Business Alliance Helps Entrepreneurs Get a Shot at Grubstake

Posted: October 26, 2006 at 1:00 am, Last Updated: November 30, -0001 at 12:00 am

By Jennifer Freeman

According to a recent article in the Washington Post, venture capital investments in the Washington region dropped during the third quarter. However, the Business Alliance of George Mason University is doing its part to keep those investments from dipping further.

Yesterday, the Business Alliance hosted its signature Grubstake breakfast, allowing five local companies unprecedented access to pitch their products to a roomful of local venture capitalists.

The five companies vying for funding were

  • MADCAD, the developer of the “first and only comprehensive resource” for organizing building codes, standards and regulations in the construction industry

  • Orchid Suites, an emerging leader in providing user-friendly web site creation and management for professional service firms and end users

  • SPADAC, a provider of advanced geospatial technologies that allow municipalities and organizations to make informed business decisions

  • TradingBell Inc., provider of product catalog solutions for manufacturers, wholesalers and distributors to automate the creation and publishing of commercial business-to-business product catalogs

  • Velaro Inc., an application service provider that allows businesses to add live help and real-time customer service to their web site

All of the companies were required to apply for the opportunity to make a formal 10- to 15-minute presentation to a panel of investors, and an audience of other investors, fellow entrepreneurs, potential strategic partners and other interested parties.

Local investment experts provided a brief overview of their funds and the market from their perspective and also asked questions of and offered advice to the presenting companies.

A coaching session was held last week to give the presenters a chance to practice their pitch and prepare them for the main event. Members of the Business Alliance Grubstake Committee were assigned to each company and provided feedback to make sure all the presenters touched on the same topics: company and product overview, revenue growth to date and projected revenue, management team, amount of funding needed and exit strategy.

For at least one company, this was not their first time applying for grubstake (a term from Gold Rush days). Admits Tanya Renne, cofounder and CEO of Orchid Suites, “We applied for Grubstake four or five years ago. We had no business being there at that time.”

Luckily for Renne and Orchid Suites, they weren’t discouraged the first time, and after getting their project off the ground and proving themselves, were chosen to present this time around.

“It (the Grubstake breakfast) has a reputation in the mid-Atlantic as a good opportunity to meet high-powered, savvy investors and other emerging technology companies,” said Renne.

Contrary to what many may believe, venture capital funding is not just for the young entrepreneur with nothing more than a great idea. All five companies that presented at the Grubstake breakfast have been around for an average of five years, are bringing in revenue, have a proven growth record and are seeking additional funding to continue to grow their companies.

As evident from yesterday’s breakfast, today’s venture capitalists, unlike those before the technology boom, are looking to invest in a more mature company, one that has a proven track record of success.

Even the exit strategy of these companies varies from just a few years ago. Previously, many companies had a plan in place for taking their company public. In contrast, almost all of the presenters at yesterday’s Grubstake breakfast indicated their exit strategy included their company being acquired by another, larger company.

While none of the entrepreneurs may have walked out of the breakfast with a check in hand, they are all hoping to secure between $250,000 and $2 million in the coming months. The next step for these presenters is to “network, network, network.”

Being chosen to present their companies to a roomful of potential investors provides these executives and companies with a foot in the door. It is now up to them to leverage this access and arrange meetings with venture capital firms and angel investors to discuss their projects in further detail. Past experience shows that successful bidders can secure funding in as little as six months.

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