James Connor compares becoming a CEO for the first time to jumping out of a plane without a skydiving lesson. “It’s learning as you’re descending. You can miss by a few seconds, but you can’t miss too far.”
But making sure that parachute opens is where events like the $Unlimited Investment Challenge come in, the president of California’s Sand Hill Angels says.
The concept is simple. Entrepreneurs looking to grow their business apply and the finalists are selected, then coached to get their pitches investment ready. In early November the 10 nervous finalists pitched to a panel of investors, Dragons’ Den style. Last year two of the finalists successfully raised capital — and now the wait is on for this year’s cohort.
Mark Robotham, general manager of New Zealand Trade and Enterprise’s Escalator service, says the challenge provides much needed exposure for small companies.
“A lot of companies are sitting out there and saying ‘why do we need to get involved in these challenges?’ and they can’t expect to come onto the scene and front up to an investor and say ‘hey look, invest in me tomorrow’.”
Investing is a high-risk business he adds, and for an investor, handing over that cash requires a level of trust. “If you’re not on people’s radar you’re simply not being seen.”
On the day the key to impressing the panel came down to intellectual property, he says. A good IP strategy means a company can fend off competition and defend the niche it has carved.
Connor agrees, adding that the biggest challenge for startups is becoming the dominant default provider.
“Unfortunately at this time most companies are by nature a nice-to-have feature or a nice-to-have product or a nice-to-have service. Generally speaking, for them to be successful they will need to transform themselves into a must-have.”
That’s what Massive Software is well on its way to doing. Israel Cooper, finance director for the crowd simulation software developer, says the company was driven to enter the challenge because of massive demand for its program.
The software, recently picked up by Los Angeles International Airport and previously used in the Lord of the Rings trilogy, builds individual characters and allows them to explore their surroundings as a real person would. Essentially, users can predict how people will interact with their environment.
“Previously we were just going to develop it … all on our own through our internal cashflow.” But since the release of the beta version of its architectural engineering program in March “we’ve realised this is a time-critical opportunity; we really want to leverage this as much as possible so we need additional funding to do that”.
For B2P’s Rosemary Sharpin, the challenge has provided a valuable opportunity for networking and promoting her rapid-response bacterial test. “Finding the right people to talk to is hard. If you literally knock on the doors one by one, you might never strike the person to whom your product has appeal and interest, and fits with their portfolio. Exposure to a wider range of people who then may or may not be interested but then may pass you on to somebody else is fantastic.”
Already in New Zealand, Australia and Ireland, B2P is looking to expand into the US, where a case of food poisoning can be costly for producers and restaurateurs.
One of the major challenges for the finalists, says Robotham, is learning to focus the pitch on the business, rather than the product. “It’s more the ethos that we operate on in this country — it’s not common practice for people to talk about their business.”
From the other side of the fence Cooper agrees: “Obviously we’re experts at selling our product, we’re brilliant at doing that. The concept of selling our business had never really been something we needed to do up until we needed more funding — so the focus from the product to the business was really the big shift towards the end.”
The finalists:
- Somnaceutics: developing sleep-enhancing drinks
- Biomedics NZ: cutting-edge dental technology, including tools to diagnose oral cancers
- Maxwell Energy: producing alge-based biofuels
- Hydropal: developing a filter bottle to remove chemicals from tap water
- Autogrow Systems: manufacturing greenhouse control equipment
- Massive Software: developing simulation and visualisation tools for film, games, architecture and transport
- Nova Eco-Tech: developing alternative fuel retrofits for vehicles
- Predefine: construction information consultancy
- B2P: developing onsite rapid-response bacterial tests
The $Unlimited Investment Challenge was sponsored by New Zealand Trade and Enterprise’s Escalator service and James & Wells, in partnership with Unlimited and the Independent