What Are the Predictors of a Startup’s Survival?

Pamela Hartley
Marketing Manager
Connecticut Innovations

Good question. Marty Swilling, CEO and founder of Startup Professionals Inc., recaps the results of an old study of 27 startups that appeared in Inc. magazine. The findings are not surprising but are worth reviewing and reinforcing – even today.

Paraphrased below are the seven characteristics found to be predictors of survival:

• Founder is ready, willing and able to learn from others.
• Startup seeks out and connects with established suppliers and channels.
• Startup pays close attention to new potential competitors, reassessing them  frequently.
• Startup spends significant time on initial positioning and identity development, striving to make a great first impression.
• Startup has access to capital and backup plans for financing.
• Startup offers customized products or services.
• Startup chooses to play in a growth industry.

Read more in Swilling’s recent blog post on innovation DAILY’s blog.

What do YOU believe are predictors of a startup’s survival and success?

Robots and iPads and CI…Oh My!

Melanie Hoben
Marketing Associate
Connecticut Innovations

Want to spend a day in the midst of manufacturing brilliance? Intrigued to see what kind of robot a group of teenagers can build? Interested in learning more about creative financing for your business? Then head to EASTEC 2013, the premier conference for East Coast manufacturers, taking place on May 14, 15 and 16 in Springfield, Mass. Just remember 3242—it’s Connecticut Innovations’ booth number, and it’s where you’ll meet Sandra Rizza of our lending team and me, along with our special guest, a robot from Connecticut’s FIRST Robotics Competition. You’ll learn more about our flexible business loans, and you can also enter to win an iPad mini!

We hope you will join us at EASTEC. Remember, it’s booth 3242 (in the Young Building). We can’t wait to see you there!

Enough Already!

Amy Hourigan
Director of Marketing & Communications
Connecticut Innovations

Why do buzzwords—meaningless terms that replace plain English—gain so much traction in the business world? Perhaps it’s because they sound impressive. Or maybe it’s because it’s easier to befuddle your audience than it is to say what you really mean. Whatever the reason, buzzwords are never as effective as clear, simple language. Consider this example from the San Francisco Chronicle.

The vicissitudes of our earthly existence are disproportionately distributed.

Translation: Life isn’t fair.

Sure, option one sounds eloquent, but two is a heck of a lot easier to absorb.

Want to impress your colleagues with your outside-the-box thinking and make an impactful paradigm shift? You can start by striking these five buzzwords from your vocabulary.

  1. Outside the box. When you become the three billionth person to utter a phrase, it kind of loses its ability to convey innovative thinking, no? Try ‘fresh’ or ‘new’ instead.
  2. Curate. According to GeekWire, curate has replaced less self-important words when used to describe the act of pulling together digital detritus for social media and your website. “With rare exception, few digital ‘curators’ are carefully selecting items and presenting them with analysis of the original creator’s intent. Instead, they organize, collect, gather, assemble or aggregate.”
  3. Impactful. It’s not actually a word.
  4. Utilize. Why ‘utilize’ this word when ‘use’ will do?
  5. Leading. If you lead in something, say so. If you can give specifics, you can kill the buzzword.

What buzzwords drive you bananas?

Two Heads Are Better than One

Douglas Roth
Senior Investment Associate
Connecticut Innovations

Teamwork is critical to the success of venture capital investing. The VC perspective on teamwork, however, is perhaps more diverse than one might imagine. In any entrepreneurial venture that a VC is considering investing in, there must be a management team. Even the brightest scientific mind or most successful serial entrepreneur must be surrounded by a diverse group of professionals that complement each other in experience and other important character traits. They must also work together as a team – pulling together when challenges arise, aligning interests, and being willing to both offer and accept the ideas, suggestions and criticisms of teammates. I am rarely interested in backing an entrepreneurial venture of one.

But there are other areas of teamwork that are just as critical to the success of a VC firm. Within the firm itself, the investment professionals must work together. The Deal Team at Connecticut Innovations, for example, meets weekly to discuss both prospects and portfolio companies. By sharing the concerns we uncover during our due diligence or the issues discussed at recent portfolio company board meetings, we benefit from the experience and perspective of our colleagues. At times, we have even asked other members of the Deal Team to meet with the prospect or portfolio companies we are responsible for, in an effort to bring another set of eyes and a complementary skill set to the table to assist these companies.

Yet another area requiring teamwork is with VC co-investors. A syndicate of investors can do so much more to ensure the success of an early-stage company than any one investor on its own. Investors share deal flow and help each other with due diligence. Multiple investors working together offer a broader perspective in the portfolio company’s board room and bring to bear a larger network of valuable contacts.

Peter Longo, Chris Penner, who is CI’s newest Deal Team member, and I recently traveled to Boston. While in town, we attended a networking reception hosted by the law firm Goodwin Procter, the New England Venture Capital Association’s breakfast presentation by Facebook COO Sheryl Sandberg, and three separate meetings with Boston-based venture capital firms. Events like this are great opportunities to catch up with old friends and make new contacts, and the meetings with VCs allow us to solidify relationships and exchange investment prospects.

The entrepreneurial environment in the greater New England area, and Connecticut in particular, is thriving. Nevertheless, it is very difficult and can take a considerable amount of risk capital to successfully launch a profitable, sustainable business. CI can support companies only so much, but working together with others, we can accomplish far more. Co-investors can provide part of the capital necessary to bridge a company throughout the inevitable challenging times. Co-investors can suggest management candidates to fill unexpected gaps in the entrepreneurial team.  Co-investors can make business development introductions that contribute to the growth of the company. Of course, teamwork among co-investors is more than simply pooling capital. By working together toward a common objective, multiple investors can validate the cliché “two heads are better than one.” Generally, that common goal is to launch and grow a business such that investors can exit in a reasonable timeframe and earn returns commensurate with the investment risk. As an evergreen fund investor, CI relies on liquidity events from previous investments to recycle its capital, fund its operations and invest in future entrepreneurs.

To date, CI has invested alongside more than 60 other VC firms. With the kinds of productive discussions we had during our recent trip to Boston, Peter, Chris and I hope to increase this number, boost our ability to leverage CI’s investments with capital from other firms, and further support promising entrepreneurial companies here in Connecticut.

Learning from the Best

Pamela Hartley
Marketing Manager
Connecticut Innovations

Want to promote innovation within your organization? Here are some insights into cultures and processes in place at high-growth companies that are effective at promoting and capitalizing on innovation within their organizations. While the observations pertain to larger corporations, entrepreneurs may take away some useful concepts and approaches.

This article, which appears on the InnovationManagement.se blog, highlights 19 characteristics shared by some of the world’s fastest growing companies:
What High Growth Companies Share in Common

This article, which appears on the Forbes blog, talks about a company we’re all quite familiar with, Google:
Google’s Secrets Of Innovation: Empowering Its Employees

A Conversation Starter for This Weekend

Pamela Hartley
Marketing Manager
Connecticut Innovations

Here’s something to debate over coffee or a meal this weekend… Will adding more women to your leadership team give you a competitive edge?

An article that appeared yesterday on ScienceBlog suggests that it would, pointing to research on how the sexes tend to approach decision making and how boards with higher female representation perform relative to those with lower representation.

Read the full blog post titled “Women make better decisions than men?!” here.

Bombarded with Pitching Pointers: You Can Never Have Too Many

Pamela Hartley
Marketing Manager
Connecticut Innovations

Need some pointers on how to pitch to venture capitalists? We recently shared information with our portfolio companies about the upcoming March 27 “How to Pitch a VC” presentation being given in New Haven by David S. Rose, one of the best coaches in the business. Hopefully, some of our companies will be able to attend.  (I understand a waiting list has been prepared!)

In the spirit of providing plenty of pointers on pitching (How’s that for alliteration?), I thought I would pass along an article that appeared Tuesday on the blog of Entrepreneur magazine. The post, titled “10 Mistakes to Avoid When Pitching Investors (Infographic),” was written by Catherine Clifford.

We’ll see how her pointers align with the ones David will be presenting next week…

A Wise Approach to Raising Startup Capital from Individuals

Pamela Hartley
Marketing Manager
Connecticut Innovations

Clearly, raising startup capital from individuals can be a slippery slope. Does one pursue friends and family? Professional and seasoned angel investors? There are some pitfalls to be aware of – particularly if you do not wish to lose a good friend!

Hear more on this topic in a blog post titled “How to raise startup funding from friends and family” that appeared Saturday on the VentureBeat blog and that we accessed through Innovation Daily.

Governor Malloy Visits CI-backed Bioscience Company to See Breakthrough Technology Firsthand

Amy Hourigan
Director of Marketing and Communications
Connecticut Innovations

Yesterday, Governor Malloy visited AxioMx, a Branford-based CI portfolio company that has created a faster, less expensive way to produce antibodies used in research and diagnostics.

The governor toured the lab where product is being made for customers including the Department of Defense and the National Institute of Health—less than a year after the company opened its doors.

Governor Malloy tours AxioMx labs with company co-founder Chris McLeod and members of the scientific team

What’s thrilling for Connecticut is that this breakthrough technology is being produced right here in our state. What’s thrilling for Connecticut Innovations is that the company’s co-founders are successful repeat entrepreneurs. Not only is AxioMx showing tremendous potential, but Affomix Corporation—an earlier company founded by this same team—was another CI investment that resulted in a win for the state, both monetarily and for advances in health care.

AxioMx has hired 12 employees and plans to bring on an additional five. This is exactly the type of initiative Connecticut is delighted to invest in.

Bytes from Beyond

Pamela Hartley
Marketing Manager
Connecticut Innovations

Entrepreneurs, take note. Here are two interesting articles I spotted yesterday. One discusses goal setting and the other recaps pointers on the effective use of social media offered by Ford Motor Company’s head of social media. Both offer useful tips.

• “The Power of Huge Goals and How to Achieve Them” (on Young Entrepreneur and Entrepreneur.com)

• “3 Social Media Lessons from Ford” (on Entrepreneur.com)

I hope you enjoy them!