Every friday I take a sec and fumble through my stack of witty dan’ism’s, assorted ah ha’s and bit brainstorm notes. They’ve been piling up, so here’s some notes I took at recent meeting where the State of Ohio Third Frontier folks came to visit and talk to us here at TCO about basically, what makes for a successful TVSF proposal. Which is hugely important stuff. For the university, actually any university in the state, a successful TVSF round Phase 1 which is 50k match and Phase 2 100k award is a BIG BIG BIG deal, its typically the kickoff point for many would be startups that we’re working on.
Now you have to get this money, its just nice to have money given that its a big win, few if any strings and its like do good for Ohio, make jobs, and we’ll help ya do it. However, there is one bit thing, your proposal needs successful “traits” as I would call it.
These are my RAW notes, so dan’ism’s are fully included, no charge, as are my interpretations on what I heard.
You can read more about Ohio Third Frontier’s program here, which btw, is a really kick ass program. For transfer offices we get windows of opportunity to apply for Phase 1 (usually early early stage funds, funds that need to be matched either by the university or another party) and Phase 2 (start a new biz funds, this the grail startups chase, and for good reason, 100k few strings, and go go go). Phase 2’s are typically an indicator for follow on support funding as well. Getting a Phase 2 is like shooting a flare gun in Columbus, or for VC its like the Bat signal, people notice, and incubators, accelerators and related funds engage as everyone is looking for the deal to be.
My notes are focused more around Phase 2, because my deals, what’s in my pipeline are typically technologies that while they could be direct licenses and we’re always working that, are also startup worthy targets. Sometimes you need to go startup to get a big licensee to pay attention, at least thats what I think.
Keep in mind that these “traits” I talk about are not slam dunk material. Its not a check list, its a “have the right mindset”. TVSF btw stands for Technology Validation Startup Fund. To apply, you have to write a 6 page proposal, explaining all the usual aspects of why you, why this tech, how you make money, etc etc to the TVSF board which is has its analysis and reward recommendations done by a third party.
Traits of Successful TVSF Proposals
1, links, so the gist here is give the reviewers MEAT in the proposal, give them places to go, things to do, they will research, give them link material. They did say they don’t always look at them but the point is that if ya got’m throw them in.
2, anticipate the problems you’ll have and how you will handle them, Every startup is filled with a degree of BS. You will have problems. Stating those problems and how you handle them, gives the reviewer a better sense of whether or not you’re delusional in what you’re doing. Accepting a challenge and noting where the challenges are and then how you’re the one to tackle them and with x method- is what they want to see.
3, litmus, do you lack the acumen? Here the reviewers I get a sense is a bit like #2, I mean these guys are gonna add it up as well and if the risk is just too wonderland material, passing is unlikely- which is one of the big questions I hear alot in the university setting- would typical “I can’t believe” startups of the valley really fly here. Like would AirBnB ever get TVSF if we rewinded way way back to the start of that biz? Would the midwest take the risk? Any my notion is no. And the question is- is that bad? Thats where the real debate seems to be. But thats for another blog post.
4, budget narrative, the budget needs more info, explain it better, what you need and why vs the typical, we need x for doing stuff.
5, 90% of TVSF Phase 2 proposals fail on the biz model, I’d add that the model fails for a few reasons, 1 it bad, 2 it doesn’t exist, 3, you’re crazy see #1, 4, its ok for you but for TVSF
6, too many gaps in the biz model is bad, again this goes back to you recognizing where the issues are and calling them out in the proposal with the overwhelming awesome hammer of how you’ll rock them
7, notable biz leads engaged, Ok lemme state this, to me TVSF folks never came out and said it, but its in my impression that having notable mentors/VCS in your proposal increases the odds of “mmm yeah, could be good”. I figure the state kinda doesn’t like risk that much, if at all, but if there’s a so and so on there, well i know so and so… and comfort comes and it doesn’t feel as risky though its sure as heck is.
8, partners and first customers are KEY, While so and so is good, what’s even more convincing is a first customer, partner that is gonna either test and validate your concept, or be your first paying customers. Nothing brings money to the table faster than “I have orders can can’t meet demand!”.
9, be CLEAR, well written proposals are noted.
10, common pitfalls, a pure license deal where theres a sense you wont generate jobs or grow, ROI that is not apparent or so far way meaning that you’re a project but not a biz yet, location issues- you intend to take the operation out of state, parent company doing well but this new arm or new company thats related to the big company needs the funds- basically red flag
Where Proposals Fall Down
- path to market issues (#2, #3, #5, #6)
- lack of company backing (#7 #8)
- Proof to raise additional funds (#7)
- Have customers (#8)
- Have people that want to invest (#7)
So what do my notes tell me. RISK is risky. State of Ohio is pretty decent at taking risk but it likes to shore up the odds as best it can and for good reason, thats our tax bucks afterall? Even so, the other compelling clarity is that you need people to make things work in Columbus. Out a 100 startups that apply, nearly all of them need a sense of overwhelming traction to them in the sense of venture and mentors engaged, first customers, and a compelling prospect for state funds.
The more I look at my notes the more I feel the pain on my side of the fence. Need more entrepreneurs. Have tech, yes lots, have entrepreneurs to help craft the gap between tech to realized opportunity, not so much. Some of the tech i have is obvious in its model, obviously those ones go quicker than the bigger more risky ones. But alot of the things I have are dog food techs, they’re techs I love because the university swims in the context, it feels the problem and has addressed it and will feel the problem every day, hour and minute of the day. In any given time frame here at TCO there are some 15 startups in states of possibility but without entrepreneurs they are well.. challenged. Heh. Mostly cause we don’t give up too easily.
Personally I’m as much of a fan for biz models as i am successful traction metrics (see TPS report earlier blog post), I’ll take startups that are converting on users, netting traction and getting sitting on a defined “sauce” any day. A model will appear in time. Usually its there already but its not as $$$ obvious, like big data, etc.
But back to the notion of Air BnB would it ever been “funded” via something like TVSF? I suspect not. Mostly because we’re talking state funds, and they need more. But I think they want the challenge- amaze them. Thats the gist really. You need to show that you need TVSF, you need x, you need y and why you’re the one to bet on. Vision, conviction and the power to make a convincing argument is powerful. Additionally in Columbus, for these funds, you gotta use the network. Which means you need to let people in and you need to make room for them in your brain. Get ready for thoughts and opinions, win some lose some and don’t lose yourself.
Take-aways for faculty remain the same, the invention is one thing, the value/market is another, lets work together to cross that gap.