recently laid-off technology workers with start-up tech companies looking for management talent, and that's still a major theme of the event.  But we've gone on to add elevator pitch competition, panel discussions and a unique "Innovation Cafe."   Expect the November edition to be well worth your while.  The Start-Up Connection is free and open to the public.

     Planning is proceeding well on two other events that have not yet been officially scheduled:  Investor Speed Dating and a Seminar/Workshop on Web Globalization.   Speed dating will enable selected ITEN companies to interface one-on-one with local early stage investors in an informational and informal setting.   Web Globalization will explore many important aspects of successfully generating a world-wide reach for your enterprise.   It's a well-known shortcoming that most Americans only know one language, but there's more to international website success than just translation.   This event will tell you what you need to do to be successful.

     To register for these and future ITEN events, go to the "Events" tab on the ITEN website.

Tags: Director

jbrasunas

Just wanting to let everyone know what we're working on and will be working on for the remainder of the summer and into the fall.  Now that the website is getting closer to fulfilling its mission, and we're seeing a continuing growth in traffic and stickiness, I'm going to be turning my attention more and more on other important aspects of ITEN.

We're in the process of rolling out an enhancement to the Mongel Training program that focuses on the requirements and steps for a company to achieve graduation from Mongel Training.   New information on this will be posted on the site in the next few days.   We've also begun work on exciting enhancements to the Beta Program.   There are already three companies enrolled in the Beta Program, and all three feel they're getting a lot of benefits from it.   We're using their experiences to devise a more detailed program which you will also soon be able to see posted on the site.

We've got a couple of upcoming events already scheduled:  Strange Loop in October and our third Start Up Connection in November.   You can check out "Events" to get more info on both of those.   Beyond that, I've begun working on a more or less private event for ITEN companies and mentors that we'll probably schedule for late September or early October.  This event will connect ITEN companies with local investors looking for IT deals.   If you're looking to get access to other people's money, you'll want to make sure to attend.   

There is also the possibility of an event before the end of the year or early in 2010 centered on the topic of global web marketing.   It turns out we've got a world-class university program in web globalization right here in town and we want to make these resources more widely known and available to ITEN.  If you can't wait, ITEN companies can do a Mentor Match on "web globalization" in the Marketing section of the search menu and find a couple of new ITEN mentors who are part of this program.

Finally, I'd like to recognize a few of our mentors and volunteers who have stepped forward to fill roles that are desperately needed and appreciated, and done so with no expectation of compensation.  Gokhan Lus has volunteered as our new Beta Program Coordinator; Tom Dopheide will play the same role for the Mongel Training; Sheila Burkett continues to do incredible things for ITEN as the Project Manager for the website.   By recognizing their contributions, I don't want to in any way ignore the wonderful contributions being made each day by the volunteer mentors, the Mongel team and everyone giving their input to the program.  This week, we say good-bye to Kenneth Leu, who's been our summer intern from Washington U.   He's made a lot of important changes and clean-up on the website and has provided great value for our very modest investment for his time and energy.

Times are difficult, and programs depending on contributions and government support are facing cutbacks all over.  ITEN continues to grow and provide significant benefits to the community.   We hope and trust that the value we are creating in the form of an emerging entrepreneurial community and exciting new ventures will justify the continuing support of our State and our region. 

Tags: Director

jbrasunas

Well, the Start-Up Connection, version Deux, has come and gone; we've released this website to the world; Sierra Ventures has visited and liked what they saw; we continue to get more and more interest in what ITEN is all about, and new companies keep coming out of the woodwork (no offense), so maybe it's time to sit back for a moment and look at the bigger picture of what ITEN can be and how we might get there.   First a confession:  my modest hope for the ITEN website is that it will become the absolute go-to place for anything and everything for start up IT companies in the region.   And to continue with the modesty, ITEN will be the leader in the turn-around of the St. Louis economy and our collective self-image (assuming cities can have a self-image).   To do this, we need to get our best young ventures funded, and funded well, and launched towards success.   We also need one or two of the more advanced IT start-ups here that are already into their B, C and D rounds of funding to have an exciting liquidity event.   There are 4 of them right off the top of my head that are candidates for that success, and hopefully soon.

We've got a lot of chicken and egg dilemmas to deal with in the start-up world, and one of them is early stage investors putting money into local early stage deals.   There's plenty of money in this town, and a lot of it is invested elsewhere.   That's not a knock......money goes where it thinks it can multiply.  If we get a few deals here to spin off some millionaires among the brave folks who have options because they joined the company instead of opting for a corporate gig, or who invested in common stock or the A-round of an early deal, then more will follow.   We can't shame each other into creating a buzz around the IT entrepreneur community here, we have to create it.......the hard way.   Rome wasn't built in a day and neither was Silicon Valley, or RTP or Route 128 (now called I-495 I think).

So how do we do that and what's in going to take?   Here are a few ideas I'm working on; let's hear some of yours:

• Full contact mentoring of inexperienced entrepreneurs.   We have mentors (in ITEN) that have done it and been successful, and then we have a lot of first-time entrepreneurs.   Investors don't like to see their money going into on-the-job-training if they can help it.  Take advantage of experienced mentors, admit they know more than you do, and beg them to get as involved as possible into your deal.   Your management team needs to have a lot of credibility.  If it does, it will attract investors much faster than any whiz-bang idea (but you do need the whiz bang, too!).
• Broaden the exposure of our best new deals.  Expose our Mongel Training graduates to investors from across the region and the country.   This is going to be a priority for ITEN during the next 6 months.   I've been building relationships with investors locally and beyond, and in spite of the economy, I'm finding an appetite for good deals.   We're marketing ourselves as a region of surprising deal flow, offering valuations that are likely better (for investors (sorry!)) than what they'd find on the coasts.
• Keep at it.   St. Louis will become a happening kind of place where deals are done, and you'll be bragging about these days and how you were there at the exciting beginnings of things.  No way is it going to happen overnight......but it will happen, oh yes, it will happen.

Tags: Director

admin

Welcome early visitors and early users of the ITEN site.

My hopes for ITEN are unbounded, and launching this website is a big step forward for the program. I hope this launch will be looked back upon as contributing to a great flowering of technology entrepreneurship in St. Louis.

Over the next few weeks, we'll be unveiling more and more of the pieces of the ITEN site. Eventually not only will mentors and companies seeking their expertise be able to meet, but also investors looking for deals, service providers providing advantages and benefits, along with sponsors wanting to support and encourage what we're doing: all will find usefulness and value here.

So don't be hesitant with your comments and suggestions, and let us know what you like and what you don't like.

Most of all, thanks for your consideration and your support.

Jim Brasunas, Director

Tags: Director