Funding Strategies in the Current Economy

Panel Session with: Robin Kovaleski, executive director, Florida Venture Forum Lee Bell, CPA, Saltmarsh, Cleaveland & Gund Tom Cardy, managing director, Hyde Park Capital Partners, LLC David Doney, shareholder, Fowler White Boggs Matt Rice, vice president, Ballast Pointe Ventures

Tom: There's not a lot of money right now in Tampa Bay real estate. Companies aren't putting as much money out there as they have in the past.later stage transactions with angel groups. True angel deals are really squeezed right now.
Matt: Some of the sectors that are getting money right now are ones that people seem to think are less subject to the recession, such as the healthcare industries of biotech.
David: Green business are finding it has hard as anyone else to find capital and financing.

Tom: I've made more money coming out of down cycles. As cycles exit, there is strong cash flow. Human capital tends to be more strained in good times. Fundamental business, good people, and stable capital, then as markets turn, it's just survivng that turn in between.
David: There's not a lot of deals going on right now. It's a great time to get in front of someone for exposure so that when it is time to invest, you and they will be ready. What kind of sophistication level do you see out there?
Tom: Even in this environment, we're still seeing a lot of great ieas. It's about the people and the quality of the ideas.

Matt: On average, we see at least 500 business proposals per year. We only make probably 3 to 5 investments a year. It's more important to find out who the investors know than to spend a lot of money or time on an elaborate business plan. It's important to have the elevator pitch, a presentation and an efficient business plan all mapped out since you dn't know how long you will have to present your plan. We like getting qualified introductions from people in our network who we deal with on a regular basis. There isn't one place to find young entrepreneurs. We are on average initially introduced to a company about two years before we invest in them.
Tom: It's about networking. The people you meet may not be in a position to provide services, but that relationship you have with them may play out to help you out along the road. I never want to send someone away empty but help them connect with someone else who may be able to help them. You're one person away from the person you want to reach, as long as you network yourself and know who is in your network.
Lee: Develop a clean, concise way of communicating what is you are doing. If it doesn't land on the proper ears, it's just going to go to waste. When you're networking, you never know who will be able to help you. likely from someone you didn't expect. Who are gatekeepers for the entrepreneurs?

Lee: We're very interested in hearing about what is going on. Whether you're ever going to be a client or not, our culture is to listen and spend time getting to know you and we never know where it's going to lead and want to be a part of the success it can make. We will make introductions as often and best we can.
David: We like to spend some time with the prospective client, understand who they are nd what their business is. That qualified introduction is helpful to them in the vetting process. As many business plans as they see, it's helpful for a comany looking to make money to be introduced by a professional advisor. That doesn't guarantee you'll get financed but it ensures that someone pays close attention to your business. What else can you bring to the table besides cash?
Matt: It's the network we can provide. Our network consists of 75 entreprneurs who have been in your shoes before and understand. Our involvement really flexes on the need of the entrepreneur.

Tom: Know what market to buy into. Certain things are favored and certain things aren't. You won't be able to change that. Do your homework and know what they do. As you look at the market, try to match personalities. Use your advisors - they'll be able to tell you if it's a fit. Think about what you're selling versus what the market is buying. Early stage development is really difficult to do right now compared to a few years ago, it used to be really easy for early stage development. Don't try to sell an early stage idea to a later-stage company. Try to match as best as possible. There's always some money source.
David: Industry focus and appetite, also. Some investors ultimatley like to invest in things, deals, people, and companies that they understand. You're less likely to get funded if they can't understand your business plan. Advisors can help identify who best to target.How important is my management team?
Tom: It depends on the investor. An entrepreneur is smart enough to know that a small piece of something great is better than nothing of something else.

David: Very rarely do you see an early stage company that has a management team in place.
How important is evaluation?
David: If you've got a great idea but nothing sitting behind it, it's not worth much. What is the business plan? Sales channels, marketing plan?
Lee: Your financial projections will take a pounding. A lot of entrepreneurs have spent a lot of time building elaborate models, it can be surprising how a potential investor will look at it and find a big hole that they're very interested in- the risky portion of what is actually going to drive the revenues. Having spent your time on building realistic projections, whatever you do, be real about it with the absolute worst case scenario.What is one piece of advice to give entrepreneurs?
Lee: Be very realistic about your expectations. Delivery should be optimistic, but projections should be somewhat pessimistic.
Tom: A very strong relationship and network is important for differentiation.
David: Be sure to build your network rigorously. Your integrity is of the utmost importance.

Matt: Don't be too evaluation-focused early on. Evaluation only matters on the exit. Be focused on getting a good partner that you think you can build the company over time.

I spaced out the panel comments by three(3)... no relation to how the conversation was.

From STAR TEC