By B.L. Ochman
Rank 1
At A Glance
Need venture money? Where do you get it in these days black days of the crash? Speed pitching is an alternative to going door-to-door with beggar cup in hand.
What would you do if you sold your company for tens of millions of dollars and
never had to work again? If your name was Rick Friedman, you'd be "back
in the game" after your first real vacation in 11 years, and?despite the
dot-com crash?you'd be helping other entrepreneurs hook up with money by speed
pitching to venture capitalists.
Friedman, who had a hit early in his career when he created the TV show "Dance Fever," is involved in startup fever these days. At the end of January, Friedman's new company, Mindshare Ventures teamed up with Baruch College for I-Startup Fever, a two day educational conference and business plan competition that gave 40 winners five-minute, one-on-one "dates" with between 10 and 14 venture capitalists and angels. One company was offered a deal on the spot and 217 second round meetings have resulted for others.
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"What would you do if you sold your company for tens of millions of dollars and never had to work again?"
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Friedman and a team of five VCs, angels, and successful entrepreneurs read each of the 300 submitted business plans. A standard form was created for the plans "so we could compare apples to apples," Friedman says. Conference participants were promised that all of the "money guys" were highly qualified, SEC accredited investors seeking deal flow in Q1 of 2001.
The conference?which Business Week Online called "A Post-Crash Crash Course for Startups"?sold out. Conference speakers included: Alan Meckler, chairman and CEO of Internet.com, and Joseph Park of Kozmo.com.
High "Money Guy" Interest
Conference participant Jim DeLillo, president of Pleiades Group, an implementer
of bar coding technology, got a term sheet on the spot. "We didn't proceed
forward because the terms weren't suitable for us," DeLillo says, "but
we were very privileged to be selected to Speed Pitch. Raising capital is a
numbers game so the more money people you can get in front of, the better."
Each entrepreneur spent five minutes with each VC in a private cubicle. Friedman even rang a bell to mark the end of each meeting period. "It was an incredible situation," he says. "The room was roaring. Now it's up to the entrepreneurs to follow through."
To prepare the entrepreneurs for their speed pitches, they were trained by a team that included Friedman and McAdory Lipscond of Accenture. The pitches were even videotaped to further advise the entrepreneurs on how to improve. "Some of the entrepreneurs left changed men," Friedman notes. "They came in thinking about their business in one way and left saying they were in a different business because the coaching helped them understand how to be more desirable to an investor."
Mindshare plans a new speed pitching event every four to six weeks. The second one was scheduled for April 23rd in New York, but others will follow. The number of entrepreneurs selected to pitch will be limited to 20 at future events to keep only "the best of the best" in front of VCs. Entrepreneurs pay $395 to attend the educational and networking events. For an additional $50, they can submit a business plan to be considered for a speed pitching slot. Those whose plans are selected pay an additional $400 for the pre-pitch training and the pitch meetings.
Friedman says VCs and angels aren't just looking for early stage start-ups, but also series B and C companies with $5 or $10 million in funding who need a next round. "Money is tight now," he confirms, "and it's rare for people to take full positions in investments. Speed pitching may lead to a 1/2 or 2/3 share, involving more than one money source."
Yahoo or Amazon Might Be Ignored
Today
So, who'll get funding after the crash? Companies with a short path to profitability,
says Friedman, but not necessarily Internet plays. One company that stood out
among the Speed Pitchers was Sea TV, a company that's setting up a television
network for cruise lines.
Another one books discount leisure travel for the wealthy and is an offshoot of Lawyer's Travel Agency, one of the largest agencies in the United States. But if an Amazon or Yahoo came along today, fronted by kids with a big idea, they might be out of the game. "It used to be that almost everybody got funded, but now it's one in 10 at best," says Friedman. "Speed pitching gives entrepreneurs a shot and that is why it's valuable."
At other venture capital conferences, entrepreneurs pitch from a stage to a room full of potential investors. The pitchers may not even meet the money guys, and therefore may leave without any real contacts. "We get big name guys involved because they only need to spend an hour listening to pitches," says Friedman.
Friedman adds that his new company, Mindshare Ventures, or even he as an individual, may take small positions in several investments. But the original reason for his involvement with speed pitching was that he volunteered to run a conference to help his alma mater Baruch College?home to one of the largest business program enrollments in the U.S.?establish itself as a Silicon Alley force.
Friedman's Midas Touch
Friedman, 47, has had more successful careers than Bill Clinton has had scandals.
Although he describes himself as "on sabbatical," he is currently
a partner in New York-based VC fund the Emergent Group, (NASDAQ EMGRE.OB) which
invests in later-stage Internet companies and is an investor in the Los Angeles-based
incubator Fortune Lab.
Friedman's done everything from promoting concerts to owning a sports team. But his biggest success, so far, came from SIGS Publications, a premier international conference company and publisher of magazines, journals, and books for software development professionals. Founded by Friedman in 1988, SIGS grew rapidly in the United States and Europe, with offices in New York City, London, and Cologne, and 150,000 readers in 60+ countries. SIGS magazines include Java Report, C++ Report, and JOOP in the U.S., Application Development Advisor in the U.K., and OBJEKTspektrum and Java SPEKTRUM in Germany. Friedman sold SIGS to 101communications in late 1999. Mindshare Ventures, which put on the speed pitching conference, was founded in November 2000.
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"Friedman, 47, has had more successful careers than Bill Clinton has had scandals."
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Friedman has also established the Richard P. Friedman Fellowship at Baruch, and he will mentor two graduate students a year. He got the idea for speed pitching when he saw an item about speed dating on television. Speed dating, run by a Yeshiva in New York promised to introduce singles to seven dates in one evening as they move from chair to chair and spend a few minutes in intense conversation with each of a succession of potential paramours. More than 5,000 people have participated in the past nine months and at least one marriage has resulted. "When I saw it, I wondered if it could work for entrepreneurs and I decided to try it," says Friedman.
Friedman's role, besides overseeing the conference, is getting the VCs and angels to participate. "I don't want to sound arrogant," he says, "but the fact that I am an active investor, involved in several angel groups?that I am a player?attracts money. I think this concept really has legs and I want to see what we can do to make it succeed."
While some may say that Friedman is blessed with the Midas touch, he maintains that catching the tide was a big factor in his ongoing success. "You have to be the first to see the wave and you need the ability to ride it with the right players and the right team," he says.
How is his time spent differently these days? "I don't have the pressure of offices in five countries depending on me for revenue every minute," says Friedman. "It's a smaller game, a little less stressful. I want it that way. For now."
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B.L. is president of whatsnextonline.com,
a full-service agency that uses a variety of marketing tactics to build global
traffic and sales for Internet companies.