By The Time I’m 40

Yes, I shared in an earlier post that I currently invest time with inventors and entrepreneurs. But by the time I’m 40, I want to be in a position to where I can invest meaningful capital in startups. I have about 2.5 years to achieve this big hairy audacious goal. How am I going to make this happen? My plan is multi-faceted:

  • Continue to invest time in early-stage ventures. Why? The assumption is that a few of these ventures will one day receive funding to pursue product development. Once this happens, CQ should be in a position to continue providing consulting support and be compensated, maybe even with equity opportunities. And maybe, just maybe, one of these funded ventures will have an exit and the resulting equity will have substantial value.
  • Bring UniDoc to market. This is a proprietary CQ software product geared towards helping medical device companies better manage design control and product development documentation and records. We’ve had a couple starts and stops and are at a point where we need to aggressively work towards launching this into the market.
  • Continue to provide consulting services, helping medical device companies with business development, operational efficiency, and project management.
  • Identify and launch other product ideas.
Yes, time is ticking but this is my BHAG. Why? Since starting CQ, I’ve come across several medical device inventors and entrepreneurs whom I think have decent ideas. However, funding, especially locally and during the last few years, has been basically non-existent. I think there are a few very good ideas that are dying due to lack of investment. I’d like to be in a financial position to help make a difference.

 

How?

Invest in them now, providing advice and consulting. Find opportunity or two with equity, resulting in exit.

Also, develop own products, starting with UniDoc.

Medical Device Accelerator in Memphis, TN

The medical device industry has several geographic pockets. Memphis, TN is one of these, especially in orthopedics.

I recently read about this medical device accelerator located in Memphis called ZeroTo510. They seem to have all the key pieces for a medical device concept to get off the starting blocks. Part incubator, part educator, part investor, part mentor. The program is geared towards helping medical device inventors and entrepreneurs get to a FDA 510(k) submission, while providing guidance and direction along the way

While I have no idea how successful this program has been, the model is very intriguing. So much so that I wonder if something like this could be piloted in central Indiana.

State of Venture Capital (recap of Venture Club)

I had the opportunity to attend last week’s Venture Capital Update at the Venture Club of Indiana. The panelists were Don Aquilano (Allos Ventures), John Diekman (5AM Ventures), and Rob Smith (Petra Capital). Of the venture firms represented, only Dr. Diekman’s 5AM Ventures is active in the life sciences sector.

I jotted a few notes and comments that I found interesting during the Venture Club meeting.

  • Concerns about life science sector in large part because of the increasing regulations.
  • VCs are having a hard time raising money right now. And that this is a very good market for venture investments.
  • Investor pitches should be interactive, conversational. Entrepreneurs should be good listeners too. Body language very important.
  • Is Indiana still a flyover state regarding venture investing? It shouldn’t be. Great universities, business friendly government, seasoned executives, several start-up successes (Aprimo, Exact Target, T2, Angie’s List, Suros Surgical, Marcadia).
  • Success breeds success.
  • Hot healthcare trends are orphan diseases and stem cells.
  • Recurring revenue streams are always more attractive.
  • Medical device tax might have some impact on venture investing. Bigger impat, though, will be the FDA.
  • Crowdfunding model too soon to tell. Likely won’t change the VC market.

September 1, 2011 – Venture Club of Indiana

 

 

 

 

Luncheon Notice

Venture Club of Indiana Luncheon
September 1, 2011

“Venture Club features Five Innovation Showcase Companies”

featuring
Joel Curts, CEO, Daily Lunch Deal
Chris Fennig, Managing Director, MyFarms LLC
Crystal Grave, President & CEO, Snappening, LLC
Kristen Nunery, CEO, myCOI
Steve Tolen, President/CEO, Indy Power Systems, LLC

March 30 – 31, 2011 – InvestMidwest Conference

InvestMidwest, the venture capital conference of the Midwest, takes place March 30 – 31, 2011 in Kansas City, KS.

For more information, visit InvestMidwest site.

October 10-12, 2010 – BioPartnering Europeâ„¢

BioPartnering Europeâ„¢ (BPE) Leading European life science partnering for 18 years.

The Indiana Health Industry Forum announced that it has signed a partnership agreement with TGV LLC, the organizer and producer of the international BioPartnering events. With this partnership, IHIF members will receive a 15% discount on the registration fee for the series of events.  To obtain the promo code for the IHIF member discount*, please contact IHIF at 317-278-9970 or e-mail info@ihif.org.  Additional information may be found on the IHIF website and calendar.

Conference Name: BioPartnering Europeâ„¢
Dates: 10-12 October 2010
Location: London, United Kingdom
Venue: QEII Conference Centre

BPE offers excellent partnering opportunities for the best and brightest in the life science industry. Three days of networking in 1 location to meet with decision-makers from leading biotechnology, pharmaceutical, and investment companies from around the world for face-to-face partnering meetings, presentations, expert panels, and exhibitions. Register for BPE and connect your company with The Global Life Science Networkâ„¢.

For more information and to register, visit: http://www.techvision.com/bpe/

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Life Sciences Seed Fund

I just read an article in the Indianapolis Business Journal about the Indiana Seed Fund I.  The Indiana Seed Fund I is a seed-stage private investment fund started in 2005 and overseen by the Indiana life sciences group BioCrossroads.  The article highlighted the successes of the fund – that none of the 10 firms in which it has invested have failed, despite tough economic times, and that its first investment, SonarMed, just won FDA approval.    It also presented the idea of creating a follow-on fund, since the original $6 million has nearly been depleted.

“It’s named the Indiana Seed Fund I, so there certainly are aspirations for us to continue,” said fund managing director Nora Doherty.

According to the BioCrossroads web site, “The Indiana Seed Fund was formed to help narrow the gap between discovery and third-party funding in Indiana and to prepare companies for venture investments, through vehicles like the Indiana Future Fund I.”

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Venture Capital vs. Boot Strapping

Venture capital (also known as VC) is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made in cash in exchange for shares in the invested company – typically those in the high tech or biotech industry. Venture capital firms typically comprise small teams with technology backgrounds (scientists, researchers) or those with business training or deep industry experience who pool their money.

Bootstrapping refers to a self-sustaining process that proceeds without external help. Therefore no VCs are involved and the company is built on it’s own and is the most common way to create a start-up. In fact, the use of private credit card debt is the most known form of bootstrapping. There is considerably more risk for the founders when bootstrapping, but the absence of any other stakeholder gives the founders more freedom to develop the company. Hey, if Dell can do it so can you!

There are different types of bootstrapping:

  • Owner financing
  • Minimization of the accounts receivable
  • Joint utilization
  • Delaying payment
  • Minimizing inventory
  • Subsidy finance
  • Personal Debt

SO, our question is this — does the kind of money you receive affect your company’s trajectory & it’s milestones? What are your thoughts?

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Things To Know Before Your VC Pitch

Here is a great TED video from David S. Rose 10 Things To Know Before You Pitch To A VC:

What is the single most important part of your VC presentation?

It’s YOU and the team.

Your VC presentation should be less than 30 minutes. And during this time, you need to convey that you have:

  • Integrity
  • Passion
  • Experience (especially serial entrepreneurs)
  • Knowledge

I’ve heard many investors validate these points. If the VC believes you and your team can do great things, this is a good start.

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Bloomington’s SproutBox Now Accepting Applications

Have you heard of SproutBox? If not, they have a very interesting approach to help entrepreneurs who have software product / service ideas.  Here is an overview of what SproutBox does:

SproutBox invests in entrepreneurs. We represent a new approach to venture capital that is about more than just writing checks. We invest ourselves in a company’s success. Each year, we give four hand-picked startups the team, tools, and resources needed to turn their early stage ideas into a revenue-generating reality.

We’re not about talk. We are a team of 10 coders, marketers and business experts that work with entrepreneurs full-time in exchange for equity.

I’m anxious to meet the founders. I think this model has applicability outside of software. I think this model can be replicated in struggling communities. I know a few I’d like to explore. SproutBox is definitely improving the tech community in Bloomington, Indiana.

SproutBox is now accepting applications for their next investment cycle. If you or someone you know has an interest, be sure to apply. The deadline is 11:59pm December 5, 2009.

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November 10, 2009 – Building an “A+” Management Team

Building an “A+” Management Team

Where: IUETC (Directions)
When: 11/10/2009 at 5pm

Join us in a discussion with local leaders on what makes the ideal management team. This topic will be approached both from an operational standpoint and an investment standpoint. As the saying goes “VCs invest in the management team.” Join us to make sure your team is built to succeed.

Cost is free, but registration is required. Click to Register.

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Are Angels Getting Better Deal Flow In This Economy?

I had an opportunity to sit in on an investor meeting for an Indianapolis-based angel network. Creo Quality was asked because the services we provide and experience we have might be an asset to this group and its portfolio companies. During the meeting, there were two established, albeit still early stage companies, presenting. One company has achieved over $10M in revenue and is cashflow positive in just under 4 years. The second is a venture-backed company seeking additional investments to launch a second generation product line. The maturity of these companies is unusual for an angel investor group. Both companies have been around and generating revenue for several years. Usually, companies seeking angel funding are earlier stage, often times seeking seed funding.

Is this a sign of the times in the investment community? Are VCs sitting so tightly that they will not consider investing in companies seeking series A or later funding? Interesting, and a great opportunity for this Indy network.

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Is This The Worst Capital Market For Medical Devices?

It seems like investors are sitting tight in Indiana, especially for medical device and life science deals. While Indiana does not ever lead the investment world, from what I’ve been reading, medical device companies are having a hard time locating capital. Here is a link to the Virginia Bioscience Blog article “‘Darwinian’ in VC Funds and Biotechs”. Some interesting excerpts from the article:

“Three years from now, there will be one-third as many venture capital firms as there were three years ago,” Mott said. “And there will be half as much money.”
But he said that sort of Darwinian selection will be a good thing — a slimmer funding pot filters out the companies with weaker prospects from the beginning, ensuring only the strongest survive. “The industry is alive if not well,” he said. “Any purging that has been happening and is still ongoing in our ranks is going to be good for our industry. . .”

. . . venture capitalists must continue to be more selective, a common criticism from early-stage companies that protest that investors don’t give them a second glance . . .

. . . a tough review of the local biotech industry, saying it’s only produced a handful of spinouts that would catch a venture capitalist’s eye. “I go above and beyond looking for local companies” to invest in, he said, “but I can’t make bad investments.”

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