BALTIMORE
The giant red timer in the back of the room begins its countdown at eight minutes.
That’s just eight minutes for each of the tech executives at the Mid-Atlantic Venture Association’s annual fair to sell the promise of his or her start-up company, and to explain why it is worthy of a multimillion-dollar investment.
“If you don’t present well, it can break your company,” an attendee said.
The timer starts counting on the presenter’s first word, which is almost always “thanks.”
Thanks to the company’s sponsor who helped finagle an invitation, thanks to co-workers huddled around a table near the front of the room, and thanks, of course, just for the opportunity.
It’s an opportunity to meet more than 250 venture capitalists from around the country who together control at least $15 billion.
“It’s all exposure,” Yuval Boger, chief executive of Oblicore Inc., said shortly after wrapping up his pitch to polite applause.
In the audience were members of some of the area’s largest venture firms, such as New Enterprise Associates, Carlyle Group and Grotech Capital Group. Representatives from scores of other funds were also present.
Even so, venture capitalists can be like high school students. They cluster in the back of the ballroom, chatting near the doors, wandering in and out. The ones who do sit and stay aim for the back rows, the distant tables where they might jot down notes or flip through another company’s presentation book. Others stare absentmindedly into space or check e-mail on BlackBerry pagers.
“A lot of people float in and out of these rooms,” said Mario Shaffer, managing director of FBR Venture Capital Managers. “What are you going to do to capture their attention?”
Tim Robinson, president of BioPay LLC, took a novel approach. He threw open the doors to his room and beckoned the networking venture capitalists inside with an ear-splitting whistle.
There are a few key points that investors and entrepreneurs agree must be covered. Every eight-minute block starts with someone trying to explain, quickly and concisely, exactly what his “software solution” or “biopharmaceutical discovery” is. That’s a good 90 seconds right there, 61/2 minutes to go.
“It’s hard,” said Loren Burnett, chief executive of Celcorp Inc., another presenting company. “You have so much to communicate and so little time.”
Investors also examine a company’s management team. A walk through the exhibit hall does not show many newly minted MBAs in running shoes running companies — the few that are here are associates from venture firms learning the ropes. The companies are almost all staffed with seasoned business executives in jackets and ties.
Boger, for instance, a former major in the Israeli army, is on his fifth start-up company. Burnett was an executive at RipTech Inc., one of the area’s recent start-up success stories after it was sold for $145 million. Jeb Connor, chief executive of Panacya Inc., includes a little technology outfit called Hewlett-Packard as one of many employers on his resume.
As presenters detail backgrounds like those, the big red clock counts off another 90 seconds. Five minutes left.
Most start-up pitches run 45 minutes to an hour, but executives said it’s not too hard to distill that to about 20 minutes. Cutting it to half that is at least twice as hard.
They certainly can’t cut the part about their customers. Venture capitalists aren’t fond of drawing industry comparisons to the late 1990s, but one thing they’ll tell anyone who will listen is that two guys in a garage with an idea drawn on a bar napkin are not what they’re looking for.
Now it’s about customers. Big customers, like NASA, General Electric Co. or the Defense Department. It’s also about revenue. One presenting company, HealthScribe Inc., booked more than $30 million last year, and almost all the other firms report at least some sales this year. (Unless, of course, they’re biotechnology firms in drug development. They get a pass.)
With 150 seconds more gone and 21/2 minutes to go, the time comes to sell the future. How big is the market, and how much of it will the company control? It’s important to mention competitors, of course. Every venture capitalist knows that anyone who says he has no competitors is either dumb or lying, although there’s nothing wrong with explaining how competitors can be crushed.
The slide showing future revenue growth is still included in these presentations, as it has been for years, although it has been toned down quite a bit. Companies don’t regularly predict $150 million in annual sales by 2005 if right now they have none. Expectations are certainly down, but even some of the biotech firms expect revenue to trickle in soon.
And then the red clock beeps. Time’s up.
“I’d love to go on CNBC tomorrow,” Boger said after finishing with three seconds to spare.
Entrepreneurs get used to selling their companies in plush conference rooms, around dark wooden tables ringed with potential investors. Such arrangements allow casual questions and answers and give presenters a good visceral sense of how well their pitches are going.
“Here,” Connor said, “it’s a bright beacon on your face and a clock in the back of the room.”
Nicholas Johnston’s e-mail address is johnstonn@washpost.com. Shannon Henry, whose Download column normally appears in this space, is on leave.
Reported By TechNews.com, http://www.TechNews.com
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