In raising money, it’s key to be able to communicate what a company does and how it can provide value. Behind the scenes, there’s also a lot of practical knowledge that goes into the process.
From term sheets to valuation, there are lots of details, so it helps to get guidance and make a plan. That’s what the national, university entrepreneurship–focused nonprofit VentureWell is looking to provide through a program called Accelerating Startup Partnership and Investment Readiness (ASPIRE).
Last week, Inner Harbor’s Institute of Marine and Environmental Technology (IMET) played host to a group of clean tech and sustainability-minded startups who were partaking in the program. Working with leaders at IMET’s Harbor Launch incubator including former IMET Assistant Director Nick Hammond and incubator manager Lindsay D’Ambrosio as well as TEDCO, the program was initially announced in the spring. The November 12-16 session marked VentureWell’s first in Baltimore. It’s also been held in cities like New Orleans and Detroit, and Salt Lake City is next.
Three out of the 10 of the startups were Maryland-based, while others came from outside the area.
During the week, entrepreneurs worked on preparing the items that will be key when they go to raise money from investors. VentureWell held sessions throughout the week, and brought in mentors to provide guidance.
“The goal of the week is to help them make a fundraising plan that’s vetted and has input from investors,” said VentureWell senior program officer Christina Tamer. “All of the mentors either have investment experience or corporate experience working with startups in a dealmaking capacity.”
The mentors were also from the region as well as other locales, giving investors like Beltway Angels member Dave McCarthy a chance to compare notes with others from around the country.
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For the entrepreneurs, the sessions were oriented toward helping the startups understand the various elements of the process of seeking funding, whether it’s presenting intellectual property, financial projections or going through due diligence.
The cofounders of Sage Smart Garden were among the two startups hailing from Pennsylvania who attended. The Philly-based company created smart irrigation technology that uses sensors and data to automate the process of watering plants. Cofounders Dustyn Roberts, Trevor Stephens and Ariel Ramirez have honed in on a business to business model. As they prepare to seek funding, the program provided insight on different kinds of term sheets, and a look at the landscape of different stages of funding and types of investors.
“This was our next step in compressing the learning curve that is usually associated with figuring out how to raise money from several months or even years down to an intensive bootcamp week,” Roberts said. “It’s been wildly helpful.”
The idea is to provide both more theoretical knowledge, as well as practical insight. So along with leading sessions, the mentors onhand provide direct advice to the startups, as well, which helps give perspective from inside the process.
“It’s really helpful to hear from investors how they think of valuation or investment readiness or even who we should be raising from, whether it’s a venture capital fund or an angel group,” said Mihir Pershad. He’s the COO of VakSea, a startup commercializing technology developed at the IMET lab of UMBC Professor Vik Vakharia that helps to protect fish from disease.
Since the goal is to leave with work that can be used, the week ended with a mock board meeting in which a pair of startups show what they’ve prepared to mentors, and ultimately get approval.
The week also included a few surprises. The schedule was dotted with a few breaks, but they weren’t without activity. As the sessions broke up, VentureWell sent out “stress tests” that call for immediate response to a crisis. The scenarios such as board voting to remove a CEO or an issue with intellectual property aren’t real, but they’re examples of issues that have happened to others. It requires a quick email reply to think through how a team would approach an emergency that could threaten a business. Later, VentureWell helps debrief participants with guidelines that show how the situation was handled.
While the exercises add some drama, “There’s a lesson there that it’s supposed to be thought provoking for them. It’s supposed to help them realize that they need to be diligent in terms of setting up processes and thinking ahead,” Tamer said.
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