Green’s the Favorite Color of the Entrepreneurs : 2-Year-Old San Diego Venture Group Helps to Make Their Dreams Come True
The color-coded name tags tell the real story at the San Diego Venture Group’s monthly meetings.
Red tags identify entrepreneurs with heady dreams to sell.
Accountants, lawyers and consultants wear blue tags.
Predictably, the dollar-green tags are reserved for venture capitalists with money to make entrepreneurial dreams come true.
When the red tags speak, the greens and blues listen, even when the red tag wants a million dollars.
“By 9:30 the next morning (after making a three-minute presentation) I had seven telephone calls from people who wanted to meet with me, and I was scheduled for three meetings a day all last week,” said William E. Brown, the founder and chairman of San Diego-based Techna Vision, a start-up company that has developed computerized diagnostic and detection tools to be used by ophthalmic doctors to detect eye and brain disorders.
“I didn’t know what kind of reception I was getting,” Brown acknowledged. “But my sales manager later told me that 15 seconds into the presentation he started to hear ball point pens clicking. He knew we had them when the pens started to click.”
Those pens were jotting down Brown’s simple and direct analysis of Techna Vision’s capital needs. “I told them we needed $1.1 million,” said Brown, who added that the three-minute appearance has elicited speaking invitations from two other nationally known venture capital forums.
The reds, blues and greens gathering for the San Diego Venture Group’s monthly luncheon meetings are part of a growing network of more than 50 clubs that have popped up across the nation, according to Thomas P. Murphy, who has been credited with convening the nation’s first venture group meeting in 1974. Murphy retired to San Diego last year.
Murphy’s first club--six business associates joined him at lunch to discuss venture capital opportunities in Hartford, Conn.--has since mushroomed to include 368 members from across Connecticut.
Since that informal gathering 12 years ago, groups have popped up in high-tech meccas such as San Diego, which are rich in entrepreneurs but lacking in capital, and decidedly lesser-tech cities such as Beaumont, Tex., home to the investor-rich East Texas Venture Capital Club.
Two years ago, Murphy helped create the Stamford, Conn.-based Assn. of Venture Capital Clubs, which has been opening a new club just about every other week, according to an association spokesman.
“The venture club movement is one of the most important developments in the nation’s economic growth over the last few years,” said Ted Elliott, chairman of Hartford-based Prime Capital Management Co. and chairman of Connecticut Venture Group, the statewide organization that grew out of Murphy’s luncheon meeting.
“The United States is starting about 1.3 million companies annually, and the 250 to 300 recognized or large venture capital partnerships account for fewer than 1,000 start-ups, so nearly 1.3 million entrepreneurs still need to find a lawyer, an accountant, backers and manufacturers. It’s a Herculean task, especially if they come from a technical or academic background.”
Not surprisingly, relatively few deals actually are struck during group meetings, said Murphy, who noted that “one persistent guy in Connecticut stood up and made his presentation at 18 meetings in a row. He got some seed money but kept coming back to get subsequent funding.”
Sometimes, though, things begin to click immediately.
However, even entrepreneurs who fail to make a capital connection need not leave the San Diego Venture Group’s luncheon meetings empty-handed, according to Terry L. Schmidt, who founded the venture group after moving to San Diego from Washington with a plan to create Ambulance Corp. of America, a health-care company.
“When I got (to San Diego) two years ago I couldn’t find out who was on first base,” Schmidt recalled. “The meetings have been most effective in leading me to the right attorneys, CPAs, financial printers and consultants.”
“That’s what half this forum is about--getting the fellow with the idea together with the reality folks,” said Schmidt, who quipped that the “check hasn’t been cleared” by the two venture capital firms which are reviewing his proposed ambulance company.
Entrepreneurs, venture capitalists and consultants forge those important links during quick presentations made during three- to five-minute “forums” during which they can grab the microphone and register their companies’ vital statistics.
The San Diego group, now the nation’s second largest organization with 175 members, has decided to copy Stamford’s formula and shorten those forums to a slam-bang, one-minute presentation.
The Los Angeles Venture Assn., which has heard from dozens of entrepreneurs during its first year of meetings, has moved in the opposite direction. During the past year’s meetings, the 100-member organization has scheduled a handful of five-minute presentations.
That format attracted a wide range of speakers that included high-tech wizards, the owners of a weekend pet sitting service and a would-be brewery operator.
Next month, however, the association will showcase a single start-up company during a 25-minute presentation that will be critiqued by a panel of venture capitalists.
However, the presentations are often overshadowed by the “networking” which goes on before and after--and sometimes during--the presentations.
“Venture capitalists invest in people, because first and foremost, that’s what they’re betting on,” said Ron Maheu, the Boston-based chairman of Coopers & Lybrand’s high technologies industries program. The presentations help venture capitalists determine “how capable these people are of . . . adapting, changing, getting a product into the marketplace,” Maheu said.
Murphy sees an additional benefit: “Unfortunately for entrepreneurs, roughly 90% of the venture capital money goes to high-tech start-ups, but 90% of the new businesses in this country are not high-tech.
