Getting Funded

This is a presentation created by Joe Medved a digital media VC with SoftBank Capital. You can read more from him on his blog: JoeVC

I have helped a number of our portfolio companies at SoftBank Capital build financial models over the years. This presentation walks through the construction of a general business model for early stage companies, with a focus on core revenue and expense drivers.

Want to learn more about turning your business idea into a fundable business model? Join us for our breakfast roundtable on October 19: The Capital Network Breakfast Roundtable: Building a High Growth Business for Angel and Venture Capital at the Foley Hoag Emerging Enterprise Center

“We were young, but we had good advice and good ideas and lots of enthusiasm.”
- Bill Gates

The innovation ecosystem in Boston is a tremendous resource for entrepreneurs, especially scientific entrepreneurs. The prevalence of a strong venture capital community, world-class research centers and a rich heritage of independence and innovation makes Boston an ideal setting for starting a company. However the success of an entrepreneur is not as dependent upon location as it is passion, intelligence and perseverance.

In my experience as a graduate student/entrepreneur, I learned early to seize an opportunity when it is presented. I came to Boston seven years ago to pursue my Ph.D. in Genetics at the Tufts Sackler Graduate School of Biomedical Sciences. While doing a lab rotation through the Pharmacology Department I met a fellow Ph.D. candidate who was a business-minded scientist and shared my passion for improving the drug development process. Brigham Hyde and I became fast friends and started attending events at the Harvard Biotech Club and the MIT Sloan Healthcare Club on a regular basis to learn about the challenges facing the biopharma industry. We felt compelled to address the big data and innovation opportunity in biopharma and established Relay Technology Management, Inc.

Organizations such as The Capital Network, MassBio, and The Startup Leadership Program are just three examples of the resources available in Boston that fostered a deep understanding of what it would take to start a company and close a Series A financing. These organizations provide a foundation for entrepreneurs at any level to learn about starting a company, recruiting top talent, and creating a viable business model. In addition to these resources, there are four key lessons that every entrepreneur should embrace: passion, networking, listening and perseverance.

Passion

Passion tends to come naturally to scientists. Most scientists are developing technologies that they have personally worked on or have family members that would benefit from a specific medical technology. The trick is for scientist-entrepreneurs to display a deep level of understanding of the subject while conveying an appreciation for the business aspect of the opportunity. While many scientists may not feel that they are particularly charismatic or extroverted, this is a skill that can be attained through practice and is important for success.

Networking

The ability to network is the second key lesson that entrepreneurs should master. The Mass Life Science Center (MSLC) provides a great resource for scientists who are looking for networking events around Boston and Cambridge. MSLC has a weekly email blast that profiles networking opportunities for life scientists. My own network has grown substantially over the past few years, and there has been a direct correlation between the size (and quality) of my network and the opportunities that arise from the network. As Guy Kawasaki often posits, it is also important to be a mensch, essentially to give back to your network as a token of good faith.

Listening

Perhaps the most important lesson an entrepreneur can posses is the ability to listen effectively. Surround yourself with the best scientists, business people and fellow entrepreneurs and listen to what they have to say. Oftentimes scientists can develop a severe case of tunnel vision. Your mentors and advisors should be individuals who you personally respect and can act as a sounding board when you have difficult issues that need outside attention. In turn you should keep an open mind and listen carefully to their counsel. For instance Relay’s business model underwent three major pivots before we hit our stride. It is a delicate balance when deciding which advise to act on, and which advice to keep in mind down the road. Active listening is a necessity for the successful entrepreneur.

Perseverance

Finally, the last key trait of a scientist-entrepreneur is perseverance in the face of uncertainty. Rarely does success occur as planned and it is important to never give up. If you have the perseverance to complete a graduate program in science you likely have the will and desire required to do well in business.

Scientist-entrepreneurs should leverage their strengths and engage team members who will work as a team. As an entrepreneur you should always strive to know your strengths and work with individuals who complement your weaknesses. If you concentrate on your goals, listen to outside counsel when appropriate and have a passion for your venture you will find that Boston is an amazing place to grow a business and realize your full potential as an entrepreneur.

Dave Greenwald, Ph.D., Co-founder and CEO of Relay Technology Management, Inc.

Written and originally published on May 24th, 2011 by Bingham McCutchen LLP, a TCN sponsor.

Public companies that wish to pursue restructurings of outstanding debt must address a number of legal and business issues prior to launching any restructuring. This is particularly true for restructurings of convertible debt, which can be more complicated to structure and complete than restructurings of non-convertible debt. Developments over the last several years have provided more clarity with respect to certain of the restructuring issues issuers face with convertible debt. In this article, we review these developments by suggesting some initial questions any issuer should address in pursuing a restructuring, discussing recent developments with respect to these issues and providing an overview of implementation issues with respect to any convertible debt restructuring. For your convenience, we’ve provided this guidance both in a brief overview and in a full analysis.

For more information, contact Mike Conza, Partner at Bingham McCutchen: [email protected]

By Dan Allred, Senior Relationship Manager at Silicon Valley Bank, and a member of TCN’s Board of Directors.

This is an excerpt from a post on Dan’s blog, Volume Game: Observations on the Innovation Economy from a Boston Banker.

I’ve been reading MassChallenge plans as a judge for a few weeks now, and I want to share some of my feedback on what distinguished those plans I recommended from those I did not.

I’ll speak about the plans in generalities, as I obviously cannot say too much about specific companies as the competition continues, nor would that be appropriate in this kind of forum. There are three primary things that stood out for me and caused me to recommend some plans over others:

1) BIG IDEA: This may sound like a no-brainer, but when you read 20 plans in one setting, you realize that there are lots of business ideas that are only incremental improvements or gains over something that successful companies are already doing. This seems to be especially true with many of the Internet business plans I read. I kept asking myself, if this is such a good market, then why isn’t ABC company (insert Facebook, LinkedIn, etc.) doing this? Of course, I recognize the ability of start-ups to focus on smaller opportunities than big companies and to out-innovate them because of their focus and flexibility, but there still has to be a concept and opportunity that is big enough to matter to customers.

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By Leslie Williams, a serial entrepreneur, currently the CEO of ImmusanT, and a member of TCN’s Board of Directors.

I met Dr. Bob Anderson, an Australian scientist and clinician at the Walter & Eliza Hall Institute of Medical Research, over a year ago when he was visiting as part of a “sister city” lecture tour between Melbourne and Boston. In addition to lecturing, by chance, Dr. Anderson attended a TCN program. This led to Dr Anderson’s request to request to meet an experienced local entrepreneur to discuss his immunotherapy technology and company, NexPep. At the time, I had been working with scientists at MIT to spin out a technology and decided to put the company on hold and incubate in the lab a bit longer. I was also advising and mentoring entrepreneurs in the life science space. TCN provided an email introduction between us with the intent to simply share business advice and discuss the pharma market.

Our scheduled one hour lunch went into the late afternoon as we talked about celiac disease, technology, the market and regulatory challenges. Moreover, we discussed the active Boston ecosystem and abundant resources. Over the course of the next year Bob and I worked together and I tapped others in the community to ensure the opportunity could advance in the US and garner required funding. This ultimately led to founding ImmusanT, based in Cambridge, MA, in December and acquiring Nexpep’s assets. Thanks to an initial introduction, through TCN, the journey began and I am now CEO of ImmusanT.

TCN is truly a valuable local resource with the ability to form both local and global bridges. This translates into opportunity and economic growth for companies located in Massachusetts’ innovation economy. TCN programs provide a source of critical information for entrepreneurs and also broad and active networks of entrepreneurs, business leaders and investors. The tale of two cities continues to unfold!

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Leslie will be the featured CEO at the TCN UpStart Roundtable at the Venture Cafe in Kendall Square on Thursday, April 28th. Find out more about this event here.

Jean Hammond has been involved with The Capital Network for over a decade and currently sits on the Board of Directors. She is an active angel investor focusing on early stage high tech startups. She was a founder of the Boston branch of Golden Seeds and is a member of Launchpad and Hub Angels. She plays or played an active board level role with a number of her Boston area investments, including: Crimson Hexagon, Hire Reach, Home Portfolio, iTeam, and ZipCar.

Angel investors were in Boston/Cambridge Massachusetts during the week of April 4th for the National Angel Capital Association National Conference. For many angel investors, the conference provided a venue where they could get insight into 3 or 4 issues that have challenged early stage investors for a long time. The 2011 version of these issues viewed through the lens of angels who like investing in angel groups bring interesting complexity to the problems investors face. I found that a lot of the angels were discussing reaching scale and, interestingly, matching that with “right sizing” what we do.

Scale Baby Scale - Lots of fast, “early” exits:

Angel groups want to invest in great deals and analysis shows that there are a lot of companies that will indeed grow good product lines. As Basil Peter’s book points out, however, firms that take in a last final funding just for the purpose of scaling the sales force and adding a few more customers are unlikely to have a payback at the high multiples achieved in creating the product and getting the first $5-10M of sales. Additionally, even though the buyer community is ready – i.e., US corporations are sitting on mountains of cash, the infrastructure to do these deals at this scale is often lacking as most investment banker shops are still geared up for ‘large’ exits. This problem may be most extreme in the markets with a huge VC presence but finding and training a solid range of exit advisors who are interested in deals pricing out in the $50-80M range is still lacking. I have not seen a deep definition of skills needed in these advisors yet or a listing of those with great track record in deals of this size. Angels want to help quality iBanks support an efficient market from “right-time” exits, as many angels believe the trend towards lots of fast, “early” exits will continue.

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By Bill Yucatonis, CEO of CoupMe and GoodTwo

As of January 18th, 2011, I had never heard of TCN, which is strange because I consider myself to be fairly connected especially in start-up world. Believe me, I’ve attended countless hours of other so-called entrepreneurial networks in the Boston scene, and I’ve paid fairly for what they delivered - a cheap glass of wine and a cold buffet. Thanks for the heartburn.

Call it fate, but on January 18th my bookkeeper, Smartbooks, introduced me to Michelle Hipwood, Executive Director of The Capital Network. I had just launched a new brand, GoodTwo, and we were raising money to capitalize its success and spin it out into its own company. GoodTwo is a free fundraising platform for fundraisers of any size and structure. We offer deals and rewards to donors who support your mission: the donor buys a deal and money goes directly to your cause. Think of it as your own Groupon fundraiser. In particular we’re helping a lot of run-walk-ride-athons achieve their goals, so if you’re doing this year’s Jimmy Fund Walk or Pan Mass Challenge we’ll be there. GoodTwo - Good Deal. Good Cause.

So I’m the CEO, the guy that’s supposed to know it all, but since I never will, I believe it’s important to surround yourself with smart, passionate people. Thank you TCN for surrounding me, because the minute I was exposed to your group there have been countless, immeasurable benefits. I don’t where to begin, but I guess I’ll start from the beginning:

Chapter 1: Michelle introduces me to Ben Littauer, a TCN Mentor, to offer free mentoring services. Free? Seriously? OK, I’m skeptical but I’ll take it. Fast-forward to today. Ben has spent dozens of hours listening to my spiel, sharing a cup of green tea, and giving me great feedback from an investor’s perspective. Ben has gone above and beyond, and will hopefully become a partner in the company in a greater capacity.

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Congratulations to the new class of Connectors for Boston World Partnerships! The new list of Connectors is impressive and features two TCN partners:

• Lauren Celano, CEO, Propel Careers (TCN Sponsor and Speaker)
• Jason Evanish, Founder, Greenhorn Connect (TCN Community Partner)

Lauren and Jason join with these current TCN-affiliated BWP Connectors:

• Christopher Mirabile, Managing Director, LaunchPad Venture Group (TCN Advisory Board and Speaker)
• Jeremy Halpern, Partner, Nutter, McClennen & Fish (TCN Board of Directors - Chair)
• Ovidiu (Ovi) Bujorean, Senior Associate, Rudyard Partners (TCN Advisory Board)

By Dan Allred, Senior Relationship Manager at Silicon Valley Bank and Board member of The Capital Network

These are exciting times for the Boston start-up community. New entrepreneurs, new investors and new companies are everywhere, and experienced entrepreneurs and investors are lining up to mentor them. Nowhere is this dynamic more clear than in Kendall Square, and the Venture Café at the Cambridge Innovation Center is quickly becoming the nexus of much of that activity.

I’ll give you an example of what I’m talking about. I went to an event at the Venture Café one evening last week, and as I walked out of the elevator I immediately ran into one of my clients who is also a fellow BOD member at The Capital Network (TCN), a non-profit focused on addressing the “capital gap” for early-stage start-ups. As she and I caught up, a contract CFO who works with at least a dozen venture backed companies (including her company) approached us and joined in on our conversation. From there, I proceeded down the hallway and ran into ANOTHER client of mine, this time a semiconductor company. I chatted with that team for a few minutes and then FINALLY made it to the Venture Café event, which was attended by over 50 entrepreneurs, most of whom I had never met before. There were several VCs and angels in the crowd that evening as well.

Clearly, good things are happening at the Cambridge Innovation Center, and the Venture Café is quickly becoming the place to meet the next generation of entrepreneurs. With that in mind, I’m very excited to announce the launch of TCN UpStart Roundtables which will feature CEOs with many years of experience to help mentor brand new entrepreneurs. This initiative is a collaboration between TCN and the Venture Café, and we at Silicon Valley Bank are pleased to leverage our network to make sure that there are always experienced entrepreneurs and CEOs on hand to lead discussions about start-up war stories and the decision making process inside of a start-up as well as to provide insight on what keeps these entrepreneurs and CEOs up at night.

Our line-up for the first three sessions of the TCN UpStart Roundtable is as follows:

• Thursday March 31^st: Panos Panay – founder & CEO of Sonicbids
• Thursday April 28^th: Leslie Williams – serial life sciences entrepreneur and current CEO of ImmusanT.
• Thursday May 26^th: Doug Levin – founder of Black Duck Software and founder & CEO of Ayeah Games.
• Thursday June 23rd: Eric Giler - CEO of Witricity and former CEO of Brook Trout and Groove Mobile

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By Mike Grandinetti, TCN Mentor (see Mike’s bio at the end of the article)

Based on this post via BostInnovation.com

For GreenGoose, the journey from Oregon to Providence to Cambridge, and finally to last week’s Launch Conference in San Francisco, has been intense and rewarding. This is the classic entrepreneurial story of how hard work, frugality, determination to see your vision realized and confronting your fears combine to produce a successful outcome. For GreenGoose’s founder, having the support of a group of mentors and advisors along the way gave him the courage and confidence to keep moving forward despite moments of self-doubt.

Brian Krejcarek has been building physical things for as long as he can remember, and until this week, his most noteworthy creation was a cabin that he built in the woods near his home. Based on the overwhelmingly positive reaction that he has engendered amongst some of the US’ most prestigious and prolific angel investors, founders and entrepreneurs this past week, this is no longer the case. As of Thursday night, it is clear that GreenGoose now easily qualifies as Brian’s most impressive achievement to date.

Brian came to the Northeast to advance his idea, looking for a program to provide him with mentoring and capital. Ultimately, he was connected to Betaspring, a mentor driven accelerator program for technology and design engineers which is based in Providence, Rhode Island and is a member of the TechStars Network.

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