Startup companies hustling for cash often look for help from investors to give them the boost they need to get off the ground. Meet-and-greet events provide a great way for technology entrepreneurs and the people who hold the purse strings to get some face time with each other.
One such opportunity is coming up on Wednesday, May 4, when the New Jersey Economic Development Agency will host a “Founders and Funders” event for emerging New Jersey tech and life science companies. The event, which will take place at the Commercialization Center for Innovative Technologies in North Brunswick, will run from 11:30 a.m. to 3:30 p.m. The NJEDA will play matchmaker, introducing companies to angel investors and venture capitalists based on the fit between company profile and investment thesis. For more information or to apply for a slot, visit www.njeda.com.
James Hill, an associate at Edison Partners, will be one of the “funders” at the event. Edison, based on Witherspoon Street, focuses on making long-term investments in East Coast and Midwest tech sector growth-stage companies. While Edison typically invests in companies after they are out of their “startup” phase, Hill said a relationship that leads to an investment can begin much earlier than that.
Hill said there are a few things companies can do to improve their chances of getting investor attention — and a few things not to do.
“One of the biggest mistakes we see companies making is not knowing who their audience is,” Hill said. “I think it’s really important for people to have done their homework before sitting down with a venture capitalist. They need to know what the VC is going to look for and what kind of business they want to invest in.” For example, Edison focuses on financial technology, healthcare IT, marketing technology, and enterprise companies.
Often company founders have a good business idea and a good piece of technology, but that’s not enough for a company. “It’s a big issue when you have a founder who is very in the weeds with regard to technology-related information about their product, but they can’t step back and say ‘This is how an everyday person or end user is going to use this,’” Hill said.
Hill and other representatives from Edison travel all over the country and attend many events like Founders and Funders each year, meeting between 15 and 20 companies at each one. Of those, they end up investing in about six to eight companies, sometimes years after the initial meeting.
After hearing hundreds of pitches, Hill has developed a keen ear for them. A few stand out in his mind. “The best pitch I ever heard was for a machine learning algorithm with natural language processing capabilities that gave you real time insights into a combination of things: healthcare, the financial space, trading algorithms. It was definitely the coolest pitch because it was such a unique application for technology being put to working places that were really powerful and impressive, and they also had quite a few customers.”
Hill said another intriguing pitch came from a small Princeton-area company, a Princeton professor, and a few graduate students, that was monitoring metadata from social media and other websites to predict how risky certain regions of the world were. For instance, certain patterns of social media activity could predict that unrest was about to erupt in certain places. This information could be used in a hedge fund trading algorithm to raise the risk factor of those areas.
“It gave you a very granular look into risk levels when investing outside the U.S.,” Hill said.
Hill said “Founders and Funders” type events are good for business because there is no speaker or event, which eats up time that could be better spent hearing pitches. “It’s a really efficient use of your time,” he said.
Because Hill travels to events like this all over the country, he has seen how business trends affect different areas. For example, startups in Florida are heavily focused on senior care due to the state’s high proportion of elderly residents. New businesses in the Route 1 corridor are in many different areas of technology, he said, with the state offering a lower-cost alternative to New York for emerging companies. He said New Jersey companies tend to be more capital-efficient compared to their Silicon Valley counterparts, which burn through initial funding because of high overhead.
Hill grew up between the coasts, in Kansas City where his father owns a financial advising firm. Hill, who studied history at the University of Wisconsin, went into business after earning his MBA and law degree from Michigan State University. One of his early jobs was at IBM, where he worked with the Watson supercomputer.
Hill ran a business plan competition in Michigan, where he met Edison principal Chris Sugden. Sugden offered Hill a place at the firm, and he joined in 2013 as an associate.
It was that job with Watson got Hill interested in technology investing. “I started seeing how technology could really change the way we did things in the world,” he said.