RECOGNIZING OPPORTUNITY
John Jonelis—As I heard it:
I’m at the monthly BNC Venture Capital meeting. A number of things bring me to these get-togethers: Well-organized. First class. Efficient format. Limited guest list—just the right size so everybody can grill the presenters. And grill them we do.
GENECOR TRAILERS AND MANUFACTURING LLC
Jerry Kurtenbach presenting, Tom Stevenson CEO, Frank Jacquest COO
In anticipation of government regulation, Genecor proposes to make the first ISO certified portable tanks for the natural gas fracturing industry—the first to be manufactured using robotics. The thing I like about this space is the huge demand for tanks and the 6-8 month backlog. It’s a seller’s market.
Picture this: A property lease may run only three years, so when a company sets out to drill they face a time crunch. No frack tanks, no fracking. That means outsized profits for the tank providers and their investors.
Contact Tom Stevenson at tsgeneva@hotmail.com
Full disclosure—I am personally invested in this area with shares in ECA Marcellus Trust. (Ticker ECT)
PORTAPURE
George Page, CEO
Imagine taking off on a two-week wilderness excursion with one—count it—ONE small and EMPTY water bottle. Fill it and refill it in lakes, rivers, and streams. It filters out dirt, contaminants, even bacteria. No need to carry or cache water. No need to boil water. No need for water purification tablets.
Now take that same product and sell it cheap—way below any water purification product out there. Now bring it to a billion people in Third World countries who have no safe drinking water. That’s what Portapure plans to do.
They will serve NGO organizations, a $20 billion market as well as higher margin markets such as recreational and military. Portapure already boasts pilot projects in Japan, Haiti, Jamaica, and Kenya.
NO DILUTION—Portapure plans no equity financing after the first round. Do you have expertise to offer? Portapure is looking to fill out it’s team.
See their You Tube video at http://www.youtube.com/watch?v=rPFzj7kbYqc&context=C3041478ADOEgsToPDskJQ3B_ZG8I81fsDI92baLUe
GIGITY.TV
This startup plans to install multiple cameras at music venues and create automatically edited footage broadcast as live streaming Internet content for members. They solve the problem of access to clubs due to capacity restrictions and age limitations.
Initial revenue comes from pay-per-view and advertising. They also archive footage and can monetize it. Bands thirsty for video content can get it as low as $40. Initial plans call for building infrastructure by anchoring 20 high-volume venues.
Do you have expertise to offer? This is a two-person company that needs to build a team. See their website at www.gigity.tv
LOVENDAR
Ellona Ferson
I met Ellona between presentations and found her offering highly intriguing. This is a service for married couples that keeps the romance alive by daily suggestions and reminders—a refreshing change from dating services. Her website looks terrific and I think she’s off to a good start.
See if for yourself. www.Lovendar.com
SOMEBODY KEEPS MOVIN’ MY CHEESE
.
As told to John Jonelis
Early morning on Clark Street, I run into Loop Lonagan, former floor trader on the CME, venture capitalist, and man-about-town. It’s been about two months and my feelers tell me something is wrong with Loop
“Hey, long time no see.” That sounds awkward and I try to follow with a joke. “Been locked up in the joint or what?” I intend the prison reference as tongue-in-cheek, but Loop’s reaction surprises me. He staggers to a standstill and then sidles over to lean against a light pole. When he moans, I know it’s an act.
Then he slowly nods. “No mercy. No grace,” he says in a voice that sounds more like a growl. “Prison’s gotta be better than what really happens to a man these days. Lousy do-gooder sister. A guy lets loose just once and next thing he wakes up in the tank.”
“Which tank is that?”
Loop cocks his head and looks at me with bleary eyes. I’m not sure if it’s a hangover or just a typical early morning. “You didn’t hear?” he says, “That’s right, your house burned down. The old battle axe signed me up for a life sentence. Detox, then my own private room. For good. I call in a few favors and get outa there just before the big holiday celebrations in Honolulu.”
“You always seemed to hold your liquor before.”
“That counts for nothin’ these days. Let it rip once—just once—and they think they got you pegged. Anyhow, I’m back.”
“What set you on a binge?”
He growls again. “Don’t get me started on that.”
We walk into an eating establishment and shed our coats. Loop orders bagels and lox. I do the same. He finishes and orders another helping, then downs a second cup of coffee. I can see it’s doing him a world of good.
Then he looks straight at me. “Okay John, if you wanta know about it. But I ain’t got a lotta time.” He takes another bite of bagel. “Somebody keeps movin’ my cheese.”
“You mean like in the cartoon?”
“Yeah.” The waitress fills his cup. It steams and he slurps it carefully. “You notice that GDP is back where it was three years ago? But it don’t feel that way, right?”
I shake my head and wait for him to go on.
“The numbers. They’s all back to what they was but things is different—way different. Same numbers but the way business delivers ‘em is different.”
Loop finishes his second bagel and orders a third. By this time he looks like the old Loop Lonagan and goes on: “One thing—access to capital is all screwed up after the housing bubble and banks got a real attitude. We move thousands of working jobs out o’ the country. Hell—R&D too. The stinkin’ Internet changes way the way we do business.”
I sit there in shock. Is it possible that this news flash takes so long to hit him? “Listen, Loop. Everybody knows all that stuff. Everybody.”
“Yeah, yeah. But here we get to the crux. We redefine success.”
I swallow some coffee. Redefine success—first time I’ve heard it put that way.
“Success with no access to capital gets you nowhere any more. The lousy Internet changes delivery. Access to information and business processes change. People depend on referrals even more to make transaction decisions. Everything’s different and less people needed—a lot less in the good old US of A. So we get massive unemployment. It’s all structural. Ain’t goin’ away. Everybody gets redefined.”
I take my last bite of breakfast and think over what I’m hearing.
After another slug of coffee, Loop goes on. “That means we redefine the planning process. That means we redefine data sets. Those now come from outside the business as much as inside.”
I hadn’t thought about that but it’s true. I nod.
“Goals change. Used to be you get your capital first then build a business. Now it’s build a business then prove that you deserve the capital to grow it.”
That rings true for me as well.
“Collaboration changes, too. Now there’s more going on between companies than inside them. Lots more collaboration cross-country. Overseas. With customers. Platform companies like Google and Facebook dominate what goes on with information—that’s why their shares get bid so high. Then companies put together Content Management systems—can you beat that?”
“Loop, you may have noticed that my business card reads Content Specialist.”
“Yeah, but you’re a writer at heart. Then I finally come to grips with what that term really means. Manage what goes in the bag. They used to call it marketing but now it’s about information more than product. Trust the big guys to turn it into a science.”
Loop signals for the check and I ask a question. “You don’t like it—the change, I mean?”
“Don’t make no difference what I like. Gotta move with the market. Anyhow, I put the past behind me with the help of my close friend Jack Daniels. You know where that landed me—but that’s behind me too.” He looks at his smartphone. “Hey, I got a meeting. Let’s have lunch later. Gimme a call. I got the low-down on the Zero Moment of Truth. Good seeing you, John.”
And just that fast, he’s gone, and the check still sits on the table.
Find Chicago Venture Magazine at www.CoreInsightStory.com/blog Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2012 John Jonelis – All Rights Reserved.
BIG SHOT TALKS ABOUT BIG STUFF
BNC StartUp (AKA TechPitch)
VERBATIM
Uncut transcript of an interview with storied business consultant, J. P. Pierogiczikowski—affectionately known as Joe Perogi. As told to John Jonelis
Editor’s Note—I’ve been out of the Loop a while. Under the surgeon’s knife in December. Launched a new novel, THE GAMEMAKER’S FATHER, www.JohnJonelis.com Then I almost burned my house down. I missed BNC Startup in January but learned that Joe Perogi was there. Seemed like a rare opportunity so I cornered him at a little joint on Lower Wacker that Mike Royko used to frequent and we munched hamburgers and talked.
Joe Perogi—I hear you found out spontaneous combustion is the real thing.
John Jonelis—Ouch. Yes, I can attest to that now.
Perogi—Always gotta learn the hard way, huh?
Jonelis—(I nod and give a wan grin.)
Perogi—You hear that David Carmen changed the name of his group? Makes a lotta sense. Silicon Valley is just tech and nothin’ but tech. Chicago’s about all kinds of new ideas—everything from plumbing to piezoelectric gadgets.
Jonelis—Can you give our readers the format of the meetings?
Perogi— I like the way they’re set up. Companies strut their stuff in front of investors and business people. David Carmen lets two companies present, then does an interview. The interviews are always good.
Jonelis—Who is it this month?
Perogi—Kevin Willer. I ducked out early. Hadda be someplace else.
Editor’s note—Kevin Willer is the new head of the Chicagoland Entrepreneurial Center (CEC). www.chicagolandec.org He co-founded Google’s Chicago office. Held sales and business development positions at CMGI and U.S. Robotics. He’s now a venture partner at New World Ventures http://www.newworldvc.com.
Jonelis—Let’s talk about the two companies.
Perogi—Okay by me:
Lightweight Structures
http://www.lwstructures.com Jim Jendusa P.E., President 4615 Vettelson Rd. Hartland, IW 53201
262-264-6343, M-262-370-7138, jim@lwstructures.com
Perogi—This guy’s a P.E. with his own engineering firm. Makes a building panel called FortEco ™. It’s a whole new way to construct buildings fast, cheap, and green. Uses a revolutionary new lightweight composite framing system so they save time and money while creating a safe and healthy place to live and work. Sound good to you?
Jonelis—(I nod again.)
Perogi—Already completed 6 projects. Bidding on $25MM more all over the world. Lots of it in India. And they’re just getting started.
Jonelis—Exactly what problem do they solve?
Perogi—You name it. Building costs, construction time, energy efficiency. They improve on all those. They make lightweight interlocking panels with spans as large as 45 feet. $20/sq. ft. becomes $12/sq. ft. What used to take a week gets done in a day. I saw where a 15-story hotel in China went up in six days. Impressive stuff.
Jonelis—Any other advantages?
Perogi—What more you want, big shot? It’s panelized construction. Lightweight. Durable. Stands up to seismic and wind stress. Made outa recycled material. Super high R-value—40 or somethin’. Great sound attenuation. Non-toxic materials. Corrosion resistant and non-combustible. You can even build in floor heaters and other green stuff.
Jonelis—Are you in?
Perogi—You know better than to ask that.
Jonelis—Tell me about the other presentor.
Swingbyte
Perogi—This one’s the solution to your tendency to slice a golf ball. Hook their gizmo to your club and it maps your swing in 3-D. Check it out on your mobile phone or send it to your golf pro. In your case, I advise the pro.
Jonelis—What’s so unique about it?
Perogi—Listen to me when I’m talking. It’s 3-D. You can’t say that about a video. It’s always with you. I think the guys on the PGA tour will use it. This company placed 3rd in Chicago Booth’s 2011 New Venture Challenge and walked away with the $100K prize at the Clique Studios business plan competition. Good looking management team and board of advisors.
I resist the urge to ask if he’s involved in it. After a couple beers I take my leave of Joe Perogi. Amazing what’s going on in this town.
BNC StartUp meets monthly at the law offices of Perkins Coie, 131 S. Dearborn, Suite 1600 www.perkinscoie.com. For more information visit the BNC website at: www.BNChicago.com View video of meeting at: www.Facebook.com/BusinessNetworkChicago. If you’re a startup and want to pitch, contact David Carman at: 312-943-6376 or dcarman@BNChicago.com
Find Chicago Venture Magazine at www.CoreInsightStory.com/blog Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2012 John Jonelis – All Rights Reserved.
Is Your New Company Ready for the Real World?
An Interview with Len Bland by John Jonelis
This month, I’m fortunate to connect with Len Bland, who along with David Carman gives us BNC Venture Capital, a premier venue in Chicago for startup companies seeking funding. BNC meets the first Tuesday of every month. http://bnchicago.org/ Even though Len projects a poised and reserved manner, he often quietly cuts to the bone with deep insights.
Q—Let me ask you, Len, about your mission at BNC Venture Capital.
A—Sure. The straight answer is, we introduce investment opportunities to professional investors.
Q – Is there a higher level to that?
A – I think we’ve been successful fostering the growth of entrepreneurial activity in Chicago.
Q – You’re talking startups and new ventures. How do you manage to come up with such good presenters every month? (Editor’s Note—I’ve been attending and have personally seen the high quality.)
A – Actually, it’s amazing how many good opportunities are out there. We’ve been able to choose interesting ones on a consistent basis. We present no more than three entrepreneurs every meeting so each has enough time to give a meaningful picture of their vision.
Q – That begs the question, who attends?
A – Meetings are open. We get angel investors, early-stage venture capitalists, and private equity firms seeking add-ons. Entrepreneurs attend as well as service providers. It’s a friendly group but can be a tough crowd for a presenter that’s not prepared. The questions from the audience sometimes get very pointed, but that makes for a healthy vetting process and a good learning experience for the presenters. The ones that get coaching in advance from our group or others tend to do well.
Q – You keep a strict protocol. Can you describe it in a few words?
A –Each presentation lasts 10 minutes, followed by 15 minutes of Q&A. That includes the financial picture, not just the idea, so it’s brief enough to get an entrepreneur used to giving a fast-paced delivery and to enable the investor to make a decision on whether they would like to meet. I think the driver behind the quality of the meetings comes down to five basic questions we always ask: One—What is the product or service? Two—Why will customers buy it? Three—Why is this management team the best one to run the business? Four—How does the company make money? And Five—How will the investor make money? That last one is important and entrepreneurs tend to miss it.
Q – You roll those off your tongue quite easily.
A – Well, I’ve been asking those same five questions for some time. These simple questions form the basis for any business. If you can answer all of them well, then you’re a real venture. If you can’t, then you’re not ready for the real world. I actually poll the audience afterwards to find out if all five get across.
Q – I know you recently launched the Midwest Renaissance Fund and that portfolio draws in part from companies I’ve seen present here. Is a synergy developing between those two entities?
A – Yes and we’re excited about that. Our VC fund aims at a different kind of business than other funds and yes, we’ve screened a number of companies that we expect to fund through Midwest Renaissance. http://www.midwestrenaissance.com/
Q – Can you give a brief rundown on this month’s crop?
A- I’ll try. All three companies were excellent with polished presentations from Supply Vision and Psylotech. As you know, the audience rates these presentations on a 10 point scale and this month, each got a 7, 8, or 9. That’s unusually high. If somebody rates a company 7 or higher, I always recommend they meet for a follow-up. All the companies won a cash prize “funding.” Psylotech got the most votes. (Editor’s Note—Len has a running joke that nobody goes home without funding. He passes out a dollar per vote before the panelists get to meet the investors one-on-one.) Here are the three presentations this month—
1.) PSYLOTECH – www.psylotech.com/ – Alex Arzoumanidis CEO, presented. Psylotech offers mechanical test instruments that accelerate new product development for nano-scale materials, structural plastics and rubber. This is a highly technical offering in an industrial space but Alex did a fine job of making himself understood. As I said, he garnered the most votes, even though all the companies this month rated quite high.
2.) SUPPLY VISION – www.supply-vision.com/ Cris Arens and Michael Powell presented. They bring supply chain software and M&A backgrounds to the table and are successful serial entrepreneurs—an important element for VC and Angel investors. Supply Vision focuses on supply chain execution technology. Their on-demand web based platform provides visibility tools and enable collaboration between suppliers and logistics providers. That includes a Transportation Management System (TMS), Warehouse Management System (WMS), and Purchase Order Management and Logistics modules. Very interesting stuff.
3.) NOIR WOMAN – www.noirwomanadnetwork.com/ Dee Daniels, CEO comes from a radio background. This is a fully automated Ad Network—a vertical advertising platform focused on the affluent female African American niche market that controls over $400 billion in buying power. Noir’s cutting-edge technology platform matches their publishing partner’s websites and blogs with national advertising partners. Their network carefully matches advertisers and publishers to get both entities the maximum exposure. The result is an attractive return for both sides along with ad monitoring and financial reports. In their first month of operation, the website registered over 650,000 page views. Like I said, there were no weak presentations this month.
Q – How does a person gets invited to one of your events?
A – That’s simple. Join the BNC VC Group Notification list at http://conta.cc/joinbnc. We meet the first Tuesday of each month after working hours. If you’re an entrepreneur and interested in presenting, contact us at vcgroup@BNChicago.com The next meeting is January 3rd.
Q – Len, thanks for your time. The food and bar are great. I find the venue here at Polsinelli Shughart quite intimate with no empty seats. http://www.polsinelli.com/ I’ve been enjoying your hospitality every month and have yet to be disappointed.
A – Always a pleasure, John.
Find Chicago Venture Magazine at www.CoreInsightStory.com/blog/ Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2011 John Jonelis – All Rights Reserved.
My Novel This Month
I’ve put Chicago Venture Magazine to bed for a few days while I finish the final edit of The Gamemaker’s Father to come out in electronic format in December. Take a look.
Sign in by email and be the first to know when it’s availabale.
CHECK YOUR EGO AT THE DOOR
AN ENTREPRENEUR’S THINK TANK
John Jonelis
Let me tell you about a group that remains nameless. They don’t want publicity. They don’t want new members. I cannot share names. They gather together to talk freely about business problems and help each other find solutions. It’s amazing to me that this is going on in Chicago. I plan to learn a lot here.
It’s just after dawn on a weekend morning and I’m sitting among Chicago’s top thought leaders by invitation of a friend. The best of Chicago’s business thinkers come here in blue jeans with sleeves rolled up. The members meet me with a warm welcome. The founder holds everybody’s respect and has quite a history, including a street named after him. I also find that I’m now a permanent member. A sweet lady hands me a cup of warm coffee.
I see a number of familiar faces. That breaks the ice for me. One tells me he’s afraid to speak up in this group, so he just listens. I on the other hand rarely hesitate to blurt out an idea or opinion. Sometimes that’s good, sometimes not so good. But I embrace the philosophy that says, if I throw ten ideas at the wall and one sticks, I’m good. There’s very little downside to that. What do I care if somebody rips up my argument? I’m fat, bald, old. I know my IQ. What more can anybody say? So I raise my hand and the moderator calls on me in due course.
These meetings follow a couple of formats. One week, a member brings up a problem and the group tries to solve it. Another week, somebody prepares a topic and leads us in discussion. This is high-level thinking, highly stimulating, and I love it.
This week’s speaker presents his problem. Here’s a guy that wrote a famous and highly respected management book. I’m glad to call him my friend.
His problem is interesting. He’s developed an extraordinary software application on the wave of a creative spurt. He has no financial goal for it yet. He wants the project to succeed and help people—maybe 10 million people. If he makes a little money doing good, he’s happy.
He explains the details and I’m amazed that he bootstrapped this complex and practical tool in such a short time at almost no cost. While sitting in venture capital meetings, I’ve seen lesser offerings looking for major funding. This one addresses the pertinent problems, deals with them rationally, and offers real solutions. The inputs are simple and elegant and I wonder how he managed to create this in his spare time. We ask questions—a lot of questions. Then we consider alternate value propositions, added features, and disparate business strategies—the basic steps skipped over because of the speed of the development process. Once we’ve kicked those around, the solutions start coming through a formalized brainstorming process.
I’m a writer and constantly take notes. That afternoon, I am delighted to email my friend an outline of the entire meeting. It occurs to me that I can make use of this brain trust in the future and I feel a smile coming on.
Not all sessions go smoothly. You need to check your ego at the door. On another weekend, a member presents his project but disappoints us by not framing his question. Everybody tries to help, but he turns defensive. Instead of pursuing new ideas creatively, he turns them away with rational arguments. That’s not the way to get to a solution. I doubt he gained anything from the session and I reflect that ego is the stumbling block for most businessmen.
On yet another weekend we’re presented with the question of leadership. What is it? What’s effective? The interesting part of this discussion is that it starts with a number of highly educated definitions, but after the session rolls on it all comes down to delegation. We talk about delegation almost the entire morning. My contribution is as follows: Surround yourself with people more intelligent or more expert then yourself, then facilitate the team.
Check your ego at the door
Find Chicago Venture Magazine at www.CoreInsightStory.com/blog/ Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2011 John Jonelis – All Rights Reserved.
A PRICKLY INTERVIEW
VERBATIM
Uncut transcript of an interview with storied business consultant, J. P. Pierogiczikowski—affectionately known as Joe Perogi.
As told to John Jonelis
Joe Perogi—“Before we get started, I heard you’re writing a novel.”
John Jonelis—“Yes, The Gamemaker’s Father.”
Joe—“Well? What’s it about?”
John—“A machinist competes with his gifted son in verbal game of wits. The game turns into a duel that takes over their lives.”
Joe—“Okay, sounds interesting.”
John—“The publisher’s shooting for a December launch of the electronic version. Then we follow up with a hardbound. Videos, summary, reviews, and the first few pages at www.JohnJonelis.com
Joe—“Enough already.”
John—“You asked.”
Joe—“Not for the whole story. That crosses the line into what I call shameless self-promotion”
Editor’s Note—Joe Perogi strikes me as a bit of a curmudgeon. I wonder how he made all those companies so successful.
John—“Let’s get back to business. Tell me about the BNC meeting you attended.”
Joe—Yeah. I’ve been coming to these things ever since Len started BNC. I like the way he makes all these companies answer five basic questions. I can tell you from experience—these questions are the foundation for any business.”
John—“Can you give us the highlights of the event?”
Joe—“Sure, but most of them usually do. Answer all five, I mean. The guys in the crowd grill ‘em pretty hard. If the financials don’t add up, they say so up front.”
John—“Maybe just tell us what they do.”
Editor’s Note—For those who haven’t attended a BNC Venture Capital meeting, the questions are as follows:
- What’s the product or service?
- Why will customers buy it?
- Why is the management team qualified to execute the business plan?
- How does the company make money?
- How will the investor make money?
MILL CREEK LIFE SCIENCES
Judy Lundy – CEO www.millcreekls.com
Joe Perogi—“This group makes natural proteins to grow adult stem cells. They can grow proteins better, faster, with less risk. A million people walk around with damaged hearts in the US alone. This’ll be the first heart regeneration treatment on the market, and there’re a lot of other uses, like Lou Gehrig’s disease, kidneys, arthritis, diabetes, severe wounds. There’s something else that’s real special about it, but I’ll get to that in a minute.
John—“What’s your read on the industry?”
Joe—“The industry’s starved for new ideas like this. Stem cells from animal protein don’t cut it, with mad cow and human rejection. Then there’s the genetically engineered stuff, but it’s expensive and there’s problems with cell mutation. Fetal tissue is a dilemma. The concept of growing and harvesting babies like a crop is morally depraved. Some people are fine with it but I call it murder and so do a lot of other people.”
John—“I’m with you on that one.”
Joe—“Good. Mill Creek gets around all those problems. They already passed their Phase 2 study. Phase 3 is pending.”
Editor’s Note—Phase 1 proves safety. Phase 2 proves it works. Phase 3 validates Phase 2.
Joe—“One of the interesting things about the business is their supply of materials. They collect expired adult human platelets. The stuff is useless to hospitals after five days and they’re scrambling to get rid of it. Mill Creek picks it up on day six and makes everybody happy. It’s still good for their process and they cryofreeze it and build a nice stockpile. Frozen, it lasts two or three years. So think about it. Their supply is cheap waste material and right now, they get it almost free. They’re busy signing 5-year supply contracts.
“Their CEO has the credentials. Mayo, ISU, Novartis. She’s both a scientist and an MBA. Good combo. From the look of it, they rounded up a top management team. Tech licensed by Mayo, which is the normal way Mayo does R&D.”
Editor’s Note—The Mayo Clinic’s model is to research the technology, then license it for 17 years and stay on as a partner.
Joe—“Mill Creek’s first step is to monetize the heart application that Mayo is researching. They’ve already locked in two clients with others knocking at the door. Expected Y5 revenue—$52 mil. 5-year return about equal to a 183% annual interest rate.”
John—“That’s dazzling but let’s skip the financials. What’s the special item you were saving?”
Joe—“Oh, yeah. They can use the patient’s own cells to regenerate tissue. That speeds healing and there’s no rejection. I’m talking regeneration of the patient’s natural body tissue, and they can do it fast.”
John—“How was it received at the meeting?”
Joe–“Len always takes a vote at the end of the evening. It’s a device to make the event fun. I gave this company a nine out of ten. Lots of sevens and eights in the crowd. There’s an unwritten rule—if you vote seven or above, it means you’re interested in investing. This one looks like the real thing to me.”
CFC AIR CAR
Stephen Cook – President www.labicheaerospace.com
Editor’s Note—This company also presented at the Funding Feeding Frenzy the next day.
John—“Can you keep it short. Stick to the important points.”
Joe Perogi—“You want to hear this or what? CFC’s product is the FSC-1. FSC stands for ‘Flying Sports Car’ It’s a flying car with wings that fold into the body. Yeah, you heard me right. James Bond stuff. Fold-away wings gets around the main obstacle these things always faced in the past. The initial modal sells for $150K and they’re working to bring that down.”
John—“Still cheap for an airplane.”
Joe— “Steve Cook’s got seven years in Aerospace and plenty of connections. He met with Burt Rutan, Tim Draper, and Clayten Christianson. He’s got a list of amazing people involved, from NASA to Toyota and Mazda. His team includes a Ph.D, a CPA, an MBA. He’s doing a Round A funding.”
John—“As I recall, Henry Ford predicted this car in 1940. So far there’ve been a lot of duds.”
Joe—“Because of advanced technology, competition is heating up. Another company has a new 2-seater that does 120 mph in the air and is already FAA approved. That company has 250 hard orders for $250K each. Far as I’m concerned, that proves the concept. CFC’s got a better product for a lot less money. They plan to build theirs to hold five people. It’s supposed to do 150-225 mph in the air at 17 mpg with a 500-mile range.”
John—“IFR capable?”
Joe—“Yes.”
John—“That’s sounds like a nice plane.”
Joe—“It is. They use counter-rotating pusher props to make it safe and easy to fly. The video of it flying looks good. They use an airframe parachute to bring it safely to the ground if the engine fails. I like their plan to license the tech to Burt Rutan and work with him. He knows how to pull this off. Another huge thing to consider—as a car, it looks hot. Nothing brought to market in the past can say that.”
John—“You think they can deliver a car with sports car handling that has great flight characteristics? I’m an instrument rated pilot and I can tell you it’s a picky crowd.”
Joe—“Yeah, I can tell.”
John—“Can they get past Rutan’s famous ego?”
Joe—“Yet to be seen. So far, this is still a dream. No revenue at all for 5-7 years. It’ll be hard to fund with that profile, but I hope they make it a go. I think they need a good advisor to get them past the financing hurdle.”
John—“What’s that? A little shameless self-promotion? What chances do you give them?”
Joe—“In the voting, I gave ‘em a 6.”
HEATWAVE
John Dolphin www.heatwavesolar.com
Editor’s Note: This company presented at the Funding Feeding Frenzy the next day.
Joe—“This is an advanced solar heating technology called “The Harvestor” and it’s made in the US. Looks really slick, like a big window. It’s a self-contained unit that mounts anywhere. Easy installation. Put it on your south wall, hook up the fan, and it pumps hot air into your house. It doesn’t get much simpler than that. Each unit heats 1000 square feet and you can install as many as you want. They’ll probably market it through the home improvement outlets. Already talking to Menards.”
John—“What about nights and cloudy days? Does it store heat?”
Joe—“No and that’s their limitation as I see it. It works best in the mid-latitudes where they get a lot of sun. I’d like to see them add storage capacity. In the northern regions, people use electrically-heated ceramic space heaters that radiate for hours after you switch ‘em off. HeatWave needs something like that to broaden its customer base. But even as it stands, it’s a terrific add-on to conventional heating because it saves a lot of money on the days it operates.”
John—“Can you wrap up your comments?”
Joe—“I think it’s a killer product. It looks great on your house. In Minnesota you immediately get 25% back as a tax credit. It pays for itself in five years and lasts 20. The competitors offer products that are difficult to install and cost three times as much. The Harvester is their second heater. There’s no national player in the space, so it’s a market development play, meaning they need to create their own market for the product. But it sells for just 12K and that yields 45% margins. It’s patented. The company is entirely bootstrapped so far, so they’re expecting a 20x return to investors in three years. I gave them a 6. Does that wrap it up fast enough for you?”
John—Yeah. How did the voting come out at the end of the evening?
Joe—Mill Creek won decisively, followed by HeatWave and then CFC Air. Let me know when your book comes out.
John—Will do.
That’s the way Joe told it to me. Comments welcome.
John Jonelis
Find Chicago Venture Magazine at www.coreinsightstory.com/blog/ Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2011 John Jonelis – All Rights Reserved.
THE YOUNG ENTREPRENEURS
An evening with legendary international investor, Loren Bukkett
by John Jonelis
I’m standing beside the iconic figure of Loren Bukkett at a Technori Pitch event in Chicago. Everybody’s seen him on the news but this guy blends into to any crowd. Unassuming. Cheap rumpled suit. A hundred percent Midwestern. I knew his wife before they got hitched—she almost posed for one of my paintings but somebody stopped her—probably Bukkett himself. He shakes my hand absentmindedly and tells me not to call him “mister” as he scans the milling crowd in the lobby of the Chase Auditorium.
“I don’t see anybody over 30 here,” he says. Then his famous grin. “Except for you, John.” He grins some more.
I shake off the fact that he still knows my name. Total recall, I guess. “What brings you here, Loren? I didn’t think you invested in new ventures.”
“The ticket’s only ten dollars and the pizza’s free.”
“You flew to Chicago for free pizza?” In what, his private jet? I know this guy’s frugal, but c’mon.
He stops scanning and looks me square in the face. I feel the power of intelligence behind that casual persona. There’s a reason people hang on this guy’s every word. You don’t make that kind of money getting lucky at the racetrack, so I’m all ears when he answers my question: “Think about it,” he says, “Did you notice something unusual about the last two stock market corrections?”
“Yeah. Everything tanked. Fast and hard.”
He looks at me from beneath his bushy brows. “Do you recognize the importance of what you just said? Markets drop all the time. In the long run it doesn’t even matter. Tell me about the recent correlations with commodities and derivatives.” He waves a hand. “Of course, the big exchanges are right here in Chicago, so you know all about that. What do you see happening?”
The crowd gets loud and thick as I try to recall what I once knew about correlation coefficients. Finally, I blurt out an answer. “Just about everything dropped the same time, even the Futures.”
“You’ve put your finger on it. Correlations are all very close to one right now. That’s what’s so significant. Now look at all these kids. Do you suppose their startup companies move with the broader markets? What’s their correlation?”
“So you’re shopping diversification.”
“For public consumption, I’m just enjoying myself. Have you tried this pizza?”
I’m doing zero carb so I look around the room to distract myself from the food. I hear this place holds 500. Looks like they’ll fill it. The crowd presses around us. Buckkett’s been recognized. A 20 something asks for his autograph, which he grants. Some people form a line. I gesture to him and push my way through the bodies. He follows me through a door and up some stairs to the projection room. “Thought it’d be quieter up here,” I say.
Bukkett looks around at the equipment. “This is nice. Any chairs?”
I push a couple to a place where we can see the stage then decide to prod him for inside information. “Listen Loren, some of these startups are only asking for a quarter million. Isn’t that kinda small for you?”
He glances at me—a look bordering on pity. “You actually mean to say you don’t get it?” He pauses but I have no answer. “Don’t ever forget what I’m about to tell you: These kids are the future of capitalism in this country. If I see something worthwhile, I’m glad to fund it. The good ones always go through several rounds. When we’re in one of those, we’re with it all the way to IPO or buyout, or we adjust the management team and fold it into the portfolio.”
“A 100% stake? What’s that come to?”
“You figure it out.”
Looks to me like he’s talking millions, then the stage introductions start. I was right—every seat taken. Last month was standing-room-only so they moved to this beautiful auditorium. Clay Neighbor is onstage priming the audience, saying what a special place Chicago is to do business. We all know that. He gets a round of applause.
John Paski gets in a plug for the next Chicago TechWeek. At least half the audience raises their hands when he asks who’ll attend in June. That one will be on two floors of the Merchandise Mart. Cripes. 500+ speakers, 200+ sessions. Website www.techweek.com
Seth Kravitz—Tech guro and driving force behind Technori is speaking. He’s set up a Q&A method using text messaging. The audience gets to vote on what questions get asked.
Time for the presentations. Fifteen minutes each. I ask Loren for his take on what he hears.
LockBoxer
Jennifer Morehead – jmorehead@lockboxer.com
The company helps people create a home inventory and price their possessions. Type in your items, upload photos, and prices automatically post to your list from the company database. That’s valuable for insurance, for sales, and for the taxman who audits your giving. It places a hard valuation that stands scrutiny.
We hear about the recent WSJ profile of the company and the monetization plan. Their site links to the Salvation Army and Google. Major insurance agents are signing up for a pilot project to launch in January. Lockboxer is secure like a safety deposit box—that’s where they got their name.
I poke Bukkett. “Loren. Loren. What do you think?”
He leans over to me. “This gal is comfortable, even though the tech booth people fouled up her video. I like the idea. Home inventories are a terrible nuisance. Have you ever done one? There’s competition out there but that just proves how good the idea might be.”
BankBadger
Brian Busche
Want to teach your kids to understand money? Want to make banking fun? Want a simple way to do it? In this online bank, the parents are the bankers and control all aspects of the experience.
They use Badges instead of dollars and each badge can represent any amount the parents choose. The format avoids legal restrictions so kids under 13 can participate. Wow, I wish this was around when my kids were small.
It’s is a freemium model. They source parent’s names through Facebook. When one million users sign on, they’ll launch a premium service, perhaps with a stock market.
Bukkett: “Look at this one. He’s bootstrapping so far. It’s is a minimally viable project that’s already up and running. He’s letting it evolve. That’s how these kids are beating the big companies.”
Utellit
Text and social media are dominating communications and they’re here to stay. Utellit enhances text messaging with voice. “Shoutouts” take the place of “Tweets.” Not only that, the system converts voice to text and posts it on Facebook. Other features make the app fun, including full-motion cartoons.
So I’m thinking, hey, I can text and I don’t need to fool around with that tiny virtual keyboard. Sounds good to me.
Bukkett makes no comment. I don’t know if that means he’s not interested or already in.
jumprope
Loren sends me out for pizza and when I get back, he’s smiling.
Bukkett: “Look how fast these kids move. They’re launching this thing tonight. Great pitch—Don’t you get sick of waiting in lines? These guys make it possible to cut in line and the price depends on the length of the line. It’s mobile, social, local, and free to download. It interfaces with Facebook, Twitter, and email. Think this one might go?”
I can’t believe Loren Bukkett asked me a question like that. “You just like it ‘cause it’s free.” That raises a laugh out of him.
Berst
Matt & Kaleb Foster. Email: team@berstapp.com Website: http://berstapp.com/
Where are your friends? Want to know? Want to text your group and share photos from your phone? Imagine a social media site that’s mobile and aggregates Twitter and Facebook with GPS. With Berst, you STAR members to your private group or use the search function to form an elastic group on the fly. At a sporting event, text chat becomes group chat. This one’s both Android and iPhone ready with Windows and Blackberry coming. It’s already in the App Store.
Bukkett: “This falls into the category known asl the creepy app because it keeps track of where you are. Young people don’t seem to mind it but the old folks do. They don’t like to be hunted.”
WizOra
Dan Devias, founder.
This company started at the recent Chicago TechWeek. The winner of the Bloomberg tech competition, it already has thousands of followers. It asks you five basic questions and pulls personal info from your social media sites, then feeds you recommendations for food, fun, savings and more. You rate the restaurants and see ratings posted by others. Over time, the software learns everything about you and gives highly targeted recommendations. It’s web based, with mobile on the horizon.
Loren taps me on the shoulder. “See how creepy it gets? Their asset is the knowledge of everything about you.”
“So you don’t like it?”
“I wouldn’t put it that way. Never let personal bias stifle dollars.”
Junto
Marcy Capron, Joe Poeschi, Matt Wanske, founders@thejun.to
Junto is the everyman incubator. It helps non-techs apply, fund and build their venture. Is your idea any good? Are eager users waiting? Can you build it? Can you get funding? What do you do next?
Junto helps you identify a minimally viable product then connects you with a community to crowdsource R&D, testing, mentorship, and funding. The community votes on ventures and funds them. It takes the risk out of a startup.
Most applicants are MBAs with good business plans. Junto helps these not-technical clients round out their offering. This company launched just nine hours before the presentation. They already have three startups. Junto doesn’t take equity from users, but rather a 5% share of the profits.
Speechless, I turn to Bukkett.
He nods and gives me a knowing look. “You help companies write plans and get funded, don’t you? This could run you out of business.”
We slip out into the pleasant evening air. Loren invites me for a hamburger. We wind up at Uno for a deep dish and beer.
The next Technori Pitch is Nov 29, 2011, 6:00 PM – 8:45 PM, Chase Auditorium. Sign up early—it’s bound to sell out. http://www.technori.com/
That’s what I heard. What did you hear? Comments welcome.
John Jonelis
Find Chicago Venture Magazine at www.coreinsightstory.com/blog/ Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2011 John Jonelis – All Rights Reserved.
FOUNDER IDEATION BOOTCAMP
An interview by John Jonelis with JASON JACOBSOHN –
FOUNDER INSTITUTE IS COMING TO CHICAGO. Over 100 entrepreneurs signed up for Ideation Bootcamp, an intensive evening of learning and interaction. Jason Jacobsohn, the Director of the Chicago chapter, was kind enough to stop for a quick interview: In case you don’t know Jason, he’s one of the sharp knives in the drawer and a really nice guy.
Q—Ideas for new ventures are accelerating in Chicago at an amazing pace. Two VC firms recently launched. What do you offer an entrepreneur that’s different?
A— I think our approach is unique. Founder Institute is global. It’s a network of both startups and mentors and mentorship is crucial. It’s the main driver to help young entrepreneurs launch meaningful and enduring technology companies. Mentors share their real world experiences around specific topics. FI is a curriculum-based program from startup to fundraising. Each session is taught by three seasoned tech entrepreneurs. The goal is for each founder in the program to learn the good, the bad, and the ugly of starting a business from seasoned entrepreneurs. Another distinction is that we’re actually more interested in people than ideas. Ideas are everywhere but the real question is, are you ready to turn it into a business. Our model enables us to take on an entrepreneur at a much earlier stage than typical incubators or accelerators. We encourage pre-seed ventures.
Q—Tell me about tonight’s speakers.
A—We consistently draw great talent and I feel really good about that. Tonight we feature Sal Cilella and David Roth. Sal is a partner at gravitytank http://www.gravitytank.com/pov Sal’s an accomplished interaction designer who specializes in leading teams. First on the agenda—creating a compelling consumer experiences and bringing measurable value to clients. David is founder and managing partner of Get Stirred Up http://www.getstirredup.com/index.php He focuses on the branding side of innovation and works with both early-stage and established companies. Both the B2B and B2C arenas. David gained a lot of notoriety as a co-founding of the popular restaurant franchise, Cereality Cereal Bar & Cafe, which serves only cereal.
Q—Who attends these events?
A—Any aspiring technology entrepreneur might come with ideas. But a serial entrepreneur might show up with a blank slate. We believe the ideas will come—again, we believe in people first, technology second.
Q—Can you give an overview of tonight’s event?
A—Ideation Bootcamp is an educational opportunity. We put together people that can provide expert advice—people with real-world practice. The evening begins with talks by leading startup founders. We design the talks to teach the components of good and bad startup ideas. We also cover basics like how to better craft a 30-second pitch. Then it gets interactive. Attendees share their ideas with both experts and peers and get constructive feedback.
Q—What’s the next step?
A—Many of those who are here tonight will attend the first semester of the full program right here in Chicago. We have a nice turnout. Lots of aspiring technology entrepreneurs. Valuable insights. Excellent speakers. A great opportunity to let more people know that Founder Institute is coming to Chicago.
Contact Jason at jason.jacobsohn@founderinstitute.com
Find Founder Institute at http://founderinstitute.com/
That’s what I heard. I invite you to share your comments.
Find Chicago Venture Magazine at www.coreinsightstory.com/blog/ Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2011 John Jonelis – All Rights Reserved.
EVERYBODY GETS FUNDED
As I heard it—
Do you want to present your company with a 100% certainty of funding? Truck on down to Business Network Chicago’s monthly meetings. The claim is true—technically. It’s a running joke by Len Bland, who hosts these sessions. We vote. The speakers each get a dollar per vote. Hey, that’s hard cash. All joking aside, quite a few companies find funded because of these meetings—some from Venture Capital firms or Angel investors, some from Len’s own Midwest Renaissance Fund.
I dig my summer suit out of storage, skip the tie and stroll over to this month’s meeting. It feels like a soft spring day as I walk to the appointed skyscraper. Sunny, 75, green trees, flowers. Not your typical October in Chicago. There’s so much going on in this city. Why would an investor go anywhere else? Tonight I’ll see three startups each make their pitch. The elevator takes me to the great food, drink, and conversation.
Changing Patent Law
The advantage of meeting at a law firm like Polsinelli Shughart is the legal update they provide— gratis. US patent law will change in March of 2013. I sit up in my seat. This is important. I’ve heard rumors about it but nothing specific and nothing good. Tonight, they highlight the positive side:
The rest of the world is already on a first-to-file system. Our system is first-to-invent. We will join the rest of the world and eliminate the need for multiple patent strategies. The goal is to provide better certainty about the validity of a patent. In theory, patents will issue faster. It will be important to file fast, but the law won’t affect current patents. Okay, that’s clear. I know what I like about it and what I don’t. They intro the first company:
CBS Foods, LLC
- Shawn Davis, 800-216-9605, mobile 615-414-3317 chef@cbsfoods.com
- Melzie Robinson, 630-273-5231, melzie.robinson@gmail.com
Do you want to eat better? Are you bored with the usual fare? CBS Foods creates casual gourmet seafood dishes. Tonight Shawn Davis, their CEO, serves up shrimp sandwiches and causes a sensation. This is a quality product—low fat, low cholesterol, high protein, and delicious.
CBS stands for “Chef Big Shake,” a name Davis used on a Shark Tank episode on TV. He opens the presentation with his story—a black man that grew up in an Italian family—around great food.
The product already sells through both restaurant and consumer channels with 5.5M in commitments for 2012. Gross margins are huge. They outsource production to the same co-packer as Campbell’s soup. They can finance operations on receivables. The management team looks strong with industry, supply chain, and operations expertise. They boast previous success in a profitable venture and the CEO has connections with celebrities.
This presentation takes 1st place in the voting, with quite a lot of 7s and 8s out of a scale of 10. That shows a lot of investor interest.
Silvrspoon
- www.silvrspoon.com 203 N. Wabash Av. Ste 1312, Chicago, IL
- Eugene Revzin, CEO 312-957-5760, mobile 847-877-1128 erevzin@silvrcorp.com
- Nick Terkay, 312-970-1417, rterkay@silvrcorp.com
I covered this startup in the FFF Presentation Elevation article. Since then, these boys have polished their presentation nicely in their hunt for seed capital.
People wait too long at restaurants and bars for their service and bill. A huge gap exists between a restaurant and diners. Silvrspoon plans to become the point-of-sale of the future.
Using a smartphone and tablet app, Silvrspoon enables on-demand ordering at each table. The result? People order more. Service is quicker. Loyalties build. Waitresses don’t work as hard. A restaurants gains more revenue. Customers give reviews and a huge database evolves, enabling web analytics, inventory, ordering preferences, facial recognition. Yes, the app recognizes repeat customers and knows what they like to eat, and a restaurant knows who was there each night.
Silvrspoon is already live at six locations. They’ve gained international press and have been chosen as one of Chicago’s most interesting startups. This is a company with a young and diverse team and a subscription-based business model. Prices are low to restaurants and free to consumers. The database becomes an asset of Silvrspoon.
Who’s on Second?
2nd Place went to the latest venture by Kevin Callahan, affectionately known in our circles as the COO’s Bulldog. He’s professional, pugnacious, and ALL Notre Dame. This guy’s an operations guru. Due to a non-disclosure agreement, I can’t talk about his company. You had to be there. This one looks real strong and I give it a rare 10.
That’s what I heard. What did you hear? Comments welcome.
Comments and re-posts are welcome and encouraged. I cannot guarantee accuracy but I give you my best. This is not investment advice – please perform your own due diligence. © 2011 John Jonelis – All Rights Reserved. www.coreinsightstory.com/
