New Enterprise Forum: Term Sheets
October 15, 2009
Skip Simms, managing director of SPARK’s business accelerator and pre-seed fund moderated a highly-compressed discussion of venture capital at tonight’s New Enterprise Forum. As Tim Damschroder (Bodman LLP) summarized, West Coast terms are generally easier, East Coast terms generally tougher, and most Midwest deals he’s seen are, predictably, somewhere in the middle. Chris Rizik (Renaissance Venture Capital Fund) and Eric Sieczka (Pixel Velocity, and co-founder of EOTech, which exited for nearly $50M in 2005) also walked the group through preferences, capital structure, and the VC “math problem”. Slides from September and October’s meetings:
Some of the questions I heard tonight weren’t strictly related to term sheets, but earlier-stage startup issues and more general funding questions I’ve seen answered elsewhere:
- http://www.cdixon.org/?p=367
- http://www.bothsidesofthetable.com/2009/07/22/do-you-really-even-need-vc/
- http://www.bothsidesofthetable.com/2009/08/14/angel-funding-advice/
- http://blog.startupprofessionals.com/2009/04/startup-valuation-top-ten-techniques.html
- http://www.firstascentventures.com/blog/?p=17
- http://redeye.firstround.com/2009/10/company-math-vs-vc-math.html
Presenting companies tonight included Midland’s Advanced Battery Concepts and Ann Arbor’s Bio Logic Engineering.
Nouveau Angel Capital Corp, the first public angel fund?
July 2, 2009
Michigan’s Great Lakes Angels President Rick Galdi says his phone has been ringing off the hook this week after the Crain’s Detroit Business coverage of his new cross-border venture, the Nouveau Angel Capital Corp.
While we’ve seen other attempts to create marketplaces to trade traditionally illiquid assets, Nouveau is a bit of clever cross-border financial engineering that seeks to repurpose an existing, structured, well-regulated Canadian financial instrument to connect small companies to public capital - the Capital Pool Company - but instead of raising capital, say, to hire a team of geologists to dig for oil, they’ll be digging for new early stage technology companies to invest in. Rick says the team spent 80% of the time vetting the instrument and only 20% doing the deal, motivated by their frustrations in trying to organize an angel group in Windsor and getting tech deals done in reasonable time. Nouveau will be based in Windsor, targeting investments in both Michigan and Canada.
While it seems unusual to “take a company public before it goes public”, there’s clearly precedent (e.g. reverse mergers, although a CPC is just cash - a “clean shell”) and a demonstrated need for greater liquidity which seems to exist just over the border where over 40 companies have gone public on the TSX Venture Exchange since January. TSX SVP Ungad Chadda has described the CPC program as “public bootstrapping” for small companies - or in Nouveau’s case, a vehicle to help close the early stage funding gap for startups.
They’ve just lined up their founding directors, and hope to file with the exchange and raise $2M by the end of August (hiring a broker to sell shares to 200 investors in Phase 1), after which they intend to raise $18M more through the sale of public shares after making their first investment.
Angelsoft’s Ryan Pipkin and I believe this will be the first effectively public angel fund - anybody know otherwise?
May 19: Ann Arbor New Tech May Meetup, with Rick Snyder
May 18, 2009
We have a very special meetup this month - following our regular program, we’ll welcome Rick Snyder, CEO of Ann Arbor venture capital firm Ardesta and former COO of Gateway Computer, for a town hall session as he considers his gubernatorial bid in Michigan!
Leading into the town hall session, we’ll have 4 companies take the stage for 10 minutes each, 5 minutes to demo and 5 minutes to answer questions. We’ll close the event with community announcements and open networking in the atrium.
- John Barrie, Appropriate Technology Collaborative
- Jim Deakins, Lyfe
- Drew Leahy & Bobby Matson, MyBandStock
- Tim Stephens, Speedraft
Please RSVP if you can join us!
May 12-13: Michigan Growth Capital Symposium
May 9, 2009
David Brophy and the UM Center for Venture Capital and Private Equity Finance are again hosting the most important venture capital event in the Midwest - the 28th annual Michigan Growth Capital Symposium.
It was a rough Q1 across the board for VC firms, and Michigan has been particularly challenged with only a handful of operating funds remaining in the state. But last month’s announcement of a $36M Series A for Lycera in Ann Arbor reaffirms that the nearly $3M spent every day on UM research translates into excellent venture opportunities.
MGCS will feature over 65 investment firms, 32 presenting companies, and two solid days of panels, discussions, and high-level networking. If you’re currently raising money in Michigan, you need to be at MGCS!
May 4, 5: Social Entrepreneurship on Facebook, and Non-Dilutive Early-Stage Startup Finance
April 30, 2009
Two back-to-back events next week to kick off the month of May:
- Monday, May 4: (Lil) Green Patch: Social Entrepreneurship and Virtual Economies on Facebook
- Tuesday, May 5: Non-Dilutive Finance for Early Stage Startups
The former will be held in the conference center of the beautiful Michigan Information Technology Center (housing Merit and Internet2). We’ve also invited a number of environmental nonprofits and related organizations to join us.
The latter will be held in Blau Auditorium in the amazing new Ross Business School building at UM with students from David Brophy’s Entrepreneurial Finance course, as well as the CEO of Lycera, who most recently closed a $36M round of venture capital after receiving a number of grants, tax credits, and equipment through various state programs. We’ll also have time for networking afterwards with a Co-founders’ Corner of the room where folks looking for potential business or engineering co-founders can meet.
Please RSVP at http://a2newtech.org if you can join us!
Building an Entrepreneurial Community: Lessons from Boulder - April 1, 7pm
March 26, 2009
Blau Auditorium, UM Ross School of Business
Provo, Boulder, Madison, Bridgeport-Stamford, Ann Arbor: the top 5 midsize metros in terms of quality of life, according to a recent study based on the latest U.S. Census Bureau data:
Almost 55 percent of Boulder’s adults have bachelor’s degrees, easily leading all midsize metros in that category. Boulder is also noteworthy for its healthy entrepreneurial spirit. Seven percent of its adults are self-employed, twice the national average.
Ann Arbor, site of the University of Michigan, has the nation’s strongest concentration of adults with master’s, doctoral and professional degrees, 27.7 percent.
Anyone who’s witnessed the flurry of activity associated with a2geeks since December has likely seen or heard about our grassroots effort to organize Ann Arbor’s tech community, bridging the gaps we have between various University departments, over 50 geek groups, over 100 tech startups, and the traditional town / gown divide. Some of this has been inspired by a renewed interest by local geeks in the hacker culture that once prevailed here, and some by Boulder’s entrepreneurial renaissance:
In the past 15 years, Boulder has gone from a little hippie college town to a little hippie college town also boasting an impressive and growing congregation of Internet entrepreneurs, early-stage venture capitalists, and bloggers. How did Boulder pull this off? And what can other cities, policymakers, and entrepreneurs who want to boost their own start-up quotient—and overall competiveness at a local level—learn from Boulder’s success?
Next week, Jason Mendelson, co-founder and Managing Director of Foundry Group, a Boulder-based venture capital firm that invests in early-stage information technology companies, will be here to speak at the new Blau Auditorium at UM’s Ross Business School on Building an Entrepreneurial Community: Lessons from Boulder, CO on Wednesday April 1, at 7 PM hosted by Professor David Brophy, Director of UM’s Center for Venture Capital and Private Equity Finance, as part of his Finance 325 (Entrepreneurial Finance) class.
Jason will also be holding office hours on entrepreneurship and venture capital on Friday April 3 from 3 - 5 PM in Lorch Hall (Economics Building) Room 171, 611 Tappan St.
Anyone with an interest in growing Ann Arbor’s startup community should come out!