Rick Holt, 35, and David Grano, 39
Sales: $4.2 million
At the helm of a financial company that develops and markets wireless banking technology, Rick Holt and David Grano went looking for $1.5 million in venture capital funding in 2002. It was APTUS Financial's first foray into investment capital, but the pair had experience and connections in both the technology arena and the investment community through their previous positions: Grano as the head of a company that provided independent ATMs and Holt as the VP of sales at E*Trade.
How did you get in contact with the venture capitalists?
David Grano: Based on the economic environment, we didn't intend to go out to the venture capital community in a traditional way--we first put our own money into the business to the point where we could begin the hiring process. We had a successful track record in a like industry segment, so we weren't trying something that none of us had been involved in before where we were initiating new relationships.
What were the VC reactions this time, as opposed to fundings in your previous enterprises?
Grano: All of them asked if we were insane to be starting up in this environment. It boiled down to being able to demonstrate we were taking steps in something we'd done before--and, frankly, a lot more selling than we've done in the past, especially on the financial side.
Did you feel you had to agree to harsher terms than you originally intended to?
Grano: To avoid ending up with disadvantageous terms, our investors had to understand on a granular level how we were going to realize the revenue for the business and utilize the capital. That's part of developing the trust.
Rick Holt: One of the reasons we got the terms we wanted was that we had so much skin in the game to start--not only with experience but with our own capital already at play. That lent a lot of credibility.
Your money-raising strategy seemed to focus on relationships. How do you build and keep these good business and investment relationships?
Holt: It's a grass-roots effort of ongoing, open communication. It's sharing our successes--telling our story.
What advice would you give to other entrepreneurs searching for venture funding in a difficult economy?
Grano: Do everything within your power to bring a customer along with a business model to the table in this market. --N.L.T.