Any entrepreneur who's ever chased venture capital dollars can tell you the process is often a brutal, soul-stripping experience. For those without Ivy League connections or friends and family in the right places, finding someone to quickly scan your executive summary or listen to your "elevator" pitch can take months.
This need--of entrepreneurs who have potentially fundable ideas to be connected to investors--has given rise to the quite recent venture-forum phenomenon. Although these entities have been in existence for decades, the past five years have seen the number of forums grow significantly.
According to Tom Siegel, president of the National Association of Venture Forums, there are about 100 active forums nationwide. They range from relatively small, highly selective groups to forums that let just about anyone with a business plan make a pitch.
Most forums charge an application fee and offer brief one-day workshops geared toward helping selected candidates refine their presentations. Presentations range between seven and 15 minutes and are typically followed by a question-and-answer period, when angels and venture capitalists ask for more details about the company, its management team, the market and more.
But don't expect investors to be so dazzled by your presentation that they rush up, checkbook in hand and pen poised. "Most investors require additional meetings," explains Siegel, who adds that venture forums should still be considered long shots, and that they require lots of follow-up and perseverance. Despite that, says Siegel, they're still a great tool for helping entrepreneurs get exposure, refine their business models and sharpen their pitches.
How a Venture Forum Works
To gain a deeper understanding of exactly how the venture-forum process works, we interviewed two entrepreneurs on opposite ends of the spectrum. One is in the early stages of presenting to investors and the other has two appearances under his belt and high hopes for a third. Both firms are clients of Venture Point Tech Coast Small Business Development Center, the only SBDC in the United States that specifically targets companies operating in the high-tech/high-growth sector.
Irvine, California-based Venture Point has created a review process that emulates the venture forum--but with some key exceptions. Instead of seeking capital from the investors who volunteer to sit on the panels, entrepreneurs seeking help with their business plans obtain feedback and advice on how to sharpen their presentations and businesses. This help is provided through intensive one-on-one consultations and small-group critique sessions.
One current Venture Point participant is entrepreneur Richard Castellanos, who has yet to enter a venture forum. That's because he's been going through the extensive grooming process at Venture Point since November 1999. "I wanted an unbiased group to validate our opinion on [our product]," says the 38-year-old founder and president of The Flying Beverage Company, a Cypress, California, business that produces airline catering and galley equipment. "I also wanted them to help groom us to go before investors. I expected them to help review our business plan, to help ensure we had a good presentation plan and, most important, to help us develop a strategy to locate investors."
What was Venture Point's objective analysis of Castellanos' attempt? "It was obvious from his business plan that [Castellano] had spent a considerable effort trying to understand the market and the competition," says Karen Z. Gifford, director of consulting services at Venture Point. "But while he had done a lot of work, there were still some gaping holes."
In an effort to move Castellano to the next level, Gifford and her consultants pointed out the strong and weak spots and then created a timetable for dealing with them and meeting again with the Venture Point staff.
The evaluation process certainly opened up Castellanos' eyes. Like most entrepreneurs, his primary inclination had been to focus all his energies on finding the financial resources to fuel his dream. Consequently, he became frustrated and impatient when the consultants raised some unexpected questions, like "What do you and your team want out of the business?"
But that's the point. According to Gifford, helping entrepreneurs understand how such ancillary issues will affect their search for funding and the development of their business is what Venture Point's consulting is all about.
The Challenges of Qualifying for a Forum
Akropolis.net, a Web portal in Irvine, California, for architects, in-terior designers and landscape architects, is still going through the process of presenting at venture forums. The company, which has already presented at several Southern California venture forums, was one of the first to complete Venture Point's review process.
"The first one we did was the California Venture Forum in November 1999," says Jeremy Kisner, president of Akropolis.net. "First, we sent in three copies of our business plan. They received about 45 and picked the top 13 or so. We were selected. Then we went to a mandatory one-day workshop, where they talked about how the presentation was supposed to go."
During the workshop, Kisner and partners realized just how clueless they were about this whole venture-forum process. "At the one-day workshop, companies should have had a rough of their presentation," remembers Kisner, who's still trying to raise between $7 million and $10 million from investors. "We didn't have ours."
At the workshop, Kisner learned each company would have seven minutes to give a PowerPoint presentation covering their product, target market, management team, financial projections and business development strategy. A dress rehearsal was held about a week before the forum, and at that point, everyone was timed.
The second venture forum Akropolis.net presented at was WestStart-CALSTART in February. "The format was the same as the first one, with the one-day workshop and rehearsal," says Kisner, who liked the WestStart forum because more investors attended.
So although Akropolis.net hasn't found an investor yet, Kisner is in negotiations with several and insists he and his team didn't walk away empty-handed. One important thing he learned: how to refine the presentation. "We learned you have to memorize your presentation and be very succinct," he says. "You have to cover the major bullet points of the business in a logical fashion."
In addition to polishing the presentation, the forums allowed Kisner and his team the opportunity to network with individuals who might know the right investors. And thanks to the knowledge and confidence he's gained from the experiences, Kisner says they now might have a better chance at presenting at larger, more sophisticated venture forums.
Like Kisner, many entrepreneurs don't succeed at their first venture forum. But there's never a quick fix to capital needs. Don't forget: If you want to raise money, you usually have to do some learning--and some legwork.
How to Shop for a Forum
Boot Camp Basics
Made it to the venture forum? It ain't over yet--time for the orientation workshop.
Sure, earning the chance to present at a venture forum seems like a major obstacle cleared. But in reality, a more critical element to this whole process actually happens after you're chosen to participate. Referred to as orientation workshops, and designed to teach entrepreneurs venture-forum procedures, these pre-forum cram sessions actually more resemble boot camp.
Case in point: At Springboard 2000, a series of regional venture forums that target women, selected business owners must attend a day-long boot camp four to six weeks before presenting. In addition to learning about the presentation and testing out their pitch, each is assigned an experienced coach ready to help them refine their spiel.
It's not a simple process. Entrepreneurs must make special attitude adjustments in order to be successfully coached, says Karen Gifford, director of consulting services at Venture Point. "[You] must hear the advice and actually take action on it," she says. "But that doesn't mean every single bit of advice we give out should be taken. It's a matter of hearing what is said, judging it and explaining why a certain action was taken if it's not in line with the recommendation. You also have to be coachable without being defensive."
The Right Stuff?
Things to keep in mind when looking for the right venture forum
Timing is everything when it comes to presenting at venture forums. That's because these are public venues--meaning it's not possible to ensure confidentiality of a presentation. Tom Siegel, president of the National Association of Venture Forums (NAVF), says entrepreneurs should wait until they feel they're not letting the cat out of the bag about their company before applying. Depending on your business, this means securing your copyright, making sure your trademark or patent is in the works, or having your Web site in beta-test mode.
"But it doesn't mean waiting until your business plan or presentation is perfect," says Siegel. "Most investors recognize that people progress and improve over time and won't hold it against an entrepreneur who, six months or a year ago, gave a presentation that was sloppy."
Once you decide when to present, the next question is where. Finding a forum is getting easier thanks to the National Venture Capital Association Web site, which features an events calendar that lists venture conferences and forums. NAVF is currently in the process of developing a listing on its own site, and you can call the NAVF office at (314) 567-4145 to find the nearest forum.
The top six forums that pull in the largest number of participants are: The New York Venture Club; The Capital Network in Austin, Texas; the Florida Venture Forum; the Missouri Venture Forum; the Los Angeles Venture Association; and the Rockies Venture Club in Denver, Colorado.
Once you've identified potential forums, give them a call. "Ask them the format of their meetings, how you apply, what the application fee is and who attends," suggests Siegel. "Are they investors or service providers?" Also, ask what you can expect to gain as a result of attending and participating in their forum. Says Siegel, "They'll be honest with you, because they're not interested in misrepresenting."
Keep in mind that each forum has its own unique mission. These can range from investing in environmentally friendly companies to targeting firms that will create jobs in a particular local area. Find out ahead of time if your business fits with their mission, or you'll just end up wasting time-yours and theirs.
How to do the venture forum right
As you might have guessed, not all venture forums are created equal. To use a baseball metaphor, some forums are considered Double-A while others are definitely major leaguers.
Jeremy Kisner, president of Akropolis.net, noticed such differences after making presentations at just two forums. "After we did our seven-minute presentation, we had a table where people could come back and talk with us," he says. "At the first one, it was mostly students and service providers who talked with us. At the second one, there were probably five or six investors who asked us to tell them about our business."
Tom Siegel, president of the National Association of Venture Forums, agrees there's quite a variance among venture forums. "It all depends on the mission of the venture capitalists," he says. "For some of them, part of the mission is to keep the forum a relatively small, closed group. Others are more general networking groups or open forums, and a few are industry-specific."
If you're new to the game, attend a small forum to help you better learn the process. But keep in mind the following tips for evaluating venture forums:
1. If the application process is highly selective, chances are the number of potential investors present could be substantially higher.
2. A heftier application fee sometimes translates into more investors.
3. When you call to get more information on a forum, find out the ratio of investors to service providers.
4. Will there be more angels than venture capital firms attending? Angels tend to make smaller investments.