Going to work today

[gatorjjh]

Originally Posted by StrangeGator

Had our first presentation to a VC group, New World Ventures, part of the Pritzker Group. It was more of a political play than anything. Kevin Willer and JC Pritzker are the big backers behind 1871, an effort to compete with the Silicon Valley and build a stronger tech center in Chicago and the midwest. Fascinating meeting. I didn't get to say much, just introduce myself and my role in the venture, and then push the start button on the 90 second animation I created that lays out the benefit proposition for the enterprise. From that point on, it was a high stakes poker game and I was just a fly on the wall. I think we got this guy off his balance a little, asking for $10 million without having any revenue coming in at all. He started off telling us we'd be better off getting two or three million a piece from multiple firms. When he finished debating and asking questions about how we get around a number of obstacles, he wished us good luck going out went and was very honest about Silicon Valley VCs being much more generous and less risk averse. They're also hungry for big data operations, which is the sector we'er in. He then said that maybe his firm was open to coming in with a smaller stake. Our CEO asked him how much smaller. He said $7 million. She said "No thank you." I almost fell out of my chair. Then again, I'm not very good at poker.

My bet is your CEO is anticipating a 10 mil call from the $$ man in the next 2 weeks

[Al E Gator]

Originally Posted by StrangeGator

Had our first presentation to a VC group, New World Ventures, part of the Pritzker Group. It was more of a political play than anything. Kevin Willer and JC Pritzker are the big backers behind 1871, an effort to compete with the Silicon Valley and build a stronger tech center in Chicago and the midwest. Fascinating meeting. I didn't get to say much, just introduce myself and my role in the venture, and then push the start button on the 90 second animation I created that lays out the benefit proposition for the enterprise. From that point on, it was a high stakes poker game and I was just a fly on the wall. I think we got this guy off his balance a little, asking for $10 million without having any revenue coming in at all. He started off telling us we'd be better off getting two or three million a piece from multiple firms. When he finished debating and asking questions about how we get around a number of obstacles, he wished us good luck going out went and was very honest about Silicon Valley VCs being much more generous and less risk averse. They're also hungry for big data operations, which is the sector we'er in. He then said that maybe his firm was open to coming in with a smaller stake. Our CEO asked him how much smaller. He said $7 million. She said "No thank you." I almost fell out of my chair. Then again, I'm not very good at poker.

So your CEO turned down $7 million on the spot just like that? She better hope her last dollar there are people lining up for her great idea and she's not wasting yours and everyone else's time and effort.

[gatorjjh]

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[northgagator]

Originally Posted by Al E Gator

So your CEO turned down $7 million on the spot just like that? She better hope her last dollar there are people lining up for her great idea and she's not wasting yours and everyone else's time and effort.

Nothing to worry about. Deals like this are a poker game. The risk of getting skunked now are zero. Why? The $10 and $7 million were just the opening bids. I am sure that there will be some counter offers. Also word will get out and other competing offers will come in.

[gatorjjh]

Originally Posted by northgagator

Nothing to worry about. Deals like this are a poker game. The risk of getting skunked now are zero. Why? The $10 and $7 million were just the opening bids. I am sure that there will be some counter offers. Also word will get out and other competing offers will come in.

spot on, they simply set some parameters

[StrangeGator]

Originally Posted by northgagator

Nothing to worry about. Deals like this are a poker game. The risk of getting skunked now are zero. Why? The $10 and $7 million were just the opening bids. I am sure that there will be some counter offers. Also word will get out and other competing offers will come in.

Apparently that's how it works. They want to create interest across the landscape. A few of you know this game better than I do. This is very new to me. The part that I do understand and that concerns me a little, is the kind of control you give up if one firm comes through with the entire $10 mil. We'd get better terms if three different firms combine for that amount. I don't think we want any more than that. There's not a legitimate path to revenue that justifies more than that. It's one of those things that will find it's own growth progression. Since it's scalable, there's no sense building out right now what we won't need for five more years.

The play now is to pit Silicon Valley against the Chicago market. Chicago VCs will be embarrassed if we get all our money out there, especially if the operation moves out there. We got started in a Chicago funded incubator. I sincerely hope we stay in Chicago no matter where we get our money, somewhat out of loyalty, but also because this is my home. I've seen housing prices in Silicon Valley, ugly little three bedroom ranches going for $900k. Love the Bay area, but I'm too old and cranky for that kind of commute.

Of course this thing still has a very good chance of falling apart. Or it could blow up and some VC firm's appointed board decides to replace half the founders with their own "experts." I'm just going to enjoy the ride for the moment. It's been quite an education.

[StrangeGator]

We just got invited to pitch to another Chicago VC firm Thursday. It came totally out of the blue. My guess is that there are no secrets in a tech incubator and somebody wants to catch us before the team heads out to California this weekend. They will be there for most of the week. The first pitch is on a big stage in front of every private equity player in the region. The subsequent meetings will be with individual firms who show interest.

FWIW, the last quarter of 2012 was the biggest in history for health technology startups, more than the previous two years combined. The other hot startup category is "Big Data." We fit squarely into that world as well. Two weeks ago, a big data startup got $50 M for their A series funding. In Silicon Valley of course. From what we're hearing, the only way you could get that kind of money in the midwest is if you revolutionized the tractor.

[StrangeGator]

Things are moving along, but more in the area of producing some significant revenue without an A Series VC investment. There's a large association of independent group health and group life brokers who represent almost 200 firms and over 15 million individual policy holders who are interested in what we're doing. That's exciting, but no VC funding means minimal salary until the hypothetical deal comes to life. I'd rather have a great VC partner, like New World Ventures, along with a really smart partner/advisor. I'm tired of working for peanuts.

FWIW, this is the animated pitch to investors and strategic partners. I made this with a good friend and colleague from Florida. It's quick summary of our value proposition.

http://vimeo.com/59990064