There are plenty of blogs, articles, and workshops about what to do when you’re looking for venture capital backing — how to come prepared, what to say, what to present in your business plan.
Donna Usiskin, principal and a member of the healthcare IT investment team at Edison Ventures at 1009 Lenox Drive, Lawrenceville, however, also wants would-be investment seekers to know what not to do.
“There are a number of mistakes people make,” Usiskin says. “You might have all the ‘dos’ correct, but it only takes one of the ‘nots’ to limit your chances.”
Usiskin will present her take on “How Not To Attract Venture Capital” at the New Jersey Entrepreneurial Network on Wednesday, April 4, at 3 p.m. at the Princeton Marriott. Cost: $55. Visit www.njen.org.
Put your address on it. One of the most common (and easily avoided) mistakes Usiskin has come across in her career is the tendency for investors to not put their contact information (specifically a physical/website address) on each page of a business plan. Proposals, she says, can easily run 20 or 90 pages. But the meat of what an investor really wants or needs to see can often be broken down into five or six pages.
The trouble is, those five or six key pages are usually from somewhere in the middle of the pack — which means that they’re generally anonymous.
With no obvious information about the company that has submitted the proposal, Usiskin says, the investor is put into the position of having to do a search. And you don’t want to make investors have to do the legwork. Just add to the footer — name, phone, and website.
Do your homework. This shopworn piece of advice is shopworn for a reason. Knowing who and what an investment firm actually invests in will save untold amounts of time and resources on everyone’s behalf.
“Understand what the VC invests in,” Usiskin says. Edison Ventures, for example, only invests in technology companies. Actually, it only invests in IT companies with revenues between $5 million and $20 million and are based between the East Coast and Ohio.
Entrepreneurs need to pair their company size and industry with the experience and expertise of the VC.
The parameters investors set up can vary but there is always some specificity for a reason — the venture firm has developed a strategy based on size, geography, and industry and companies need to match their investment thesis.
The process is similar to a magazine that prints only nonfiction stories from regional writers. As good as a fiction piece might be, if it’s not what the magazine prints, it’s a waste of time to submit it to this particular magazine.
Moreover, she says, “There isn’t a VC out there that doesn’t put its parameters on its website. VC websites can be pretty thin, but one of those pages will be investment strategy.”
Edison, Usiskin says, has spent a good deal of effort lately making sure that investment seekers know Edison’s investment parameters. And this spreading of the word has done some good — the number of mismatched pitches to Edison have diminished. But Usiskin still sees enough of these proposals to make it a full-time job, if she let it.
Usiskin understands that eager investment seekers sometime do not know where to turn. And to those, she advises acknowledging the fact that you’re not a good fit for Edison. “Just say ‘I know you don’t invest in biotech, but could you refer me to a company that does,’” she says. “That goes a long way.”
The New Jersey-born Usiskin became involved with Edison Ventures when she worked for a company in which Edison had invested. She attended Rutgers College of Pharmacy, following in the footsteps of her father and grandfather, who both worked in the pharma industry, but quickly found the pursuit of being a pharmacist “a little too slow — I needed something with a faster pace,” she says.
She graduated from Rutgers with a bachelor’s in psychology and a minor in chemistry. She loved the science, she says, but hated the idea of working behind a counter with labels and bottles of pills.
She started her career in sales at Princeton Softech, eventually becoming the regional sales manager. She was one of the first 20 or so hires at the company that is now part of IBM.
She then went to work as the vice president of sales for a company that Edison had invested in, until it was sold to a Canadian firm. In 2002 Usiskin was brought into Edison Ventures to help the company find investments. In 2006 she became the vice president of business development, and recently she became part of Edison’s pharma/healthcare IT (HCIT) investment arm. She evaluates and leads investments in the HCIT sector.
She also is a mentor for Blueprint Health, a startup accelerator based in New York City that helps entrepreneurs improve the health and wellness industry.
If there was one piece of advice Usiskin would leave investment seekers with, it would be that “this is the interview for a partnership — you should know as much about your potential partner as they do you and make sure this is the right fit for your organization; VCs can bring a lot of value add to the table, not just in the form of money.”