Raising capital is more like a marriage – TIE AZ Roundtable wrap up
Photo contribution from Thomas Hawthorne, co-written with Tishin Donkersley
The Tempe Center for the Arts was buzzing as investors, entrepreneurs and TiE AZ members networked and threw back a few cold ones at the TiE AZ Venture Capital Roundtable. The event included a panel of venture capitalists (VCs) from Silicon Valley and the Southwest who shared their advice and insight on raising capital, and a pitch session with local startups.
The panelists included, Brian Armstrong, Managing Director, Point b Capital, Rami Elkhatib, General Partner, Acero Capital, Ed Mello, Co-Founder and Managing Director, Cypress Growth Capital, Jeff Pomeranz, Managing Director, Right Side Capital Management, Alexander B. Suh, Managing Director, California Technology Ventures, Vince Vannelli, Founder and Managing Partner, KPG Ventures and Michael Hool (Moderator), Founder and Managing Partner, Hool Coury Law, PLC.
Capital = Marriage
For those startups who might be in the mist of negotiations with VCs, before you sign on the dotted line and grab your cash, make sure you have a great relationship with the venture capitalist at the firm, Suh said. No matter what firm the funder is from, if the relationship between the entrepreneur and venture capitalist is sour, don’t do it, he emphasized. “If you don’t like the VC in firm, don’t take the money. You’ll be married to them,” Suh said. In addition he said to make sure that the contract between the entrepreneur and VC is quick and easy
If companies are having trouble connecting with investors, other avenues to consider include local accelerators, incubators, even co-working spaces to seek out capital and receive support, Suh said.
Is Angel List that awesome for VCs?
While funding platforms such as Angel List is another way to connect with investors, all of the panelists found these resources useful for an ecosystem and finding deals.
Mello said with the rise of so many funding platforms the entrepreneur now has more of a say in the funding process because they have options now for who funds them.
Suh believes all funding platforms are great and it never depends on one or the other; if you use them correctly, they’re great support systems.
Elkhatib said that the size of the seed and angel ecosystem has been helpful, and it’s good to be able to invest in someone who already has enough backers where they have market valuation.
Pomeranz said that Angel list has been awesome and with the “explosion of accelerators and incubators, they’ve made everything a lot more accessible for deal flow. They’re aggregating entrepreneurs and talent in one place.”
Before, the investors held most of the power over an entrepreneur, but the process has become more democratic, Mello said.
Deal flow in AZ
As for investing beyond their backyard, all investors expressed they do looking elsewhere, including Arizona, for deal flow, but it comes down to finding the right opportunity and team in order to get on a plane.
Armstrong said, “We invest outside, we don’t limit ourselves, but don’t want to spread ourselves thin. We are looking and continuing to look outside, we just have to be good about execution.”
Which local startups pitched to VCs
In addition to the panel discussion, startup finalists from the TiE AZ Fast Pitch presented to the VCs and received advice on how to improve their position in the market.
Force Impact Technologies developed FITGuard, a mouthguard that brings head injury awareness to athletes in real-time. When an athlete has a collision during a game the mouthguard will change colors letting them know how much force was behind the collision.
Endovantage created computer simulations of medical procedures for the patient before the surgery to assist surgeons in treating the patient more efficiently. In June, Endovantage took home $250,000 after the Arizona Commerce Authority Arizona Innovation Challenge. They were also listed in as one of the 16 startups in the Venture Madness competition.
Primo IAS created an idle alternative system reducing the amount of fuel mining equipment in order to help save fuel and engine life.