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.

All About Patents and Intellectual Property

What is intellectual property? Patents - grant by the federal govt. that gives you the right to exclude others from making, using or selling your invention Trademarks - word, phrase, logo, sound that distinguishes your business from others Copyrights - generally used by artists - writers, sculptors, painters - protect their creation from others Trade Secrets - recipe, formula, etc. that is a secret and gives you an adv. in the marketplace How to obtain a patent? -Must be a patentable subject matter -Must meet the standards of patentability -Must abide by the statues of limitations Anything under the sun made by man qualifies for a patent - computer programs, living organisms, methods of doing business (Amazon.com - got a patent for 1-click shopping over the Internet) Types of patents: -Utility patents - machines, compositions of matter (chemical compounds), etc. -Design patents - ornamentality (how it looks) and functionality Standards of patentability: -New - If you are not the first inventor, you will not be awarded the patent. -Non-obvious - Even if new, an invention cannot be patented if it would be deemed obvious to one of ordinary skill in the relevant technology at the time of the invention. The patent office looks at the scope and content of the existing technology and the differences between the prior art and the invention to be patented. Patent Search - Do it and do it early! -Client investigation -Patentability searches -Computer searches - www.uspto.gov and www.google.com/patents Statutes of limitations: -U.S. Patent Law -One year from offer to sell, public use or description in printed publication Patentability vs. marketability: Hard truth - More than 95 percent of all patented inventions never make any money; Marketability is just as important as the legal considerations. Patent enforcement: -The person who brings the law suit must be the patent owner. -If you are on the receiving end of a threat of infringement, you can take that to court. -Around 97 percent of all patent cases are settled outside of court. Only 3 percent actually make it to trial.

Methods & Tools for Funding Innovation through Government Programs

Peter Grotsky, president, and Awilda Lopez-Cepero, CEO, of Government Contracting and Marketing Services, LLC The U.S. government small business market is the world's largest buyer of products and services at more than $500 billion per year. The U.S. government buys almost every category of commodity and service available. By law, 23% of all U.S. government purchases go to small businesses. Get to know the appropriate U.S. government agency and obtain information on: -past awards -quantities -costs -awarders Government purchasing procedures must conform to the Federal Acquisition Regulations (FARs). Utilize federal business opportunities (FedizOpps.gov), available for any solicitation at or above $25,000. Look up the Small Business Act and all the rules and regulations are there. Pre-negotiated contracts are key. Everyone should be working towards a pre-negotiated contracts. Tens of thousands of them are available every year. Small usiness definitions: -Service disabled veteran owned small business concern (SDVOSBC) has preference over regular small businesses. Service disabled veterans will have government contracts for life. -Not less than three precent are awarded by SDVOSBC. --Lifetime of Sole-source procurement awards --SBA requires that at least 51% of the applicant firm is directly and unconditionally owned by the SDVOSB. -8(a) Business Development (BD) Program - created to help small disadvantaged businesses compete in the American economy and access the federal procurement market (minority-owned businesses). Women-owned small business (WOSB) procurement program - small business concerns owned and controlled by women at not less than 51% of the total value of all prime contract and subcontract awards for each fiscal year - also get additional preference over other small-business owners. The federal government does not require any formal certification of women-owned small businesses that are proposing to be prime contractors on federal procurements. Government contracting registration essentials:

• North American Industry Classification System (NAICS) Number Enter your product or service in the description area and then locate your business area
• Data Universal Numbering System (DUNS) Number (FREE) -Used by the government to identify contractors and their locations -The US govnerment and many major corporations require their suppliers and contractor to have a DUNS number
• Central Contract Registration (CCR) Primary registrant database for U.S. Federal Government

--collects, validates, stores and disseminates data in support of agency acquiasition missions, including federal agency contract and assistance awards -Commercial and Govnerment Entity (CAGE) Number (from CCR) -ientifes contractors doing business with teh fed government, NATO emmber nations and other foreign governments used for a facility clearance, a pre-award survey, automated Bidders .. The DHS recently sent out an RFI in order to determine if their forthcoming RFP would be a SB set aside. WHen the final RFQ was issued via FEDBIZOPS.GOV, all bidders had to limit theier SOW to 2 pages. the CO coordinated the contracting and financial parts for the 275 biders propsals that were erceved, with the PM reviewed RFP - request for proposal RFQ- request for quote RFI- request for information SOW- statement of work ACO - administrative contracting officer PCO - project and contracting officer CO - contracting officer PM - program manager PEO - program executive officer TPOC - technical point of contact marketing your company -get on teh GSA schedule dealing with the government is lucrative, profitable, but difficult. getting ready to work iwth the government requires due dilligence It is extremely important to get recognized by the people who can want and need to buy your product. need to know this right off the bat in marketing. We highly recommend our clients is to get on the GSA schedule. --establishes long-term government wide contracts with commerical firms. in order to avoid being weeded out, we recommend the GSA schedule. it allows you to compete because all of your company informatio nis public. 20-year contract. first five is automatic and then you have renewal options. can't renew if you're in breach of your contract (illegal FAR acts), or you haven't produced any work for the government. once you're on a GSA schedule, the govn't really wants you to provide work for them. --provide access to the federal government to over 10 million commercial supplies and services that can be ordered directly from the GSA. Myth: with a GSA schedule, federal agents will be knocking down your doors to obtain your products and services. The GSA schedule allows you to start your marketing and get your company name and info out there. Marketing to the federal government is different from the private sector. dealing with the federal government, you have to stick with it and be diligent. "The squeaky wheel gets the oil." Connect and market your company directly with the regional GSA contracting officer. For a successful marketing campaign, you need to determine if you qualify as a small business, request DUNS number, know your NIACS, register on CCR, GET ON GSA, interface directly with the government agency and pound the pavement at government agencies. Keep your face in front of the person that you've identified as you point of contact.

How Success Breeds Success: Entrepreneurs Weigh In

Strategies that Worked from a Panel of Successful Entrepreneurs:

• Tony DiBenedetto, Chairman & CEO, Tribridge
• Marc Fratello, CEO & President, SOE Software Corporation
• Chase Stockon, CEO & President, Panther International
• John West, CEO, Lion Asset Management Company

Q: How do you come up with a concept for a company? Develop it? Strategy and plan? Tony - Folks take strategy for granted as an exercise. Strategy should drive the business. Include company management and customers; get feedback from them to come up with strategy. Could take several months to develop. Shapes business on quarterly basis. Strategy is a constant work in progress. Every person in the company should REALLY understand the strategy to reach true success. Q: How did you zero in on your business and say this is where I can make a difference and be successful? Marc - Learn from other peoples' mistakes. Mistake I made - tried to be all things to all people... but found that it was a big marketplace and we realized we had to focus and be more specialized. Wanted to have a niche market that we realized we wanted to get in and not be taken on by bigger players. We play in election software - not too many players in this market. Able to get in with a big enough market share and now we are the dominate, 800 lb. gorilla. You definitely want to look for those niches where you can play to win... try to do something very, very well in a market where you won't get your head kicked in by other players. Q: Chase, How did you make the decision to get into your business? Chase - Sometimes, it chooses you. In trying to be strategic about it and finding that niche, we also wanted to solidify a client upfront. Is there a market beyond that but is it still in the niche? We manage grants for the government - Florida Department of Transportation - we manage every transportation dollar in Florida. Tony - We entered the market in a really crappy space with around 400 competitors, but noticed there was little quality. We integrated across Microsoft and changed the way everything was done. If you are going to be in a crowded space, you have to differentiate yourself and be bold, innovative and make quick changes to come out on top. Be extremely different. Q: How important is it to surround yourself with quality folks? What impact did they have? John - Single most important thing you will do. All about the quality of people who surround you and you bring on your team. Every person I knows who is successful has figured this out. The best of the best are secure enough and smart enough to surround themselves with people who are better than they are. Q: Tony, what do you attribute all of your growth and success? Tony - We have experienced 50 percent increase in revenue growth over 11 years. We are fortunate to have a board of directors who have a lot of growth and entrepreneur experience. Some advice: Think big, and then think bigger, and settle for 50 percent growth. Make a huge investment in sales and marketing. Deliver what you say. Be prepared to be different and challenge the status quo. Don't be afraid to fail; if it doesn't work, pull the plug immediately and move on. Measure results. Q: Marc, how does a small company that has a unique solution attract and retain quality folks/good talent? Marc - Spread around equity or options - ghost stock. It is easy to attract people with a new and exciting idea, but the real key is retention and keeping them over the long haul. Best way to get the best people is to share the wealth and equity. Not always the easiest thing to do. Probably end up getting one quality person who buys into the vision you can keep for the long run. Q: Chase, how do you stay focused on your strategy with good folks? Incentives for employees? Chase -We do offer profit sharing... no ownership change, but there are a bunch of profit incentives. In grant management, we have no clients in Tampa. At most, we have 1-2 clients in a town. Micromanagement can't happen, so everyone has to be in tune for the business to run. Tony - Starts with leadership and empowering people. It's not the company they are in love with; it is the people. We have had 15 people leave and start their own companies, and instead of getting mad about it, we helped them. Q: John, how do you protect your company but also share some of the equity? John - Has to be with purpose. Made mistakes in the past by spreading the wealth too broadly. What are they going to do to earn that equity? It isn't right for every business. If you have to deal with outside investors, they are going to ask why you are giving this away. Needs to be tied to performance or longevity - what is this person going to accomplish for you and your company? Why am I doing this? How do I align my strategy with where I want this company to go? How do I align my team to accomplish my goals, objectives and where I want to go? So important to ask these questions! Q: What are you seeing in this economy? Challenges and opportunities? Marc - Downturn for you is also a downturn for your competitors... takes some bold moves to take advantage of it, but you can. We doubled our sales staff over the last 9 months... bold move... benefits haven't been reached yet but we will reach them. There are opportunities to take advantage of in the economy we have today. Consider a marketing approach others aren't considering. John - Now is a good time to be selling if you have some innovation that can cut costs. People are hungry for innovation. A lot of industries out there are right for that change. Tony - Now is the time to go after talent. Buyers of talent... a lot of good people out there who are really hungry to work for good companies. This is the time to differentiate. Chase - Be flexible. It only took a bad economy and stimulus money for us to reach success. We are an overnight success story that only took 15 years to get here. Marc - Hire slowly; fire quickly.

Innovation or Expiration - Challenges of Suriving in the Current Economy

Insights from Dean Akers, CEO of Ideal Image:

• The entrepreneurial movement is what fuels our country
• I have one goal to achieve by speaking to you: stimulate you to changes your perspective on your current situation. Look at all the current opportunities.
• I have been through five recessions and in each one, I have become more successful. People make stupid decisions in a bad economy. During a good economy, business owners will jump up to take credit. But during a bad economy, fingers are pointing everywhere else.
• There is one rule in Ideal Image: do what's right. When you're measuring your own successes against what your associates suggest, how successful will you be?
• U.S. unemployment rates was at 8.9 % at the end of April. At the end of April in 2005, the unemployment rate was 5.2%.
• You as an individual cannot change the economy. You can only control or change yourself and what you are responsible for.
• You control your own destiny.
• Entrpreneurs are the backbone of our economy.
• GM is like your grandmother who's had cancer for 40 years. Do you think there will be any great stories about GM leadership?
• How much capital there is now? There is so much money out there through private equity and venture groups. The chief topic now is that the limited partners right now who are paying 2% aren't having their money's not being invested in anything. They're pulling their money out. Private equity firms are starved for deals. If you need capital, you just need to put your shoes on and get in front of them. There is plenty of money out there for you as individuals. Control your destiny. if you are, all these external things that you think can or can't get done, will happen.
• Take ownership of your own business.
• This economic climate fuels entrepreneurship. As you grow your business, "Create Intrapreneurs."
• Entrepreneurs do what they think is right. take the same philosophy and funnel it to your company. "Intrapreneurship."
• The good news: Ideal Image is a totally empowering company. The bad news ... Ideal Image is a totally empowering company.
• Can you change the eocnomy? No. Can you change your competition? No. WHat can you change? Yourself.
• Go back to your businesses and take a hard look in the mirror and say what can I do to be a better leader and empower my people and make a greater success of my company.

The Fast Pace of Innovation & Challenges of Maintaining a Competitive Edge in a Global Market

Some thoughts from Jim Failor, president of STAR TEC A Sampling of Global Innovation Initiatives:

• The Focused Factory: combines a clear strategic intent with a concentration of infrstructure and high-octane talent to discover and deploy new solutions to big challenges.
• Hollyworld provides opportunities to build a "global creative class. By leveraging the law of cool community" ... As more and more smart entrepreneurs gather in one place, the more attractive that place becomes to other like-minded people.
• Large-scale ecosystems: end-to-end innovation systems combining stewardship mechanisms, funding bodies and structures for academic collaboration, all in support of an overall national innovation strategy. Aalto - a merging of three established universities (economics, technology and art/design) to create an "innovation university."

Newton's First Law of Motion: adapted for entrepreneurs: Every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it. Innovation is the currency. As some jobs disappear, new jobs are created to serve the new technologies that are continuously be developed. To be successful, follow where the innovation is going. The future is our choice, not our fate!

STAR TEC Innovation '09 Poster Session

From pedicures to air conversion to water, STAR TEC's Poster Session has it all. Here are the latest inventions to come out of the Tampa Bay area:

• My-DropZone.net is a new solution to business e-mail. Store and send e-mail files without
• Stellair is a revolutionary system to feel like you are walking on air.
• IPS Warning System prepares you for what is going on around the country
• Sky Train Corporation a technology for a two-part solution. building a transit system that could be built over the entire Tampa Bay region. Hybrid high-speed suspended monorail system. HybridNRG - a woman-owned business focused on developing, owning and operating renewable energy systems for the communications industry.
• GPS Enhanced Field Worker Automation -
• Snap Design - SNAP is a one-finger mouse, perfect for use in tight spaces and works on almost any surface.
• Pinellas Scientific - Chemical Agent Detection System - Optical MEMS Lab-on-a-chip
• Halo Aircraft - VTOL from any surface including water with no landing gear.
• FluidPlans - dynamic business plan management software
• AquaVentus LLC develops and sells innovative water-from-air products. AquaVentus technology produces pure drinking water from humid air.
• Business Consultant
• Jeanette's Pedicure Pedestal makes do-it-yourself pretty polished toes easy.
• Tracer Pro saves companies money and time with remote employee access, etc.
• The Magnettis Port, LLC - IPS Warning System brings constant readiness and alertness

And the winner is ... Tracer Pro. Congratulations to Tracer Pro, who has won a a half-day strategic planning retreat from Collaborative Labs at St. Petersburg College, valued at $3,500.