Starting with a Seed, Add Energy & Money

New Funds For NJ Start-Ups

Funding Services

More Funding Sources

Start-up Stages

Pitching to Investors

Corrections or additions?

This article by Dina Weinstein was prepared for the January 3,

2001 edition of U.S. 1 Newspaper. All rights reserved.

Start-Up Success Story

Don’t get Rick Weiss started about food, nutrition,

and exercise. That’s his passion. Weiss is president of Princeton

Multimedia Technologies Corporation (PMT), a company that helps

nutritionists

develop and manage diets. "People eat too much," says Weiss.

"And the typical meal of adults and children is greasy, high

calorie

fast food. Lack of exercise is standard; so many kids today are

overweight

because they are not physically active."

Weiss’s company has developed a number of applications for dietary

analysis, including a software program, ProNutra, that calculates

and manages metabolic diet studies to eliminate paperwork. This

time-saving

device gives nutritionists the ability to automatically adjust diets

to meet specified constraints for several nutrients.

When Weiss started his company in 1993, it had a very impressive

sounding

name, but he was working from his kitchen table. Now he has an office

on Witherspoon Street and employs five full and part-time workers.

Along his company’s growth path, Weiss tapped state and federal

resources

for both advice and funds. His company’s story is, in fact, a textbook

case of how a technology startup can leverage government help.

Most recently Princeton Multimedia Technologies received a $200,000

Capital Seed Loan from the New Jersey Economic Development Authority

(NJEDA) to market the technology. The loan will help Weiss do market

research, web application development, and development of PMT’s

dietary

analysis system.

"In New Jersey technology is the fastest growing sector,"

says Glenn J. Phillips, public affairs officer of NJEDA. In an effort

to foster technology companies, the state has even coined a new motto

for New Jersey "Innovation Garden State — Where Brilliant

Ideas Grow." Says Phillips: "When we fund companies like

Princeton

Multimedia Technologies, they create jobs." To date six companies

have closed on similar NJEDA loans, receiving a total of $1.5 million

and creating 118 new jobs in the Garden State.

Federal grants have played a prominent role in getting ProNutra from

idea stage to implementation. Four years ago Weiss received his first

Small Business Innovative Research (SBIR) Phase I funding for $50,000

from the National Institutes of Health. The money was used to develop

the specification for what the PMT software would look and feel like

and what it would do (U.S. 1, July 17, 1996).

The following year, PMT received an SBIR Phase II grant worth

$721,000,

to incorporate the current USDA standard reference database with more

than 5,000 foods and 85 nutrient components. Weiss hired four Windows

software developers (U.S. 1, November 19, 1997). Then he moved out

of his home into an office location (U.S. 1, February 4, 1998).

Now Weiss sells a single license for his software for $3,000. ProNutra

is being used by 30 research and medical centers, including the

National

Institute of Health’s (NIH) general clinical research centers and

USDA human nutrition research centers. Other clients include such

institutions as Stanford, Yale, Harvard, Rockefeller University, and

University of Chicago. "The NJEDA loan will help commercialize

our products," says Weiss.

For Weiss’s business advisor, Don Greenfield of

Greenfield

Management Group LLC, the loan means much more. "From the funder’s

point of view the fact that Rick has gotten this Seed Capital Loan

means that the NJEDA acknowledges he has been able to make an impact

on grantors to get substantial funding thus far," says Greenfield.

"The fact that outside experts are validating his work is

important

because it is someone totally objective." Greenfield is confident

NJEDA’s validation will impress angel funders and venture capitalists.

Weiss is still going after more federal funds. He has tapped into

the National Institute of Health’s SBIR budget for a total of $1

million

so far, and he is expecting an additional $460,000 in SBIR funding

from the NIH to be used for "lifestyle assessment programs using

food images to analyze an individual’s diet."

The SBIR grants are designed to use small high-technology firms to

meet federal research and development objectives and to stimulate

the commercialization of innovative projects and concepts. All federal

agencies with a contracting budget for research and development in

excess of $100 million are required to establish an SBIR program.

The funding assists with the start-up and development costs associated

with bringing an innovation to the marketplace. And as Weiss puts

it: "The SBIR attempts to generate explosive growth."

PMT has also secured a $20,000 USDA contract for a project that

addresses

nutrition needs of people benefiting from the federal Women, Infants

and Children (WIC) program.

"Now I’ve got my hands into lots of different pots of getting

funding," says Weiss, but he also admits he has invested thousands

of dollars of his own time and money. He attributes his ability to

get funding to his passion for nutrition and his strong group of

advisors.

He includes in that circle his accountant, Greenfield; Randy Harmon

of the Rutgers New Brunswick Small Business Development Center; Paul

Kydd, Rocky Hill-based inventor and founder of Envimed; and external

content advisors from the medical field.

Harmon took on PMT as an external client and provided services from

two consultants: Michael Miller, technical liaison for the New Jersey

Commission on Science and Technology, and Kydd. "Paul Kydd helped

me take a good proposal and make it great. He helped me reorganize

it and educated me on what he thought the peer review people would

be looking for — what things to emphasize," says Weiss.

"He

also acted as my editor. It is such a competitive area."

Weiss says his experience writing and pitching research projects at

previous jobs also helped him writing proposals. He hasn’t hesitated

to include medical experts in the grant writing process. He says he

doesn’t try to do anything he doesn’t know anything about. "I

try to surround myself with people who have already gone through

stuff,"

says Weiss.

But the most important factor for growth, Weiss says, is the strong

market need for the company’s products. Some of the company’s computer

programs are geared towards those watching their weight. Indeed, the

National Center for Health statistics reports 78 percent of American

adults are overweight or obese and 11 percent of American children

ages 12 to 17 are overweight. Other wellness products will be for

people concerned about their nutrition because they are participating

in drug trials, and athletes who need correct nutrition.

But the most crucial application of PMT’s software is to provide

technical

support for clinical dietitians who need to monitor patients’

nutrition

intake for clinical trials. "When you save a day of clinical

trials,

you are saving the company $1 million a day," says Weiss.

"Our concept though all these grants and mechanisms that we’re

doing, is that the care providers need access to mountainous amount

of data on patients and given the right set of tools, their job can

be more efficient and the health care can be more efficient,"

says Weiss.

He thinks the proposed wellness programs — utilizing handheld

computers and web-based cellular telephones to remotely enter diet

and activity records into the system in real time — will be

received

equally well.

"The health care system has been the slowest to automate into

computer technology from the standpoint of clinical administration

side of things," says Weiss. "It’s a hodge-podge and everyone

has their little kingdom to run and they want their own system. Our

focus right now is ultimately trying to link the doctor with the

patient

and ultimately to manage more of their data automatically. And there’s

also this concept of an electronic medical record that the patient

owns, not the doctor."

Weiss grew up in Cleveland, Ohio, the son of Hungarian

Holocaust survivors. Weiss’ father was in Auschwitz. When he was old

enough, Weiss would help out his father in his jewelry store in

downtown

Cleveland, sometimes doing errands, his pockets filled with priceless

jewels.

He was an electrical engineering and math major at Carnegie Mellon,

Class of 1980, and has a master’s degree from Princeton University

in electrical engineering and computer science. Weiss is married to

Susan Gertner-Weiss, and they have a three-year-old daughter,

Gavrielle.

He worked at Bell Labs, ADR (now Princeton Softech), Digital Equipment

Corporation, and (the now defunct) Health Information Technologies

at Canal Pointe.

Trained as a computer software developer, Weiss began developing

nutrition

software seven years ago when his wife, a family and consumer

scientist

and a high school nutrition instructor, asked him to come up with

software that would help her teach a nutrition class to high school

athletes. Food for Fitness for Athletes was the focus, and Weiss knew

a lot about it. A high-end amateur cyclist, he had been cycling for

fun and competition for years. In fact, he met his wife on a cycling

trip. He also knew a lot about computer programming.

At that time he knew he wanted to start his own company. "I

thought

`What can I do? It has to be something I feel passionate about.’"

Weiss recalls. "Now it’s fun that I have the potential to promote

change using technology to promote behavior modification." Weiss

knows what he wants: "Where I ultimately want to be is a big

business."

Outsiders say the wide-ranging projects are actually PMT’s strength.

Earlier this year, students at Rutgers University Graduate School

of Management Interfunctional Team Consulting program conducted a

study that produced a market strategy for PMT. Raymond Sasso, the

program director, sees nearly 60 companies a year through this

service.

"Princeton Multimedia Technology Corporation is unique because

it’s the first company to provide wellness enterprise architecture

software," says Sasso. "It is applicable to fitness centers

or pharmaceutical companies. Its architecture lends itself to a lot

of examples. Also, ProNutra is the most flexible dietary analysis

program around."

Weiss and his advisors say the company’s next step will be to raise

equity financing. "We’re looking for investors who share the

vision

over the long term," says Greenfield. "So much of the business

involves Rick’s ideas, so when we move forward to the next step we’ll

be looking to work with like-minded investors."

— Dina Weinstein

Princeton Multimedia Technologies Corp., 145

Witherspoon

Street, Princeton 08542. 609-497-4600; fax, 609-497-0660. E-mail:

rick_weiss@compuserve.com

Top Of Page
Starting with a Seed, Add Energy & Money

Got an idea for a new business? Contact Randy

Harmon, director of technology commercialization and manager of

Rutgers

New Brunswick Small Business Incubator at the New Jersey Small

Business

Development Center of Rutgers Graduate School Management. The small

business incubator offers a broad range of technical and business

support services (732-545-3221). There are currently seven technology

business incubator sites throughout the Garden State.

(www.state.nj.us/scitech/incubatx.htm).

Looking for an economical way to test your business idea

in the marketplace? Contact Raymond Sasso, director of the Rutgers

University Interfunctional Team Consulting Program at the Graduate

School of Management in New Brunswick (973-353-1126). Graduate

students

work in teams to produce a market study and strategy for clients,

who are asked to be available to the team and to open the company’s

books (www.business.rutgers.edu/tcp).

Looking for federal money? The federal Small Business

Innovative Research (SBIR) grant is designed to fund research for

ideas using small high-technology firms to meet federal research and

development objectives and to simulate the commercialization of

innovative

projects and concepts. A primary goal of the program is to stimulate

high-technology innovation within the small business community to

enhance the nation’s productivity and help the U.S. maintain its

leadership

in the international marketplace.

All federal agencies (National Institute of Health, Federal Transit

Administration, Department of Defense, etc.) with a contracting budget

for research and development in excess of $100 million are required

to establish an SBIR program. The funding provides revenue to small

high-tech firms to assist with the start-up and development costs

associated with bringing an innovation to the marketplace.

The major factors in determining whether a project will be funded

are that funding will validate the feasibility of the particular

concept

or technology and, with further private or public funding, the

contract

recipient will further develop a concept or technology for the

marketplace.

SBIR Phase II funding is one public source that can be used to further

develop a concept or technology. Phase III projects use private sector

investments and support to bridge the gap between product development

and commercial sales. No SBIR funds are used in Phase III projects.

SBIR research topics are selected to fit federal agencies’ current

research needs. Yearly the National Institute of Health publishes

a book soliciting projects.

"For small companies, it’s a very important source of financing

because it’s a grant," says John Tesoriero, executive director

of the New Jersey Commission on Science and Technology (NJCST).

"The

SBIR is free money and companies don’t have to pay it back."

New Jersey companies that wish to apply for an SBIR grant can tap

into the expertise of NJCST Washington, D.C., consultant Mike Miller

at 703-354-1102. Miller can explain how to navigate the SBIR

application

forms. The NJCST (609-984-1671), also offers assistance to businesses

in the incubation stage (www.njcst.com). Other online resources:

National SBIR Resource Center (www.zyn.com/sbir).

National Institute of Health SBIR information web page

(www.nih.gov/grants/funding/sbir.htm)

Small Business Administration SBIR info web page

(www.sba.gov/SBIR/sbir.html)

Looking for state money? The New Jersey Economic

Development

Authority (NJEDA) Seed Capital Loan program provides loans from

$25,000

to $500,000 to early-stage technology businesses that need funds to

bring their products to market. (609-292-1800 or www.njeda.com). Seed

Capital loans are made at flexible terms and are available for working

capital to meet daily operating expenses and fixed asset needs, like

buildings and equipment. The loan carries an interest rate of 9.5

percent. It includes a one-year moratorium on repayment of principal

and interest and a four-year term of repayment thereafter.

"Among its eligibility requirements, the Seed Capital Program

calls for eligible companies to have a detailed business plan and

strong management team, operate within an emerging technology sector,

and to have initiated product testing," says Caren S. Franzini,

NJEDA executive director. NJEDA’s loan officer can be reached at

609-292-0187.

In addition to the NJEDA there’s the New Jersey Commerce and Economic

Growth Commission, as well as several innovative tax and tax credit

programs to help technology companies

(www.state.nj.us/commerce.about.htm).

Looking for venture capital? Business advisor Don

Greenfield

of Greenfield Management Group LLC in Jackson suggests looking at

the investment process as a validation process: "If someone comes

to me and says `I have an idea, blah, blah, blah,’ they’re excited

but it’s just an idea. It has very little value. At each step in

getting

funding you need to get validation from other sources to prove that

it is a worthy product."

When you are ready to open the doors to venture capitalists, the New

Jersey Technology Council offers assistance (www.njtc.org. The

NJTC has recently established its own venture fund, with Jim Gunton

as general partner (856-787-9700). The NJTC is also sponsoring a

one-day

Capital Conference on Friday, January 26, at the Princeton Marriott.

Speakers will include Jan Leschly, CEO of Care Capital LLC, and Mark

G. Heesen, president of National Venture Capital Association. Cost:

$160. Call 856-787-9700 or go to www.njtc.org.

More information on venture capital is available at the National

Venture

Capital Association website: www.nvca.org.

Looking for technology transfer funding? Small technology

companies might well use the services of University Ventures,

212-268-0154,

extension 280 (www.uventures.com). To help siphon technology

to the companies that need it, Craig Zolan launched this clearinghouse

for the technology coming out of universities and research institutes

from around the world. Member companies log on, do a search, and shop

around for the technology they need.

University Ventures takes a commission on each transaction, and so

far universities have been more than agreeable to the idea. "On

our site more than 4,500 corporations are looking for technologies

and 240 companies, universities, and government labs are marketing

their technologies on our site," says Zolan. "About 8,000

technologies are ready for sale."

Closer to home, Joe Montemarano at Princeton University is in

charge of technology transfer. See page 22 of this issue for

information

on his January 5 conference.

— Dina Weinstein

Top Of Page
New Funds For NJ Start-Ups

Finding the funding to get ideas out of the dream stage

and into first phase development can be as mind-boggling as coming

up with the ideas in the first place. This despite the abundance of

venture capital companies headquartered in the Garden State.

Some relief could come from one of the newest funds, New Jersey

Technology

Council’s Venture Fund, which plans to invest early stage capital

particularly in state-based businesses (E-mail: venturefund@njtc.org

or call 856-787-9700). Currently, only about 10 percent of the venture

capital raised in New Jersey actually goes into enterprises located

here, points out Jim Gunton, who has been named general manager of

the new fund. Gunton is also vice president and principal at the

Edison

Venture Fund, one of the few New Jersey venture capital companies

that focuses on expansion stage, New Jersey-based enterprises

(www.edisonventure.com

or 609-896-1900.).

His focus on early stage companies is what will set NJTC Venture

Capital

Fund apart from many of the other funds based in New Jersey, says

Gunton. Early stage falls between seed stage and the majority of

current

venture capital investment.

A seed stage investment might range from $300,000 to

$3 million. The seed stage company has probably gone through one or

two rounds of angel financing or is a spinoff that was privately

financed

by a larger firm. Then there is a gap before the traditional venture

capitalists step in. Edison Venture Funds, for instance, invests from

$1 to $5 million in "expansion stage" companies with at least

$2 million in annual sales. Care Capital, the new healthcare venture

capital firm at Princeton Overlook, takes the next step. It wants

to make "late stage" investments of from $5 to $50 million

and up (U.S. 1, November 8).

The in-between "early stage" is what Gunton hopes to fund.

"We’re looking for companies to invest in with the potential for

rapid growth with sustainable competitive advantage and opportunity

for a premium exit," says Gunton. "The appeal of early stage

venture capital is that you are looking for the home runs."

He adds that "New Jersey’s emergent industries such as optical

networking, wireless, and genomics are especially appealing."

But he has not ruled out more traditional industries such as

telecommunications,

pharmaceuticals, financial services, electronics, and aerospace. Other

characteristics of the NJTC fund:

Orientation to invest in New Jersey-based companies.

Experience and success of its investors, encompassing the

state’s

leading law firms, banks, entrepreneurs, corporate executives,

government

leaders, and financiers.

Affiliation with the New Jersey Technology Council, with its

comprehensive coverage of the state’s business market. NJTC members

will get their applications reviewed and will certainly get some

feedback,

but no guarantees can be made to them.

Familiarity with the New Jersey business market by the fund’s

principals, who have extensive business relationships and knowledge

of New Jersey companies and entrepreneurs.

The New Jersey Economic Development Authority will match every

$3 that Gunton raises with $1 from its own funds. (For this

investment,

the NJEDA will use income from its own investments and monies raised

through bond issues — no tax money gets used.)

Federal money could triple this amount. Under the Small Business

Administration’s

SBIC program, designed to help "grow" small companies, the

SBA leverages equity capital with government debt at a rate of two

to one.

The SBA loan money must be repaid, but at lower rates than a private

investor would expect — treasury rates, which might be 9 or 10

percent. Meanwhile, the payback for the venture capitalist investment

could be as low as zero or as high as 60 percent from a very

successful

company. Gunton is understandably optimistic that the rewards for

NJTC Venture Fund investors will be high, and he guesstimates they

will get a return of 30-40 percent.

"My aim is to get 100 percent of the fund invested in New Jersey

companies," says Gunton. At Edison, he and John Martinson tried

to focus on the New Jersey market. "With frustration, I sat by

and watched an enormous number of opportunities go by — sometimes

getting out-of-state money, but sometimes just floundering."

Top Of Page
Funding Services

Donmar Business Services, 165

Robbinsville-Allentown

Road, Robbinsville 08691. Donna Marchetti, owner. 609-259-1969; fax,

609-259-1219. E-mail: donmarbiz@worldnet.att.net. Home page:

www.donmarbiz.com.

Business angel investing, capital resources, network for entrepreneurs

and private/angel investors.

Equity Research Group raises capital for start-up

and early stage companies in New Jersey, New York, and Pennsylvania

(609-737-0267; fax, 609-737-6647; www.equityresearchgroup.com).

Kim and Jack Louth.

InHealth Venture Management LLC, 125-310 Village

Boulevard, Princeton 08540. Ted Stack, co-managing director.

609-452-7100;

fax, 609-452-7134. Home page: www.inhealthventuremgmt.com. Services

for start-up companies.

Silicon Garden Angels + Investors Network, 32 Cedar

Brook Drive, Silicon Garden, Somerset 08873. Daniel J. Conley, venture

catalyst. 732-873-1955; fax, 732-873-3237. E-mail: OnCallCFO@aol.com.

Home page: www.OnCallCFO.com. Expansion capital, venture capital,

creative leasing to business owners, coaching entrepreneurs in

business

plans.

Trenton Business Assistance Corporation, 209 East

Front Street, Trenton 08608. Deborah Osgood, executive director.

609-396-8271;

fax, 609-396-0559. E-mail: tbac@earthlink.net. Home page:

community.nj.com/cc/tbac.

Community development small business loan fund providing financing

and technical assistance to business in Mercer County.

Top Of Page
More Funding Sources

Accel Partners, 1 Palmer Square, Suite 402,

Princeton

08542. James R. Swartz, managing general partner. 609-683-4500; fax,

609-683-0384. Home page: www.accel.com. Focused on Internet,

software, and health care services also with an office in San

Francisco.

Acorn Technology Fund LP, 5 Vaughn Drive, Princeton

08540. John Torkelsen, president. 609-924-3000; fax, 609-452-2700.

For start-up and early stage companies, a participating security in

SBIC, also PVR Securities Inc.

Biotechnology Financial Corporation, 1 Palmer

Square,

Suite 530, Princeton 08542. Jennifer H. Lobo, president. 609-683-1318;

fax, 609-921-1509. Investment bankers.

Cardinal Health Partners LP, 221 Nassau Street,

Third Floor, Princeton 08542. John Clarke, managing general partner.

609-924-6452; fax, 609-683-0174. Home page:

www.cardinalhealthpartners.com.

Care Capital LLC, 100 Overlook Center, Princeton

Overlook Suite 102, Princeton 08540. Jan Leschly, partner.

609-520-1973;

fax, 609-520-9299. E-mail: davidramsay@carecapital.com. Life-sciences

investment fund.

Domain Associates LLC, 1 Palmer Square East, Suite

515, Princeton 08542. James C. Blair, general partner. 609-683-5656;

fax, 609-683-9789. E-mail: domain@domainvc.com. Home page:

www.domainvc.com.

Early Stage Enterprises LP, 995 Route 518, Skillman

08558. Ron Hahn/Jim Millar, general managers. 609-921-8896; fax,

609-921-8703.

Home page: www.esevc.com. Venture capital investor in seed and

early stage companies.

Edison Venture Fund, 1009 Lenox Drive, Building

4, Suite 200, Lawrenceville 08648. John H. Martinson, managing

partner. 609-896-1900; fax, 609-896-0066. E-mail:

info@edisonventure.com.

Home page: www.edisonventure.com. Equity and guidance to companies

with proprietary technologies or unique services in emerging markets.

Healthcare Ventures, 44 Nassau Street, Princeton

08542. James H. Cavanaugh, president, general partner. 609-430-3900;

fax, 609-430-9525. Formerly Healthcare Investment Corporation.

Johnston Associates Inc., 181 Cherry Valley Road,

Princeton 08540. Robert F. Johnston, president. 609-924-3131; fax,

609-683-7524. E-mail: jaincorp@aol.com. Focus on healthcare and

biotechnology.

Penny Lane Partners LP, 1 Palmer Square, Suite

309, Princeton 08542. Stephen Shaffer, partner. 609-497-4646; fax,

609-497-0611. E-mail: pennylanepartner@msn.com. Financing for early

to mid-stage companies, a participating security SBIC.

Proquest Investments, 600 Alexander Park, Suite

204, Princeton 08540. Pasquale DeAngelis, chief financial officer.

609-919-3560; fax, 609-919-3570. Www.proquestinvestments.com.

Focus on cancer research.

Sycamore Ventures, 989 Lenox Drive, Building One,

Room 208, Lawrenceville

Facebook Comments