Instead of spending time chasing investors, your time should be spent proving your clean technology business is viable in ways investors value. Because of the distant “dot com bust” and the current economic malaise, investors are highly risk-averse. No news here. Accordingly, entrepreneurs must have a more disciplined strategy, and it is a myth that there is no money to be had. But where does an entrepreneur equipped only with a potentially great idea learn what’s needed to interest investors? Books and webinars are available on how and what to present, but these are never interactive or hands-on experiences.
So here’s the news. Many entrepreneurs are not aware of low-cost teaching resources in their own cities. Every city has some combination of incubators, accelerators, and co-working resources to help entrepreneurs understand and produce the deliverables investors require. These environments range from work-only spaces to highly engaged, mentoring incubators. Principles on how to build your business — and how to secure funding — can be learned and even tested in the collaborative environments of these working groups.
Here’s a generalized short list of the key principles required by capital investors. Each has been written about elsewhere, so a summary will suffice. The strategy to secure funding, in a word, requires demonstrating “proof” that your new technology, new service, or new product is viable, including;
- Proof of demand. For developed markets, independent studies by Pike and IDC can size the market and identify major competitors. For undeveloped markets, independent in-market customer research is needed
- Proof of concept. Must go beyond the “bench testing” done in the HP or Apple “garages” back in the day. Validation by third-party labs or in-market testing are required.
- Credentializing the business. Members of the management team must have proven industry experience. In the absence of a strong team resume, third party validation is key, such as endorsements by Siemens or Honeywell in the energy management (EMS) arena.
Following are examples of the types of incubator, accelerator, or co-working learning groups that exist in Reno and Carson City, Nevada. While these are unique to Nevada, every city has support groups that provide workspaces for startup businesses, and provide mentoring on how to build your business — and attract capital funding. Note that at the end of each summary, there are comments by each owner, stating in their opinion the secrets to attaining a successful new business.
Bosma Business Center, Reno, NV
The BBC, founded in early 2012, is a collaborative working environment combining rentable co-working stations for small business owners, surrounded by offices of full-time service providers. Currently, there are 10 resident consulting services on site, including for accounting, legal, and sales. This “community” (currently 50) combines struggling, hopeful entrepreneurs with professional advisors on site and is unique among the support groups in Nevada.
Each month, for a small fee and open to the public, they conduct educational lunches on topics geared towards small business success. According to Managing Shareholder Mike Bosma, “by offering a full range of business consulting services, the BBC is your single most powerful tool for running your business,” further adding, “proximity creates opportunity.” When asked what Mike thinks are the keys to business success, he cited;
- Have an Advisory Committee that provides trusted advice.
- If your problem is capital; fix this! There are funds out there.
- Have a well credentialed management team.
CCTAC (Carson City Technology Center and Accelerator), No URL, 208-863-7007
The CCTAC will open summer of 2013 as an “accelerator” technology center to create desperately needed skilled and high-value jobs for the region. This is made possible by Steve Neighbors, trustee for the Hop and Mae Adams Foundation, who purchased the building and is funding the remodelling. According to Steve, it is truly a regional collaboration involving the foundation, the Northern Nevada Development Authority (NNDA) and Carson City officials.
Each tenant — perhaps only 2-3 initially — will be carefully vetted for likelihood of success and representing desirable technologies, such as medical supplies, software, communications, data centers, and cleantech. Reno’s energy management company SunScience is a possible initial tenant. In addition to providing office and even manufacturing workspace, the CCTAC also intends to provide training and mentoring for tenants. When asked what he thought were the keys to success, Steve was quite specific, saying:
- Clear away all the rhetoric and spreadsheets, and demonstrate clear “demand.”
- Know how to commercialize, implement and bring it to market. Test in market.
- Pay attention to both the credentials and the character of the management team.
- Need to understand and manage diverse stakeholders.
C4Cube, Reno, NV
Founded in 2009 and today run by Ky Good, Norman Smith, and Lynne Keller, the “Cube” is an incubator for new businesses, with an emphasis on technology. For their current roster of 10 incubees (7 in-house) the cube provides offices, business equipment, and access to a large network of industry professionals. One of their cleantech tenants showing early promise is LOAD IQ.
From the Cube’s Advisors, “entrepreneurs in residence” and registered service providers, incubees can receive mentoring on wide-ranging topics such as business consulting, human resources, finance, federal grant applications, intellectual property, and legal issues. There are frequent formal presentations on these topics on site. Plus, their monthly Business Opportunity meetings provide 3-5 selected new businesses 15 minutes to present their case to investors. As serial entrepreneurs themselves, Ky and Norman are always on hand for advice, sometimes becoming the interim CEO.
Ky describes the cube this way, “we provide a nexus for entrepreneurs, investors, service providers and the community to create skilled jobs and build small businesses.” When asked what creates success, he cites;
- Offer a viable product or service that is sellable – proof of demand.
- Have mentors you respect, that are knowledgeable and willing to talk straight.
- Build your network of contacts.
- Develop access to money. (Note this is not listed first.)
NIREC, Reno, NV (Nevada Institute for Renewable Energy Commercialization)
Founded in 2007, NIREC defines itself as an accelerator of innovation-based businesses with the primary goal of job creation for all Nevada. Because they do not provide physical office space for companies, they are not an incubator or a co-working organization. They do advise individual companies (currently 6-8) on a wide range of business development issues, and provide introductions to business consulting, legal, and financial resources. They are the only organization of the six reviewed here with offices in Las Vegas, and they are funded by state and federal funds, sourcing the Governors Office of Economic Development (GOED), Department of Energy (DOE), and the Small Business Association (SBA). They also work closely with the state’s higher learning and research institutions. To address the gap between academic study and realities of the job market, NIREC’s goal is to help institutions’ curriculum and projects become more directly relevant to high-skill job creation.
When president and CEO Walt Borland was asked what he thought were the keys to entrepreneurial success, he said simply:
- Focus, focus — and focus.
Reno Collective, Reno, NV
Colin Loretz founded the collective in 2009 making it one of two purely co-working organizations serving Nevada. Unlike local incubators or accelerators, they provide group work spaces, where members “collect” around large work tables with their laptops. Similar to other organizations, they conduct learning events, which tend to be more software oriented. Colin, a “core” member, states that this collaborative environment is both supportive and highly conducive to learning and problem solving. They take no financial interest (stock) in member’s businesses, and work space is paid for by membership fees, which are based on space usage.
Currently there are 45 members, who tend to be in the creative arts (designers, photographers) as well as technology and software. Their 6 core members are all software developers and are involved in launching CloudSnap. When I asked Colin what’s the secret to a successful new business, he unhesitatingly stated:
- Is all about the team; the collective skill and chemistry to make the idea work.
- Demonstrate demand by testing with potential customers.
Reno-Sparks Local Business Co-op, Reno NV
Dave Asher founded the Business Co-op in 2010, making it the only other co-working organization in Nevada. The co-working space is not a stand-alone venture, but part of a larger initiative to support locally owned businesses. Components of this larger initiative include a directory of local businesses, assistance with developing websites, a “Green” Business Chamber and a Buy Local promotional program. Funding for work space in the co-op is provided by annual memberships: Silver ($250), Gold ($500) or Platinum ($1000). Tenants are typically non-technical, more of a cross section of local businesses and services (Mom & Pop). When asked what he thought contributed to successful small businesses, Dave said:
- There must be a clear need for your product or service.
- Know your financial needs to start your company and secure the funding.
- Develop a cost effective marketing campaign.
In addition to these incubator, accelerator, and co-working groups in Nevada, there are four economic development agencies: EDAWN, NCET, NNDA, and the RSCVA. These groups also provide advice and key introductions to area entrepreneurs and were profiled in a previous CleanTechnica article.