17 Nov Wisconsin entrepreneurs need to self-promote like coastal rivals
The other day I went to a lecture on angel investing. When the lecture was finished, a man in the audience raised his hand. He wanted to know whether the Fox Valley – the part of Wisconsin that stretches from Fond du Lac to Green Bay – had enough entrepreneurial activity to support a network of angel investors.
When I heard this, I realized that there is a huge difference between reality and Wisconsin’s perception of itself. A number of Wisconsin-based VCs have told me that they feel overwhelmed by the number of great deals that come across their desks, although many of these deals are simply too small for them to bother with. When a deal is great, but too small for a professional VC, then that deal is probably the right size for angel investors.
I’ve heard the same thing when I talk to the people who run angel investment networks. “We’re overwhelmed,” they say. They’re getting more deals than they can handle, often from companies that are already profitable and need capital to expand.
They might get 30 or 40 applications each month, and invest in 3 or 4 companies each year. The people who run these angel investment networks are having a hard time reading through the massive quantity of business plans that get referred to them by professional VCs, to say nothing of the deals that get sent over the transom.
Why, then, would an established angel investor, who has lived in Wisconsin for decades, wonder whether there was enough entrepreneurial activity to support another angel network?
The answer, in my opinion, has to do with the way that Wisconsin natives, and engineers in particular, interact with the media.
Few engineers understand that it is possible to interact with the media, instead of just reacting to articles that are written. It is possible to tell a journalist who writes for a national, or international, publication to write an article about a company that is located in your region, and to have that journalist write an article as a result.
The first time I tried this was back in 1999, when I was writing a proposal for my book about high-tech startups. I had just finished reading Po Bronson’s book The Nudist on the Late Shift, and I was excited about meeting him. I read in USA Today that Random House, Bronson’s publisher, was sending him on a book tour throughout the United States. There was going to be a stop in Cambridge, Massachusetts, where I lived.
I went to Yahoo’s yellow pages and looked up the phone number for Random House in New York. Then I called the front desk and asked to speak to Bronson’s publicist. I told the publicist that I was a fan, and I wanted to set up a special fan event in Cambridge, when Bronson came through town.
My idea was to invite Po to the Muddy Charles Pub, where a group of MIT engineers got together on a regular basis to drink beers and talk about entrepreneurship. Bronson thought this was an interesting idea. And so, when the Random House promotional event at the Cambridge Public Library was finished, some entrepreneurs and I drove Bronson over to the Muddy Charles Pub, where our networking event was underway.
The Muddy Charles party went well. Bronson met a lot of my friends, and he was impressed with a lot of the devices they were working on. He was particularly impressed with a man named Gregg Favalora, who was working on a 3-D imaging device.
Favalora’s device was wonderful, but he’d been having a hard time finding angel investors who wanted to invest in his company. He told this to Bronson, and Bronson sympathized. Bronson thought it was a shame that Favalora, with his fantastic imaging device, would have a hard time raising capital when so many dot-coms were getting millions.
When the book tour was finished, Bronson wrote an article about the 3-D imaging device and Favalora’s quest for capital. He published the article, titled “Is Anyone in Silicon Valley Still Making Things?”, in The Wall Street Journal on August 16, 1999. During the week after the article appeared, traffic on Actuality System’s Web site increased by 2,000 percent, and Favalora began to be deluged with calls from prospective investors.
Before the article ran, Favalora had convinced a professional investment banker that his company warranted a $115,000 investment. But the banker’s offer was contingent on Favalora’s ability to raise an additional $400,000 from other sources.
Thankfully, Favalora didn’t have to wait very long to close his round. Slowly but surely, the buzz that was generated by the article in the Wall Street Journal was translated into a round of angel investments from sixteen different individuals totaling approximately $1.5 million.
When I heard about Favalora’s success in raising the round of capital, I was intrigued. What did it mean that a large chunk of angel investment dollars went to a company that actively sought publicity? Did that mean that companies that did not actively seek publicity would have a harder time raising capital, regardless of how great their technologies were? Did that mean that raising capital had more to do with going out and getting some attention than with staying home and perfecting a really, really great invention?
Yes, and yes.
After Favalora closed on the round of financing, I stared to look at newspaper and magazine articles in a completely different way. Instead of seeing news as “cool things that happened in other places to people I didn’t know,” I started to see news articles as “products that were manufactured by people who bothered to go out and get attention.”
Then I took it a step further. I realized that some people were good at getting attention, while other people were too embarrassed to speak up. People who excel at getting attention do not necessarily have better products or services than folks who chose to remain quiet, but they do have an easier time raising money, hiring employees, and finding customers.
Today, Gregg Favalora’s 3-D imaging company, Actuality Systems, counts the University of Tennessee, the National Institutes of Health, Jikei University, the University of Ottawa, NASA, Kyoto University, the San Diego Supercomputer Center, the US Army Research Laboratory, Nissho International, Purdue University, ENEA, the University of Toronto, Los Alamos National Lab, and Okayama University among its customers.
Gregg Favalora wasn’t afraid to speak out and tell Po Bronson what he needed. As a result, he was able to get what he needed, when he needed it.
Back in 1999, Gregg Favalora’s company was little more than a strange looking 3-D imaging device in the basement of Favalora’s house. Today they’re selling it to NASA. The publicity that Favalora received played a significant role in that success story.
Overcoming a culture that encourages silence
Since moving back to Wisconsin (I grew up in Waukesha), I’ve been amazed by how quiet Wisconsin’s entrepreneurs are. I’m amazed by how little they reach out to the local news media, and to journalists who cover national and global news. I know for a fact that the technologies that are being developed here are every bit as good as the technologies that are being developed in Boston and Silicon Valley. But the products that are being developed here are not getting anywhere near as much media coverage.
I recently flipped through the November issue of Wired Magazine. I learned about a hotel in Berlin with a gigantic fish tank; a reverse-osmosis desalting plant in Yuma, Arizona; and a mummy exhibit at the Egyptian Museum in Torino, Italy.
I learned about an anti-proton, anti-cancer device being developed in Geneva, Switzerland; a bioengineering project at UCLA involving machines that grow living muscles on their silicon skeletons; and a robot in Bethesda, Maryland that can tie a necktie.
Then I had to stop reading. Because while Wired was celebrating robots that can tie neckties, some entrepreneurs in Wisconsin who are developing significant, important, life-saving technologies are being ignored.
For example, Wauwatosa-based PointOne Systems, LLC, is using its proprietary algorithms and software to identify people who are pre-disposed to certain diseases, and to help health care organizations provide treatment for these diseases at the earliest possible stages.
Madison-based Quintessence Biosciences is developing novel cancer therapies, including a cancer cytotoxin that doesn’t have harmful side effects. If everything goes according to plan, the solution being proposed by Quintessence Biosciences will allow patients to fight cancer without losing their hair, without becoming sick, and without becoming infertile.
I would love to read about these companies on the pages of Wired Magazine. But before I can do that, the marketing folks at these companies need to become absolutely shameless about issuing press releases, making phone calls, and sending e-mails to journalists.
Getting attention is about asking for attention. Getting attention is about picking up a telephone and calling a journalist. Getting attention is about looking for the e-mail address at the bottom of a news article and writing an e-mail to a journalist who covers your area.
Getting attention is about feeling like you deserve to get attention. It’s is about overcoming shyness and making an effort to reach out the the world outside your lab.
I believe that if Wisconsin’s entrepreneurs made more of an effort to reach out to the local and national news media, it would be much easier for Wisconsin’s angel investors to feel comfortable investing in local companies.
That’s just how investing works.
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Teresa Esser is a contributing columnist for the Wisconsin Technology Network and author of the book, The Venture Café. She can be reached at teresa@wistechnology.com.
The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.