Tag: Venture Capital (page 1 of 2)

Top Ten Reasons It Is Time for You to Raise American Venture Capital

CTI_Headshot-circle-mask-mattMatthew McCooe
Chief Executive Officer

10. You are unafraid to scale fast or fail fast.

9. Your company nailed product-market fit, your customers value what you are doing and they’re willing to pay your asking price.

8. Your company is growing and you raised some investor capital. Yet, you are spending too much time raising additional funding and not enough time adding value to your enterprise. You are ready to tap into the massive supply of venture capital in the United States.

Continue reading

Perfect Pitch: Attracting Venture Capital

CTI_Headshot-circle-mask-mattMatthew McCooe
Chief Executive Officer

Connecticut’s recently launched $5 million global pitch competition for fintech and digital health companies, VentureClash, has drawn an incredible response from companies globally. So I thought it would be an opportune time to take another look at what makes a pitch attractive to investors.

Continue reading

VET Your Investor: Three Reasons Why the Source of Your Funding Matters

Doug-Blog-Circle

 

Douglas Roth
Director, Investments
Connecticut Innovations

Capital is the lifeblood of any startup. Because of this, too many entrepreneurs blindly charge forward raising money without understanding the importance of the process. Raising capital is generally not a skill that most startup executives have. Why? Well, for starters, fundraising is not something an entrepreneur does every day. It’s also a distraction from the important effort of launching and operating a business. A young company needs money and generally needs it now, but many entrepreneurs fall victim to the belief that four quarters from one funding source is the same as one dollar from another. But smart entrepreneurs aren’t so cavalier about something so important! Not all money is green. The sources from which you raise capital can make all the difference between success and failure.

Continue reading

Recap of #InnovateCT

CI Ranks High on PitchBook Lists

Pamela Hartley
Senior Marketing Manager
Connecticut Innovations

Connecticut Innovations’ hard work in supporting seed- and early-stage ventures was recognized last week in a report published by PitchBook, the leading research firm for private equity and venture capital.That organization’s “Valuations & Trends” report ranked CI the seventh most active investor nationally in seed/angel deals and the sixth most active investor in early-stage deals in the trailing twelve months (4Q 2012 through 3Q 2013).

As noted in the report, CI invested in 19 seed/angel deals and 33 early-stage deals during that time frame.

Hats off to our investment team, which has been busy evaluating investment opportunities, structuring deals and providing strategic guidance to these newest members of CI’s investment portfolio!

CI Coaches, Scouts Entrepreneurs at the New York Venture Summit

For two days at the end of June, hundreds of VCs, angels, bankers, incubators and startups gathered at the Digital Sandbox in downtown New York for the 2012 New York Venture Summit. The conference, one of the largest of its kind, was orchestrated by youngStartup Ventures to assist growing companies in accessing angel financing and venture capital investments.

Fellow investment associate Douglas Roth and I had an opportunity to attend and participate in group coaching sessions with entrepreneurs. It was a great opportunity to get to know scores of talented entrepreneurs on the East Coast – and beyond – and network with others involved in the funding and growth of early-stage businesses. Also present was CI portfolio company Precipio Diagnostics, a cancer diagnostics lab based in New Haven.

The venue was crowded with a diverse group of entrepreneurs. In attendance were companies from clean tech, IT, biotech and social media. The buzz and enthusiasm around the conference was palpable and reflected a national trend in venture capital investments into innovative startups. Recently, the University of New Hampshire Center for Venture Research in a study that followed angel investing in the U.S. reported that last year over three hundred thousand angels invested over $22 billion into sixty-six thousand companies.

The driving idea behind the summit was getting VCs to coach entrepreneurs on how to effectively pitch their business models to prospective investors in seven minutes or less. The time in between coaching sessions and presentations gave all involved a chance to network and exchange visions and ideas. At the conclusion of the summit, youngStartup Ventures presented awards to recognize the best presenters in each of the three tracks – cleantech, life sciences and tech.

In the past couple of weeks, Doug and I have been following up with some of the most promising investment prospects from the summit. We look forward to continuing our discussions and meetings – and learning more about these exciting companies!

Matthew Storeygard
Investment Associate

The Teams Rocked!

May 18 was a spectacular spring day. The morning air and landscape seemed fresh and new – which elicited a sense of new beginnings, hope and excitement. This was the perfect backdrop for Connecticut Innovations’ TechStartSM Demo Day, which ushered new beginnings for 11 entrepreneurial teams.

The teams’ hope and excitement rang through loud and clear at the event. Smiles emerged as the theme song to Rocky played while the teams lined up and were introduced to the audience. Over 25 venture capital and angel investors had taken time out of their busy schedules to come to the Maurice R. Greenberg Conference Center at Yale, meet the teams and listen to their ambitious plans for launching and growing their new technology companies. The goal of the teams was to pique the interest of the investors and pave the way for investments from them.

I was impressed by the quality of both the business concepts and the presentations. The teams had clearly done their homework. They represented bona fide investment opportunities.

In the coming weeks, CI will be following up with both the teams and the investors, facilitating communications and encouraging new investments.

Learn more about TechStart Demo Day and the presenting teams in our press release. View the event video here.

Pamela Hartley
Marketing Manager

2011 New England Venture Summit

At the New England Venture Summit on Wednesday, December 14, Connecticut Innovations was well represented. Patrick O’Neill participated on a clean-tech panel, I acted as a judge for company presentations in the technology sector, Pam Hartley distributed information at the Connecticut Innovations table, and Adrian Horotan and David Guerrera, our newest investment team member, networked with other venture capital investors and scouted for entrepreneurial businesses seeking to build and grow their companies in the great state of Connecticut.

It never ceases to amaze me – there is no shortage of great ideas and enthusiastic entrepreneurs and investors willing to bring those ideas to market. I spent my day in the tech sector (there were also life science and clean-tech tracks), which boasted a great diversity of companies and business models. I spoke with entrepreneurs whose business ventures span social networking, crowd sourcing, disaster recovery, fabless semiconductors, wireless applications, software etc. Companies from across the United States, Israel, Finland and Canada were in attendance.

One of Connecticut Innovations’ portfolio companies, Innovatient Solutions, of Farmington, Connecticut, presented to an audience of potential investors. Innovatient Solutions was formed in January 2010 by three seasoned executives to develop, design and market the next critical phase in health care delivery. The company has developed a patient-centered information system to provide quality care management tools for the care team to dramatically improve the patient experience. It connects patients to their care team, to their friends and families, and to other systems in a facility, all from the comfort of their own bed and through a medium they are already comfortable with, their TV.

In addition to company presentations, the conference also included several panel discussions. The panelists, various VC professionals, shared their insights and recommendations with the group. Some notable remarks included:

  • It is more likely for a company to be acquired than to tap the public equity markets for a liquidity event. The years 2010 and 2011 set records for the number of acquisitions of venture-backed companies. This activity may have been overshadowed, however, by the few – but high-profile – IPOs that took place, including the IPOs of Groupon, Pandora and a few others. To weather the difficult economic times and until the current level of uncertainty subsides, Fortune 500 companies are sitting on more than a trillion dollars of cash but will eventually put this money to work.
  • When should entrepreneurs start thinking about an exit? One panelist suggested as soon as the entrepreneur starts thinking about starting the business. Venture investors want to know what the potential options are for an exit and want to ensure the entrepreneur is not neglecting this important aspect of business strategy.
  • Due diligence should be a two-way street. Particularly in early-stage investing, entrepreneurs should seek to partner with investors that bring more than capital to the table. Each investor has specific interests, goals and time horizons. You should make sure these are aligned with the development and growth plans of your business.
  • Several venture investors frowned on the use of formal written business plans. They are out of date the moment they are written and are rarely, if ever, updated and revised. PowerPoint presentations, for some, are a more effective means of communication, as they are better able to keep pace with the dynamic nature and fast-changing evolution of any entrepreneurial venture.

There have been, and continue to be, some grim statistics related to early-stage venture creation. However, attendees at the New England Venture Summit – entrepreneurs, investors and service providers – were universally optimistic. This is an exciting time to start a business.

The Connecticut Innovations team looks forward to following up with the many new contacts we made.

Merry Christmas and Happy New Year!

Douglas Roth
Investment Associate

The Masters and Venture Capital: Fundamentals, Repetition and Reward

This weekend Charl Schwartzel won the Masters at Augusta National in Georgia, one of the most coveted tournaments in golf. As I watched, I thought about what it takes to win such an event. If you are invited to play, you are up against some of the world’s best competition and you play on one of the most daunting yet beautiful stages. The only way to win is to focus on the fundamentals, make sure you are repetitive in your process, and take calculated risks when the risk/reward profile suggests you should go for it.

Venture capital and early stage investing aren’t much different. Sticking to the fundamentals is foremost. Is it a disruptive technology or product in a large enough market with a management team that can execute on the plan while holding off or beating the competition? Be repetitive in your process, evaluating opportunities in such a way that they are comparable and your process becomes your strength. This will help you avoid having emotions come into play in your decision making and will guard against your own due diligence bad habits and oversights. When you find an opportunity, take the risk but only if the reward is worthwhile. And then repeat.

Amen Corner at Augusta includes the second shot at the 11th, all of the 12th, and the tee shot at the 13th hole. This stretch contains some of the most difficult shots of the course, but it’s there you will find the reward. It’s not always where the Masters is won, but it’s often where it can be lost. Stick to process and repetition, and wait for the right time to take risk.

Or you could just birdie, birdie, birdie, birdie the last four holes to win. You know… if that’s easier.

Kevin Crowley
Managing Director, Investments

View comments / leave a comment

Key Takeaway from YSV Event: Bootstrap Your Startup as Long as You Can

Last week my colleague Kevin Crowley and I attended the youngStartup Ventures VC Outlook event in New York City – an event sponsored by Connecticut Innovations. This well-attended event attracted numerous VCs and entrepreneurs. During the event, both Kevin and I held pitching sessions for two hours nonstop, and we heard some very interesting business ideas.

While a lot of people came to pitch their ideas to CI, several entrepreneurs just wanted to get feedback on their products from VCs. This is a great strategy. The entrepreneurs not only get initial feedback on their prototypes, but they also make great connections for future meetings with VCs and start to be on the VCs’ radar. It helps an entrepreneur to be a “known entity” when raising venture capital. A VC may remember an entrepreneur from, say, six months ago, and he or she may note a considerable ramp up in the company’s product, a sign of great progress that can help the entrepreneur raise capital on better terms.

A panel during the event featured speakers from top VC firms and angel groups, including our own Kevin Crowley from CI, Phin Barnes from First Round Capital, Stephen Davis from Goodwin Procter, John Basile from Holtz Rubenstein Reminick LLP, Eliot Durbin from Penny Black, Jon Karlen from Flybridge, David Rose from New York Angels and Medha Vedaprakash from Rho Capital Partners. The panelists provided valuable insights about current trends in the venture capital industry. Although the panelists were concerned about the frothy valuations and the “bubble” in the tech community, all agreed that this is a great time to be an entrepreneur. Startups are being funded at a faster pace than before, and there are more sources of funding – family and friends, angels, early-stage VCs and incubators.

The panelists were very bullish on 2011. Medha Vedaprakash from Rho Capital Partners said that her firm saw three IPOs in 2010 among its many exits, and she does not see that trend slowing this year. This is good news for entrepreneurs, as it suggests they will not need to sell their startups to large companies like Google for $30 million; instead, they can continue to build their own large companies that can go on to have their own IPOs.

Ironically, although this was an event to help entrepreneurs raise capital, most of the panelists recommended that startups raise only the minimum amount necessary from VCs early on. Because venture capitalists have been investing heavily in startups lately, it has been fairly easy to raise a seed or Series A round – but high expectations come with this funding. Milestones, for example, must be met. In contrast, the number of funds offering follow-on investments is still very small. So, later-stage funds can pick and choose the companies they want to invest in. This will result in a lot of startups that will not be able to raise larger, follow-on rounds.

The key for a startup in today’s market is to be as capital efficient as possible and try to secure more non-dilutive financing. Kevin Crowley from CI suggested that entrepreneurs look at sources outside traditional venture capital, such as angel capital. The new Connecticut Angel Investor Tax Credit Program was designed to move more angel capital into circulation. It provides an incentive to Connecticut angels who invest in Connecticut high-tech startups – a 25% tax credit on the angels’ investments. Other sources of financing for startups include small business loans or grants from the government.

David Rose from New York Angels repeatedly stressed that the best way for a startup to be successful in today’s environment is to bootstrap as much as possible and raise financing only as a last resort. When there is enough traction – both in product strategy and customer acquisition – startups could consider seeking venture capital. But they should demonstrate that new investments would be used to help their companies achieve well-defined, achievable sets of milestones.

Jon Karlen from Flybridge and Phin Barnes from First Round said that this environment is actually good for entrepreneurs. The early-stage capital enables them to test a hypothesis about a product or market, but only those who validate their product or market can go on to raise more money. This ensures that only the most promising startups progress to the next stage. If an idea/company is not gaining traction, the entrepreneurs leading those ventures can cut their losses and focus their energy on their next startup.

It was a pleasure to attend this useful event. I wish to thank youngStartup Ventures for hosting yet another sold-out event, and to thank the energetic entrepreneurs who pitched to Kevin and me.

Rashim Gupta
Investment Associate

View comments / leave a comment

Older posts