Funding Feeding Frenzy – Part 1
VERBATIM by Loop Lonagan – Investor and man about town,
as told to John Jonelis
Loop Lonagan here. I’m at the Funding Feeding Frenzy ‘n’ there must be more’n 1000 people here and lots more goin’ in and out all day. If you wanna see what’s happening in the Chicago Startup Community, this is the place to be and you can do it all in one single day. But don’t ferget—there’s sharks in them waters and they bite.
This is the place where the judges hold up cards like they used to at the Olympics way back when. They say either FUNDABLE, which almost nobody gets, KEEP FISHING, which I see a lot, or the dreaded GO FUND YOURSELF. Plenty of those too. I watch one company get the thumbs down from the judges but later in the day that same company finds itself an Angel Investor right here at the event. I’m trolling for a couple good companies myself. And maybe some fun on the side.
It takes all day before I see any blood in the water. And I’m sittin’ here with a big grin. I always like a good fight.
FFF is so big they hold it in this enormous indoor car dealership – almost as big as McCormick Place. I crawl into a hot new Camaro and ogle the red Corvette. In past years, with room to spread out, they ran three stages at once.
This year for the first time, the FFF runs just one stage—not the usual three. This poses some pros and some cons. It allows David Culver & Company to put together a large panel of distinguished judges—all recognized Chicago investors. That’s on the good side. I get to see every company that presents. That’s good too. They already weeded out the weak companies and lotsa these presenting here bear a deeper look. I’ll check into those. These companies seem like they’re coached better than ever before and I appreciate the professionalism. All o’ that is on the good side.
But some things don’t work so good on a single stage. You gotta picture the situation. This event goes on ALL DAY. Sure, you can walk around but with only one stage, there’s nowhere else interesting to go. And it’s a hot day. Real hot. The AC keeps going till afternoon, then it gets nasty. But I like investing in startup companies and I like fireworks. I expect to see some of both. So I show up bright and early and stay late. And so do the judges—the whole day. That’s what causes all the trouble.
Just like any good event, they save the best fer last. That means the big show happens late afternoon. By this time I see lotsa shiny faces. The audience gets kinda thin. Most of ‘em are feedin’ their faces and indulging in various liquid cravings and raising a terrific racket in back—so loud it’s hard to hear the panelists. Like I said, these judges been workin’ their tails off all day and barely time for a pit stop. Anybody can see they’re all wrung out. And cranky. For what it’s worth, I figure this thing needs to start at 10:00 am and end at 3:00 pm max. That gives time for a couple two-hour sessions and a nice break. But that ain’t the way it is. No it’s every minute all day.
I think it’s crazy to pitch to a buncha investors suffering the miseries, but I see that’s just what’s about to happen. I prick up my ears and lick my chops. I wanna see what develops.
After four o’clock, the panelist’s questions are gettin’ kinda testy. They’re attention spans are probably at the breaking point too. I figure some promising offering is about to get chewed up.
Lemme tell you what happens but first, remember my rules:
- Tell a good story.
- Don’t get the judges mad.
- There ain’t no third rule ‘cause three strikes and yer out.
The next company is real special. After hearin’ their pitch over lunch, I believe they’re the real deal. But the guy I talked to at lunch ain’t the same guy givin’ the presentation right now. No, this presenter comes off as a know-it-all. What’s the word? Arrogant. Could be the heat because I meet him later and he ain’t that way at all. But right now, it’s painful to hear. He’s breaking rule #2.
And sure enough, the first judge turns nasty right away.
“I don’t understand your value proposition.” That’s the opening salvo. Then he starts firing off questions at the poor guy like a machine gun and when he’s done, you can sweep the pieces off the floor. This judge is an investor I respect. He’s the kinda guy I call the sharpest knife in the drawer. Some people think he’s intimidating. This time as it turns out, it’s the kiss of death. No way the other judges are gonna say anything positive after this guy turns vicious. No—they all fall right in line:
It’s like lecturing a schoolboy when the next judge says, “Within the million dollars, how do you see using that money?” Hey, the presentation covered all that stuff. Was he asleep or what? Like I say, it’s late and these guys attention spans are all shot to hell.
They could rattle off the rest of the objections in their sleep:
“You spent virtually no time on the business side.”
“Can you describe in more detail…?”
“How is that justified…?”
“I have a concern…”
Then back to the first judge. “There’s some big players in the marketplace. Some BIG, BIG competitors. One is coming to Chicago probably this year. It’s gonna—they’ll crush you!”
It’s all a buncha hogwash. But now the poor guy is back on his heels. He’s shot his wad.
Here’s the problem: He’s fielding questions all alone—something I like to avoid. He let himself get caught up in details and he don’t recognize these questions is coming at him from an entirely different perspective. Naturally he gets defensive. Naturally that offends the judges. What he needs is a colleague to observe and step in when there’s a problem. But he’s all on his own.
Then we hear objections shouted from the audience.
“Can you move so I can see?” Sheesh, I been sittin’ here all day. I’m tryin’ to pay attention to the shellacking going on in front of the big screen. I don’t even need to turn around to recognize the loud, harsh voice of Rong Mayhem. Why’d he wheel himself behind me?
“Somebody make him move.” I don’t budge. Rong can take a flyin’ leap fer all I care. Then he calls out to the speaker—as if the guy didn’t have enough trouble. “What happened to your last venture? I heard it went bust.” I have no idea what he means by this remark. Their last venture is a film that turned out real good.
The moderator interferes before another word gets out: “Don’t talk to him,” he says, meaning the speaker and audience shouldn’t oughta talk to each other. That’s the rules but it seems kinda rude given the circumstances. I like Rong but he gets banned from alotta these events. Can’t keep his mouth shut.
Then there’s a burst of noise from the beer drinkers in back ‘n’ that gets a response from the audience.
“Turn up the speakers. I can’t hear anything,” shouts Rong Mayhem.
“Who cares?” yells Sheldon Tommygun.
“Shuttup Sheldon,” booms Rong. This delightful interchange leaves me wondering if I’m gonna see an old man and a guy in a wheel chair duke it out. That’d be somethin’ to see.
Another judge goes on as if there was no interruption: “What does adopt the platform mean? C’mon, whaddaya think it means? Then he suggests a major change in the business plan and the poor guy is so beaten down he accepts it—even calls it “smart.”
Time’s up. The presenter limps off.
This comes as a big surprise – the very next company, Pallette App, gets a nice warm and friendly reception and takes first place fer the whole event.
I gotta admit, they’re good. Real good. But where’d all that irritability go? Maybe the shark’s bellies are full. To my mind, they just butchered a promising offering and missed a shot at a great investment.
The Happy Ending
I always say: If you tell a good story with passion and don’t personally offend the investors, they’ll gleefully fill-in the holes in your business plan using their own imaginations. Without a good story, they’ll pick you apart like vultures on a carcass. Well it isn’t hard to offend the investors this late in the afternoon. And that’s what just happened here.
So here’s what I do the next day: I run off a transcript of the Q&A. I go to the company’s offices and present it to them. There’s nothing like seeing something in black and white to get your attention. Then I encourage ‘em to show up at a couple other events. And sure enough, the next time these guys present, they do great. And I watch ‘em get fully funded. So this story has a happy ending.
Upcoming FFF Event
So’s I’m goin’ to the next FFF. It won’t be like this one was. Probably strictly business. They’re holdin’ it in an auditorium where they can keep tighter control. All the noisy food and venders is gonna be separate. I’m sure David Culver’s got it figured out. It’s his show and he knows what he’s doin’. And I’ll be there ‘cause I’m always ready to pick up another great company or two. And it’ll be ALL DAY again, so maybe, just maybe, we’ll get some fireworks on the side. If not, I’ll see what I can stir up.
Hey, you wanna know how it actually feels to give a pitch to this kinda crowd? Check out “My Kraken Encounter.” Just click da link.
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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 © 2012 John Jonelis – All Rights Reserved