YOUTOPIA picked up three angel investors at this meeting and achieved their stage one funding goals.

I’m at BNC Venture Capital. I came to see two exciting companies that have already crossed my radar screen. One easily won the recent FFF event and the other was in the top three.

I like Business Network Chicago events because they’re ALL BUSINESS. Most other events are all hype, but here, each company gets grilled with five standard questions:

1.) Exactly what is the product or service?
2.) Why should the customer buy it?
3.) Is the management team the best in the business?
4.) How does the company make money?
5.) How does the investor make money?

That’s tough and hard-nosed and that’s why I like it. Not every startup is ready to subject itself to this kind of rigor, but Len Bland manages to find three each month. The fact that he and Ray Markman are starting the Midwest Renaissance Fund probably creates a big draw to qualified companies.

After the presentation and grilling, the audience votes on a 1-10 scale. A score of “1” is considered “entre-manure” while a score of “10” means, “Where’s Grandma’s pension fund?” I’ll give you a quick peak into what two of these companies are doing:

Youtopia

This company was the subject of my previous article, DOT – A FILM FOR US.

I also watched Youtopia present at the recent Funding Feeding Frenzy. It’s an exciting offering, but after a long day, they presented next to last—after the judges were hot and tired and cranky—a recipe for disaster. The result? One judge turned on the speaker and the others followed like chickens in a barnyard, pecking away at him. When they finally got him on his heels, they sat back, apparently satisfied with a good day’s work. These judges were all angels and VCs. As far as I could see, they’d just blown the chance to invest in a really exciting company.

Disgusted with the whole thing, I paid Youtopia a visit at their downtown offices. These guys are highly creative and very coachable. I gave them a transcript of their FFF presentation, complete with Q&A.  They took all my suggestions, even improved upon them, and then got coaching from Len Bland and crew and delivered a sparkling performance at BNC.

The result?  They picked up three angel investors tonight.  That completes their stage one round.

The e-Harmony of Altruism

• Today, school districts across the nation require 40 hours of community service for graduation. Kids get stuck doing meaningless tasks that don’t match their interest. With Youtopia, the engagement starts with “What do you like?” The answer might be, “I like cats.” So maybe the system hooks-up the kid with an animal shelter.

• Under the present system, tracking is almost non-existent. With Youtopia, a web and mobile application enables schools to track and generate an organized social report card complete with recommendations for college admission offices.

Social Giving

• Youtopia facilitates connection with social media so givers can get their friends involved. The possibilities of going viral loom large.

• Colleges, fraternities, and sororities are another huge market. Imagine frats competing to make the world a better place. One guy in the audience said his kid would kill to get this.

• The business connection is huge. Corporations dearly want to advertise this kind of altruism.

Become a Youtopian

They already launched two weeks ago with three customers while they continue to develop their model. I like that aggressive approach—learning by doing. It’s a subscription-based model, which I also like. They need to fill out their team but with this kind of creativity and experience, it looks like they’re off and running.

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The next company is also ripe for funding:

PaletteApp

This company recently walked away with the Funding Feeding Frenzy grand prize—and well deserved. Tonight, at BNC, they made a big stir. PaletteApp proposes to change the 150-year-old way architectural design is done. In the process, they’ll transform a job that takes many man-hours into a joyful process that takes just a few minutes. They’ll save their customers millions of dollars in labor and materials, increase efficiency 100%, and better serve the entire architectural industry.

PaletteApp is a digital design tool that helps manufacturers, designers, architects, and contractors, speed the design and sample ordering process. With a vast library of products, design palettes are created in mere minutes.

150 Years of Waste

Today’s architectural designers painstakingly build what’s called a “palette” of samples on a large drawing board. They do it the old-fashioned way—catalogue search, phone canvassing, ordering multiple samples of every component by mail. Most samples are wasted. It takes many hours to design each palette and costs a lot of money. PaletteApp turns drudgery into a seamless creative experience with an electronic palette that automates all research with a comprehensive database of manufacturers. The designer can quickly drill down, find products and manage specs. Images of samples are downloaded onto one clean electronic presentation. What used to take 5 hours now can be done in 15 minutes.

• For 150 years, manufacturers have hawked their wares to designers using heavy mass-produced binders. A single change in design makes an entire run of binders obsolete, resulting in millions of wasted dollars. PaletteApp solves that, making quick electronic revisions for free.

• The old system means manufacturers delivering binders through reps. That reaches maybe 10% of the potential designers and does it slowly. PaleteApp can reach 100% of them immediately.

• Now, when it’s time to order, instead of spending hours on the phone, the designer simply points and clicks. Orders immediately transact online.

• Almost all designers already use Apple hardware and the new Retina display promises color accuracy of 99%— as good as or better than hard samples.

Augmented Reality

PaletteApp is a web based as well as tablet-enabled, with some interesting features. Imagine you want to change wall color. Simply download

the new sample to your iPad, then using the tablet’s camera, scan around the room. What do you see? The existing room with the new paint autofilled into the picture.

Scale

There are 87,000 design firms. Manufacturers spend $4B making old fashioned binders and most of that money is wasted. It takes 750,000 man-days to manage them. They can only reach 10% of the designers with their rep system. That provides a huge opportunity for PaletteApp.

Designers are already tech-savvy and ripe to embrace innovation. There appears to be no serious competition. Add to that, schools don’t have access to samples at all, making this a natural for architectural colleges and high schools.

The Company

The technical side of the management team looks solid. I like the business model. It’s subscription-based with huge margins and money from multiple sources. Manufacturers pay to eliminate sample books. Designers pay to build palettes quickly. Schools pay to give their students true-to-life experience. PaletteApp rightly expects to become the largest library of its kind. With the kinds of margins they project, investor prospects look highly attractive.

Contacts

These two tied for first place in the voting. At present time, PaletteApp is further along while Youtopia holds the promise of going viral and becoming over-the-top profitable.

Youtopia – Simeon Schnapper and Brett Singer – https://youtopia.com

PaletteApp –Jerry Freeman – www.paletteapp.com

BNC Venture Capital – Len Bland – http://bnchicago.org/Groups.php?group=8

Funding Feeding Frenzy – David Culver – www.fundingfeedingfrenzy.com

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