April 16, 2009
The Rockies Venture Club’s April Meeting opened with two companies offering pitches to the audience. To start, Monty George presented Fossil Energy, Inc.’s approach to oil production. The company seeks previously underdeveloped fields with proven production and relies on horizontal drilling technology to maximize output, obviating the need to drill more deeply. George assured the audience that Fossil requires less investment and involves less risk than other oil companies because they “are not doing it like everyone else.” The Lakewood, Colorado based company currently has wells in Wyoming and Texas. George believes the company “is ready to turn the corner” and is looking to raise about $6M.
Jim Davis, the COO of Distinctive Brands, introduced the audience to his company’s beef jerky brand via his presentation and free samples provided on each table. The jerky features a “patented tenderization process” as well as an all-natural variety for sales in natural food stores. With 45% of meat snack sales coming through convenience stores, the company is also working to penetrate this channel. Last year the brand appeared in 20,000 locations in forty-nine states, racking up sales of $1.43M. The company is seeking $4M, primarily for growing the brand to a point where it could be sold to a major food manufacturer.
Moderator Lisa Greim of Metzger Associates then kicked off the panel by issuing the challenge of understanding “what works and what doesn’t” when starting a business. All panelists are currently involved in IT related startups:
* Charlie Savage, CEO of Zerista which provides software tools for conferences and tradeshows
* Carol Barbeito, President of EarthProtect.com which is a “Green YouTube”
* Jeffrey Saffer and Vicki Burnett, Co-founders of Quertle which will provide a search engine for biomedical research literature (alternative to PubMed)
Greim began by asking the panel how they allocate roles among team members, and what criteria lie behind outsourcing a function. Saffer noted it essential to find “someone else that is as committed as you are” and who “brings a different perspective,” so the team can handle as many tasks as possible. Burnett called the support of the “legal team invaluable,” given that in her business they have a complex partnership with another firm. Savage actively sought a partner with a complementary background and appreciated the “honest feedback on [his] business plan” he received from those outside the company.
The conversation then moved to discussions with investors. Barbeito expressed some frustration that “everyone wants something different” in terms of the business plan, which necessitates a lot of redrafting. Saffer noted that “in the end no one reads the business plan and spreadsheets, but it was absolutely critical that they were done” so he could “rattle of answers to questions” frequently posed by potential investors. Saffer and Burnett had the good fortune in the midst of the recession, of garnering all their current funding from a single investor back in December. Savage is also in the process of completing a round of funding that “took about six and half months” to complete, which was in line with what he was told to expect.
Greim then delved deeper into the companies’ business models to understand their competitive advantages and metrics for success. Savage noted Zerista’s focus on providing value to all key stakeholders at a conference (organizers, exhibitors and attendees) while many competitors focus on one or two of these groups. Barbeito cited extensive research into social networks and video sites, an investigation that did not turn up a destination catering specifically to wide-ranging environmental themes. Quertle (which will launch in May) hopes to provide more relevant search results to life science professionals. In terms of metrics for success, all panelists focused on number of users, as well as a revenue related metric specific to the business. For Savage, this means number of conferences, revenue per conference attendee, and adoption rate. Berbeito and Burnett both focus on users and ad revenues.
Greim’s final question asked the panelists their advice to budding entrepreneurs. Savage said “you better love it and keep an even keel.” Barbeito warned “you can just burn out,” urging people to try to separate business from personal time. Burnett advised an early assessment “of the skills that you need” in partners to build the business, while Saffer said he would “advise people not to do it” unless they carried the passion necessary to succeed.
Rockies Venture Club (RVC) was one of the first non-profit organizations in the country to help entrepreneurs launch and manage high-growth potential companies. Founded in 1985, RVC is the Rocky Mountain Region’s premier networking organization that connects entrepreneurs, service professionals, investors, venture capitalists and other funding sources. The club’s next event is the 21st Annual Colorado Capital Conference to be held on May 12 beginning at 7 am.