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7 TIPS FROM A WINNER

Funding Feeding Frenzy – Part 5

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m gonna go full circle at dis Funding Feeding Frenzy.

No, I ain’t drunk—well maybe I am by now—but what I mean is, I’m goin’ back to the start o’ this event. After all that stuff I already talked about, I’m finally gettin’ ‘round to the first speaker at the FFF—Palette App—the company that won last time.

Like I said, I seen the pitch before. I also seen them at BNC Venture Capital and later at their corporate offices. Research. A guy’s gotta check stuff out fer himself.  Anyhow, here I am at the FFF in the Chopin Theater to hear what he has to say.  And as it turns out, I’m very glad I to be here.

Chopin Theater Lobby

Lobby – courtesy Chopin Theater

The speaker is Jerry Freeman, founder of Palette App, and the guy’s real smart. He’s doin’ his pitch fer us as a demo—to break the ice before all the poor slobs face the judges.

So I’m sittin’ here next to Jay Kinzie, a colleague o’ mine from Mastermind Advisory Board in this cushy seat in the Chopin Theater. Rong Mayhem ain’t gonna wheel up behind me and start yellin’ like he did at that car barn they held this thing at last time. And the noisy crowd is banished to the trough downstairs.

Feeding Trough

Feeding Trough

That means I’m free. Free to concentrate on findin’ the companies I wanna follow up on. But first comes Jerry Freeman. He starts by giving his own pitch. I know it by heart so I’ll paraphrase:

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Da Pitch

Palette App logoPalette App helps architects and designers do their job better, faster, cheaper. (Jerry doesn’t actually say better, faster, cheaper, but that’s what it amounts to.)

They take away them old-fashioned sample binders that designers and architects been blowin’ their money on for 150 years. They hand ‘em this beautiful digital palette. It’s easier to put together, better organized and more efficient to use. You can make changes fer free! That’s a big deal in this industry.

Palette App

Palette App

It saves a designer about 30 business days a year. That’s alotta man hours. And that kinda time’s worth a few bucks. The digital palette’s better for the client too. That’s why I been excited ‘bout this company right from the first.

Palette

Palette

The software usta be just on iPad ‘cause that’s what designers and them kinda people use. But now it’s on Android too. There’s a version for architectural design schools, which turns out to be a big deal. You can read all about it at https://chicagoventuremagazine.com/2012/07/16/150-years-of-waste-meets-technology/

The company is up-and-running and generating revenue. They already got 35,000 products loaded in their system. They got multiple profit centers. They make money whenever a designer orders a sample. And they make money through subscriptions.

Far as capital goes, they already raised $700K and the first round is gonna close pretty quick. 70% of that came from the last FFF. You can read about that at https://chicagoventuremagazine.com/2012/11/23/shark-tank-meets-the-apprentice/

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Da Interview

So after his sample pitch which I kinda butchered—but hey—how ya gonna spoil something as good as that? Anyhow, Jerry sits down with David Culver and does an interview about what it’s like to run a startup. This is good stuff and I learn something.

Jerry Freeman and David Culver

Jerry Freeman interviewed by David Culver

Raising Money

This seems to be the biggest question on ever’body’s minds. Jerry says, keep pitching at every event you can ‘cause it’s the best way to get connections to lotsa investors. Raising money is a full time job. As CEO, raising capital turns out to be his #1 job.

Then there’s cold calling. You start by pitching on the phone to some junior-level gatekeeper. Then to the next one up, then the next. Then maybe you gets a face-to-face with a decision-maker, fly way out somewheres and run up the old expense account.

All that takes months. Then maybe you get a commitment. Whoa—the money ain’t in the bank yet, fella. Gotta go thru due diligence. Paperwork. It takes six months to get the check, if it comes at all. People drop out. Meanwhile, how you gonna pay yer staff? So you gotta watch yer cash flow real close.

So he says to keep entertaining small investors till the big checks come through—just to pay the bills. The little guys come through quicker.

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Crowd Funding

Glenn Gottfried

Glenn Gottfried

Let’s talk about the new self-directed IRA. Lotsa baby boomers got millions stashed in their IRAs. All those add up fast. There’s five trillion in investment dollars hidden away in these accounts. That’s right—I said five TRILLION dollars—almost a third as big as the national debt! It dwarfs private capital. Blows it away! And deals like that close in thirty days—not six months like with VCs and Angels.

This is a form o’ crowd funding. Usta be only charities raised money that way. Now there’s brand-new laws that open it up to investors. So far it’s only for accredited types—people with a million bucks plus. That’s gonna change but the government is draggin’ its toes—nothin’ new about that.

So fer now, friends ‘n’ family ‘n’ Kick Starter is still the best way for small cash, then

Loren Minkus with Jay Kinzie

Loren Minkus with Jay Kinzie

millionairs with self-directed IRAs. Pretty soon we might see the dam burst on crowdfunding and money’ll flow all over the place.

Jerry gives 7 more tips on how to run a startup:

7 Tips

  1. “The shorter your pitch, the better,” says Jerry. If you think yer gonna get through it in eight minutes, cut it back ‘cause it’ll always take longer. “Practice 21 times,” he says, “so you’re not nervous.”
  2. “Simplify. If you’ve got twenty ideas, narrow it down to three,” he says. When Steve Jobs came back to Apple, he cut down their product line to about five. Now they’re huge.
  3. “Challenge is important.” He asks himself why he ain’t tripling his users every month. You gotta find creative ways to reach that target.
  4. “The dot bomb era is over.” Start raising revenue ASAP. That helps attract investors way better than flashing yer goofy projections on PowerPoint. “When you can say, We already started generating revenue, it puts you in a different pile from the rest.”
  5. “Crank up sales fast because sales sell. Get to risk mitigation ASAP.” That’s important ‘cause investors is more risk-averse than dey ever was before. And the banks ain’t lending. Actual sales sounds a lot less risky.
  6. “Keep your people motivated.” Use every success to get your people rejuvenated. Tell ‘em stories from the road. Celebrate small successes.
  7. An entrepreneur is somebody who goes from failure to failure to failure without getting discouraged.” It’s good to come from a sales background so yer already used to rejection. “If you’re a wallflower, get over it,” he says. Then David Culver follows that with, “The fortune is in the follow-up.”
Chopin Theater

Stage – courtesy Chopin Theater

Gotta Go

I gotta catch a cab to another meeting, so after plenty o’ good food ‘n’ drink, I say g’bye to the FFF kinda early. Two guys tag along to share the ride. One’s an investment banker, the other a VC.

And wouldn’t you know it—I trip on another pothole, right there on the sidewalk. Now my suit’s slashed in both knees. Neither o’ these guys helps me up like the bums did.

And when I drop ‘em off, neither offers to share the cab fare.

Happy New Year to all o’ youse out there.  Cheers from da merry land of Shark Tank Meets the Apprentice.  

NOTE TO JOHN – I seen your articles on a buncha sites.  One o’ dem usta be a real good tech jounal run by the Huffington Post.  It went through a buncha changes.  Now it’s runnin’ third-rate soft porn right along with da articles.  Don’t know what’s with that but thought you’d wanna know.

NOTE TO LOOP – Thanks for the heads-up.  I’ll check it out and maybe put a stop to it.

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Continue to WHAT’S GOOD?

Go back to Part 1

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Da Contacts

Palette App – www.paletteapp.com

Funding Feeding Frenzy – www.facebook.com/FundingFeedingFrenzy

The Chopin Theater – www.chopintheatre.com/event.php?id=2275&pageId=soon

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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DEAR FRIEND

Dear Friend 

 

An acquaintance showed me this letter.  How would you advise him going forward?

 

 

Dear Friend

My neighbor Dave has a wonderful new product and needs more funding to move it forward. I already put money in it and don’t want to lose any of that. Can you give me some advice?

Tonight, he’s over here venting at the top of his lungs about some meeting. Drinking up half my single malt. Some guy had the gall to say that Dave doesn’t get his story across to the investor. Says he needs to make it clear to a reasonably intelligent 12-year-old. That’s ridiculous. Another one told him to write a real business plan. Can you believe that?

Everything Dave owns is tied up in this thing—it’s his whole life. Nobody knows that product better than him. His old company sold him the rights. Then he got a patent—that cost him plenty. But after he builds a prototype and proves the concept, investors will scramble to jump aboard. He only needs another $250K to do that. He practiced his presentation on me and he had so many good ideas and complex slides, it took three hours to explain it all and left my head spinning. I don’t pretend to understand it—I’m not an engineer or an accountant.

So, he hits all the meetings at the local universities. Nothing happens. He makes a formal presentation at a venture capital group and nobody calls him back. Next, he gives his pitch at a big all-day event and they basically say, “Get lost.” Then he tries a couple angel groups and they show no interest whatsoever. All this takes a lot of time. So he goes to New York and Boston for a month. Comes back empty. Now he’s planning presentations in Silicon Valley. Says California’s where all the tech money’s at. Dave believes he’ll eventually find an investor if he keeps throwing his shoulder at the door.

Problem is, he’s running out of doors. With no revenue and only three technicians left on staff, he’s still burning money. I don’t know what he’ll do if he loses these guys.  It seems so unfair. Dave keeps costs down. Handles everything himself, right down to the legal work. Even plans his own presentations. What’s wrong? Some guy offered him coaching but he doesn’t need that, does he? Sometimes I wonder. If he got professional help from the start, is it possible he’d be up and running by now? I don’t dare tell him that. What do you think?

Please keep this confidential.

Yours Truly,
Hal

This is a fictional account drawn from a composite of personal observation, experience and imagination.  Any similarities to actual individuals living or dead or to a particular sci-fi movie are purely coincidental.

Comment on this article — Name and email optional

Find Chicago Venture Magazine at
www.ChicagoVentureMagazine.com
Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

© 2012 John Jonelis – All Rights Reserved.

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Filed under Chicago Venture Magazine, Chicago Ventures, Consulting, Entrepreneurship

FFF Presentation Elevation

John Jonelis

FFF KrakenTonight I’ll see something that could change the world

We’re meeting at Tower Club in the Civic Opera building. The raised-panel walls surround me with the ambience of wealth and the seats are packed with it. I take in the great view above the Chicago River while enjoying the dinner spread.

David Culver, CEO of Extraordinary Success hosts this event to put entrepreneurs in front of investors. Each company gets 10 minutes to present before comments by a panel staffed by Carl Moose of Property Calc Analytics, David Beaseley of Synergy Financial Partners and Ron Kirschner of Hartland Angels. Tonight is the prelude to the big Funding Feeding Frenzy in November. Here’s the story as I see it:

As I heard it –

 

Dr. Harvey Charles-Kaplan  

DoctorInvent@gmail.com  773-484-7731

The most memorable presenter in my recollection wears a rumpled suit and gives his entire talk barefoot. I recall stories of Einstein teaching class in a bathrobe and carpet slippers. No spit and polish–This is an inventor presenting new science—not yet a full-fledged company. As I watch, Dr. Kaplan proceeds to read complex patent verbiage off the screen until somebody with a dose of compassion calls out, “Show the pictures.” Kaplan kindly complies and goes on to explain everything in his own words. Things get hugely interesting. If what he has is real, we are seeing something that will change the world.

A few eyes have already glazed over, but along with many others, I am enthralled as he moves on to show us his mass of overlapping technology. His Kaplan Fibonacci is an entirely new method of generating electric power. It’s passive, requiring no fuel. It creates no pollution. Instead, it cleans the environment. Here’s how it works: Water falls through a spiral, using gravity for energy, creating a vortex under pressures upwards of 1000 psi. That swirling water passes through a magnetic field, eliminating the need for an expensive turbine.

It could double the capacity of hydroelectric plant. In Lake Michigan, it could pump water to the top of the Sears Tower while breaking down toxins in the water and cleaning the lake. At such high speeds and pressures it breaks apart water molecules and as a side efffect, produces hydrogen for automobile fuel cells, or in a water treatment plant, produces marketable methane gas.

With the BP disaster still making an impact, the technology cleans oil spills, transforming the molecules into nutrients that could boost the fish population. It is intended to convert nitrogen from the air into liquid nitrogen.  That freezes an oil leak, stopping its flow.

Dr. Kaplan is pursuing 243 patents pending. His personal credentials don’t fail to impress, with a Harvard degree, medical experience at Mayo, and a career in nuclear. Can this be the real thing? What do you think?

 

Nerve Access, Inc. – Dr. Yaser Maksoud, M.D. University of Illinois

ymaksoud@nerveaccess.com  312-731-4949

NA-135 is the first cure for Alzheimer’s disease. How many new offerings get more important than that? Insulin is a proven cure for the disease but the problem is delivery. Dr. Maksoud uses a novel nasal spray that is absorbed by the brain in 15 minutes without going through the blood stream. This is not a temporary fix or treatment of the symptoms like existing drugs. This is the first cure. In vitro studies show that brain cells regenerate using this treatment. Academic studies project a 67% increase in cognition.

Alzheimer’s is a huge market and big pharma is spending big money to address it. 36MM patients exist worldwide. This is a 7BB market growing to 70BB by 2040. The competition has no effective treatment—all are symptomatic, yet the top competitor brings in 3BB without curing the disease. Dr Maksoud estimates that NA-135 will be worth 500BB once it gets through phase II clinical trials.

I see a lot of testimonials from impressive sources. The project has already received 1.5 MM in Federal grants and Dr. Maksoud has his own skin in the game. Continuing research shows the same treatment addresses Parkinson’s disease and Diabetes. These are huge markets. Dr. Maksoud has several other products in pipeline. His team is made up of an impressive blend of PhDs with business and legal experts. The delivery method is patent pending for formulation and use.

 

ExpoInterface – Nick Henning and Mark Marineck

nickh@expointerface.com   312-208-0930

At 31,000 trade shows each year, people throw away brochures and business cards without reading them. Badges, books, brochures, and maps are costly. Registration lines are long and slow.

ExpoInterface creates a paperless trade show. All information is shared from a centralized cloud repository to mobile devices controlled by the trade show. And everybody gets a mobile device—attendees that don’t own smart phones can rent. The cost to the show is negligible and the system adds revenue.

This is a multi-billion dollar market with five competitors. ExpoInterface management has 30 years’ experience in trade shows and sees future opportunities at sporting events, amusement parks, or anywhere there’s a registration line and a payment transaction. Barrier to entry isn’t huge, making this is a time-to-market play.

 

Silvrspoon – Eugene Revzin

erevzin@silvrcorp.com    847-877-1128

People wait too long at restaurants and bars for their service and bill. A huge gap exists between restaurant and consumer interaction. Silvrspoon plans to become the point-of-sale of the future.

Using a smartphone app, they create convenience to the customers by on-demand ordering at each table. The result? People order more. Service is quicker. Loyalties are built. Rewards programs become interesting. Customers use social media as part of the experience. Waitresses don’t work as hard. Restaurants gain more revenue, see customer feedback and get access to data including inventory, ordering preferences, and facial recognition. When a customer returns, the restaurant has a record of who it is and what was ordered before.  Silvrspoon is already live at four locations, has gained international press, and is featured as one of Chicago’s most interesting startups. One member of the audience volunteered a testimonial of a terrific experience.

This is a subscription-based business model. To drive quick adoption, prices are low to restaurants and free to consumers. The database becomes an asset of the company. The management team is young and diverse.

 

SweetPerk Inc. – Kalan Kircher

kalan@sweetperk.com    614-634-2099

Amazon price checker scans a bar code and gives competitive prices while Google and Amazon provide local data. How does a store remain competitive under that kind of pressure? SweetPerk proposes the LiveLocal.com loyalty programs with a unique identity for each neighborhood. Merchants create a perk that goes live immediately. Customers see it immediately on their iPhone or Android and redeem it. They can “favorite” a merchant and link to Faceboook. Eighty three merchants are already on board.

The system creates multiple revenue streams. A chamber of commerce, merchant association, or city manager can see the dollars spent in a community.

 

What’s Next for FFF?

The upcoming Funding Feeding Frenzy runs for 12 hours starting at 8:30 am 11/2/11. For details, see http://FundingFeedingFrenzy.com  

To experience what it’s like to present, check out http://coreinsightstory.com/my-kraken-encounter  on this site.

That’s what I heard. What did you hear? Your comments are welcome.

Find Chicago Venture Magazine at
www.ChicagoVentureMagazine.com
Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2011 John Jonelis – All Rights Reserved.

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