What You Should Know About ECS

Ask Sherman

April / May 2010 By: Sherman McCorkle Volume 8 Number 2

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I saw in the last issue of Innovation that Technology Ventures Corporation is sponsoring an Equity Capital Symposium in May. What exactly is an Equity Capital Symposium?

This will be TVC’s 17th annual Equity Capital Symposium. We put a large number of investors in a large room with a large number of technology entrepreneurs who are seeking equity funding and a large number of fundings occur. This year the event happens on May 19 and 20 in Albuquerque. The real work goes on for the five months leading up to the event.

In October there is an open call for business plan submissions to be received in January. The TVC project managers read every plan (usually there are between 40-70 submissions) and score them based on a set of internal criteria. They then sit down and compare scores and select the top plans for that year’s symposium. This year there are 20 companies represented. Each team is assigned a group of advisors from the professional community in Albuquerque. These advisors volunteer their time and come from varied backgrounds such as accounting, patent law, corporate law, marketing and management. The advisors and entrepreneurs meet several times during the next four months trying to help the entrepreneur hone their business strategy, business plan, elevator pitch and ten-minute presentation.

In April TVC hosts a dry run to practice these presentations in front of a highly opinionated audience comprised of members from all of the advisor teams. Then in May it hosts the symposium. Some 300 people attend every year including professional, equity and angel investors.

During the event TVC hosts an “investor-only” reception, a dinner and the big event, the PowerPoint presentations. Each investor in ten minutes or less explain the unique investment opportunity. On average about 33 percent of the presenting companies get funding. This is a significant number since the odds of venture funding from just dropping off a plan at the VC’s office is about 1 in 1000.

What is an elevator pitch?

One day an eager young man was assigned the task of trying to raise funds for a new natural history exhibit in Chicago. He decided to visit the head of the largest department store, Marshall Fields, to solicit a donation. Marshall Field, the person, was a well-known philanthropist but had proven very reluctant to provide the $1M needed to start a museum. He said, ”I don’t know anything about a museum and I don’t care anything about a museum.” The young man’s quest was going to be difficult indeed.

Field’s secretary told the young man that he needed an appointment to see Mr. Field and that there were none available for several weeks. Undaunted the young man said,” I just need 30 seconds and I am willing to wait.” Wait he did. He was a constant fixture in the secretary’s outer office every day for a week.

Finally, on Friday the secretary took pity on the young man. She said,” Mr. Field will be leaving the office at exactly 5 today. If you catch him at the elevator you may be able to have the 30 seconds you need while he is waiting.
At exactly 5, Marshall Field emerged from his office and found the young man standing at the elevator. As he approached the young man blurted out three names, “Archibald Potts. Benjamin Peabody. Herbert Wycliffe.”
“Never heard of any of them.” replied Field brusquely.

“Exactly”, replied the young man. “They all made their fortunes here in Chicago but they never left anything behind for the citizens of Chicago to remember them by. I am here to make sure that you don’t have the same fate.” By the time the elevator reached the bottom floor the young man had the money and today any Chicagoan can give you directions to the Field Museum of Natural History.

Now I don’t know if this urban legend is true but it sure is a great story and it demonstrates the importance of what the investment community calls the elevator pitch. It is a succinct encapsulation of the most relevant parts of your business idea and designed to raise enough interest from an investor to get you to a longer meeting. My colleague John Freisinger offers details in an article that begins on Page 13.

Sherman McCorkle is president of Technology Ventures Corporation, Send your entrepreneurial questions through our contact page.