Jan 17 2012
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Tips & Advice

Need money for your startup? Here are five sources.

Written by Elana Fine, originally published by the Washington Post‘s Capital Business column on September 11, 2011

Companies all experience growing pains, but for startups much of the early pain has to do with finding funding. After you’ve maxed out your personal credit cards to kickstart your great idea, now what? There are sources for funding out there — you just have to know who to turn to next.

1. Friends and family

This option is a critical first step for startups raising capital. If you can’t persuade your closest friends, family and colleagues to invest in your idea, it may be difficult to raise funding from strangers. But you don’t need a wealthy uncle ready to write blank checks. Funding from friends and family can come in small increments, even $1,000 or less, to fund your most immediate startup needs. Take Silver Spring-based Hook & Ladder Brewing Co., for example. When the business first started out (full disclosure: founder Matt Fleishman was a University of Maryland MBA student at the time), it initially needed just enough money to brew that first batch of beer.

When trying to raise money from friends and family:

·Formalize the process: Seek the advice of a lawyer to make sure you’re structuring the financing correctly.

·Don’t give away the pie: Make sure you don’t give away too much equity, especially at such an early stage. Maintain strong ownership. This will be important down the road — and could make you more attractive to venture capitalists.

·Think beyond your immediate circle: Tap into your professional network and those who know your business.

·Make it formal: Create a pitch presentation and prospectus for potential investors to show you are serious and your business is legitimate.

2. Grants

Find an organization that fits with the goals and mission of your venture and research available funding opportunities and grants.

·Plan your growth strategy: Tackle business applications that align with grant opportunities. For example, if your technology has applications that could be used by the military or in health care, pursue those verticals first. There are lots of grants available from the Defense Department, National Institutes of Health, National Science Foundation, etc. to help develop new technologies with those types of applications.

·Find a mentor: Consult with a company that has similar qualities to yours and a founder that can shepherd you through the grant process.

·Don’t forget local organizations: Beyond national and federal grant opportunities, local and regional business and tech organizations may have money available. For example, Maryland’s Maryland Industrial Partnerships program accelerates tech commercialization by matching funding with research from University of Maryland System faculty.

3. Customers

Often overlooked as a funding source, your customers can be a great source of funding if they are willing to pay you to develop a custom solution or product that you can then use to fuel additional growth and sales. An added benefit: You won’t dilute your stake in the company.

4. Angel investors

When you are close to having a finished product ready for market and have some early customer traction, you may be ripe for an angel investment — usually seed funding between $150,000 to $1 million.

·Find an angel investor group and get involved: Start attending meetings to network with investors, even if you’re not ready to pitch.

·Be creative and entrepreneurial about how you raise money: Research the investors involved in various groups, know the types of companies they invest in, and figure how to best pitch them.

·Start early: You should always be raising money before you need it. Think at least six months ahead and plan.

·Don’t undervalue “smart capital”: Beyond dollars, investors have a lot of advice they can provide to your startup. Many are seasoned entrepreneurs and have been down your road before.

5. Venture capitalists

Venture capitalists and venture banks invest in companies that have a high potential for significant growth. VC investments are usually no less than $3 million. If you’re up to this point in the funding process, make sure the VC has a compatible approach to building a business and has a good network that will help you grow and realize your full potential.

Not all of these sources will be right for every company. As you grow, continue to refine your business plan. And don’t get discouraged: There is still funding out there — you just have to know where to turn.

Elana Fine

Elana Fine joined the Dingman Center for Entrepreneurship in 2010 as the Director of Venture Investments. In this role, Elana manages the Dingman Center Angels, a network of active, accredited angel investors providing open and efficient access to early-stage capital for entrepreneurs in the Mid-Atlantic region. Her responsibilities include identifying quality start-ups, screening deal flow, conducting due diligence and providing coaching for companies presenting at monthly review days and investor meetings. In addition, Elana is responsible for program expansion including new investors, sponsors and forging regional partnerships with incubators and technology organizations. She has recently become the Associate Director of the Dingman Center for Entrepreneurship.

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Jan 06 2012
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Tips & Advice

Entrepreneurial Do’s and Don’ts

Do you want to start the next Brazen Careerist or KBL Group? Explore these “Do’s and Don’ts” from a few entrepreneurial Pros:

DO’s

“Keep it simple and tell a story during an investor pitch session.” – Ed Barrientos

“Fall in love with the idea that your product solves a business or consumer need and can do so at the appropriate price point.” – Michael Schwab

“Go out and make contacts, leverage your network of individuals that have a background or some knowledge base or expertise that they’re willing to share with you.”  -Michael Schwab

“Surround yourself with great people” – Steve Begleiter

“Listen to anybody and everybody, but don’t let them make your final decision.” – Steve Begleiter

“Do things that you love and are passionate about. Be authentic in everything you do.” – Wayne Kimmel

DON’TS

“Don’t bore me to death: Keep your pitch fresh and interesting.” – Ed Barrientos

“Don’t be a phony. Don’t get involved in things you don’t care about.” – Wayne Kimmel

“Don’t overplay the valuation card. In other words, be realistic about what your business is worth and come to terms with it emotionally.” – Ed Barrientos

“Don’t give up if the first opportunity doesn’t create a sale or a success story. ” – Michael Schwab

“Don’t let other people run your business. If you’re in charge, you have to understand what your business is about at all levels.” – Steve Begleiter

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Jan 04 2012
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Center Stage

Center Stage with Michael Schwab, Co-President of D&H Distributing Company

What drives your interest in entrepreneurship?
From my vantage point, what is really tremendous is not only what I do, but what I get to see. Our company is a technology distributor of both software and hardware. I would say that 5-10 new companies a week come to D&H and present their innovative ideas. They need help with price points, marketing, and a number of other business problems.

What’s so encouraging to me is that these individuals come from all walks of life. Many of them have decided to leave large organizations, and have ventured out on their own to work on a product they believe in. When I think about that aspect of entrepreneurship, that’s what gets me excited.

Why work for yourself?
After graduating from law school and working for several large companies, I found that I was looking for something specific; the ability to control my own destiny and to have a positive impact on defining a firm. Entrepreneurship gives you the flexibility to make those decisions on your own. D&H’s business profile really lends itself to an entrepreneurial spirit. We’ve done it through shared ownership in the company. By providing employees with ownership stakes, we’ve created a business with more than 1000 entrepreneurs.

How did you get involved with the Dingman Center?
My son, Brett, is an undergraduate at the University of Maryland in the Smith School. The entrepreneurship program was a big part of his decision to attend. I now have a second son there as well.

Dingman has an entrepreneurial process and program far beyond what I had ever seen or experienced and I wanted to get involved. I wanted to help the Dingman Center grow by leveraging my own expertise. My goal was to help students understand the fundamentals of starting a business, and the importance of intellectual property in the marketplace.

I was also interested in Dingman’s efforts to bring many pieces of the University together, whether through Tech Transfer or through the annual trips to Israel and China. This is an important part of [University of Maryland President] Dr. Loh’s focus on the future of innovation and entrepreneurship on a global basis.

What type of business has the greatest chance of success right now?
I would say we are seeing strong growth in storage technology. In other words, how do you take all the information being created by individuals, corporations, etc. and make it readily accessible by a number of individuals on a number of devices? This is about the creation of a “personal cloud” instead of using another shared cloud solution.

What traits do all successful entrepreneurs have in common?
Diligence and Grit. As an entrepreneur, you can’t give up. The successful entrepreneurs understand that if Plan A doesn’t work, they need to deploy Plan B, C, or D. The most successful people we’ve worked with understand that running a business requires long hours and being in the right place at the right time. If the first opportunity doesn’t go quite as well as you thought it would, look to find a new strategy, always focusing on the long term. The reality is that for most entrepreneurs, businesses have the opportunity to grow exponentially, but not necessarily on a straight line.

Michael Schwab, Co-President, D&H Distributing Company

Michael Schwab runs D&H, a 93 year-old company which focuses on e-commerce solutions and the distribution of technology products to retailers, e-tailers, college bookstores, and solution providers. With annual revenues exceeding $2.5 billion dollars, D&H has expanded its operations almost ten-fold over the last decade. In 2009, Michael was named #15 on the list of the most innovative executives of the year published by ChannelWeb, a division of United Business Media LLC. This list also included John Chambers, Steve Ballmer, Mark Hurd and Paul Otelllini. As well, D&H was named Cisco’s Global Distributor of the Year for 2009.

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Dec 19 2011
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Center Stage

Center Stage with Wayne Kimmel ’92, Founder of Artists & Instigators

You’ve started, and helped start, a number of businesses over the course of your career. What are you working on now?
I’m building a new company, “Artists & Instigators”, which will be a consumer brand. To accomplish this, I’ve partnered with Marc Ecko, who founded the billion-dollar brand “Ecko Unltd.”  He is an expert in selling and marketing products.  More to come next year…

Over the last decade, I’ve personally run a venture capital fund, which has invested in close to 30 companies. Most of those startups have been consumer product and technology companies. We have been fortunate to have had a number of great successes over the last decade with several of the investments we’ve made like with SeamlessWeb that was founded by a Terp alum and was acquired by ARAMARK, Take Care Health Systems that was acquired by Walgreens, and NutriSystem that was the top performing stock in the U.S. for 5 consecutive years.

As the manager of a venture capital fund, you’ve seen dozens of entrepreneur pitches. What advice do you have for someone preparing for a pitch?
Passion is the most important part of any pitch. Anyone doing a pitch must truly believe in what they’re selling and that company they work for. They have to be personally involved. It’s obvious when people are pitching a business and they don’t truly believe in what they’re saying. Whatever you do, you’ve got to believe in it. If you don’t love it, and you’re not excited about it, then you’re doing the wrong thing. That’s the kind of advice I give to people all the time. It’s very, very important for you to believe in what you’re doing. You have to love it.

Given the state of the economy, what would you say to someone considering the launch of a business?
Why not? What’s the alternative? These are the times when some of the best businesses are built. Follow your passions, follow your dreams. This is the time to go and make things happen. Yes, there are a lot of problems out there today. At the same time, it’s not like there’s a safety net in having a job. There is no loyalty from employers. It’s not personal; it’s just the way it is today. The pundits out there have dubbed this generation of kids, “The Lost Generation.” That’s just not true. Students today have skills that other generations are not capable of having because of the technologies they’ve grown up with. The employers that embrace this will be successful. Now is an opportunity for young people to go make their mark.

Why is the Dingman Center a special place?
[Managing Director] Asher Epstein and Dean Anand have really been the driving force behind entrepreneurial opportunities that you typically don’t get at other universities. The entrepreneurial spirit that Asher brings to the table is contagious. He has a real passion for helping students achieve their own goals; whether during the MBA summer trip to Israel, the various programs at Dingman, or as an advisor. Students look at him as a peer because he’s approachable. That kind of a relationship that he’s been able to have with students is a major feather in the cap of the Smith School and the University of Maryland in general. It’s a major selling point for the University.

Wayne Kimmel '92, Founder and Managing Partner, Artists & Instigators

Wayne D. Kimmel is a Founder and Managing Partner of Artists & Instigators with Marc Eckō and Tony Bifano. Wayne is an entrepreneur, venture capitalist, philanthropist and tireless networker. In 1999, Wayne founded a venture capital firm that invests in startup and early-stage companies. Some of his successful investments included, SeamlessWeb (acquired by ARAMARK), Take Care Health Systems (acquired by Walgreens), and NutriSystem (NTRI), (top performing stock in the U.S. for 5 consecutive years). Currently, Wayne serves on the Board of Directors of Ecko |Code, OrganizedWisdom, Ryzing, meetMoi and KGRA Energy.

Follow Wayne on Twitter @waynekimmel

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Dec 08 2011
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Tips & Advice

Tips for pitching your business idea

A business pitch can make or break a startup. Delivering a successful pitch can grab the attention of potential investors, attract customers, and even win funding in a Pitch Dingman Competition! How can you tell if your pitch will be successful? Check out these tips from a few of our Dingman Center all-stars to get advice on pitching your new business idea.

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Rudy Lamone, Dingman Center Founder

“Your opening statement must grab the attention of your listener or in most cases you have failed; so try again.”

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Asher Epstein, Dingman Center Managing Director

“Focus first on what problem you are solving. Is this a vitamin or aspirin problem (must have vs. nice to have)? Second, concentrate on who specifically has this problem. The target market needs to be tight and focused. Finally, what is your solution and why is it better, faster or cheaper than current options?”

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Elana Fine, Dingman Center Director of Venture Investments

“Know your customer. Pitching a business isn’t just about the product or technology you are creating, but about who you will sell it to, why they will buy it and how often/how much. Before you start a business, make sure you spend time talking to potential customers to confirm that you have identified a real market needs that people are willing to pay for versus other existing options.”

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Alla Corey, Dingman Center Program Manager

“Show passion and commitment to your idea. Investors must believe that not only you possess skills necessary to carry out your plan, but are also dedicated and will not give up when challenges arise. “

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Harry Geller, Dingman Center Entrepreneur-in-Residence

“Be brief. You should be able to clearly state your idea in two or three sentences. Practice this with some friends and see if they can comprehend the idea, if so then you are ready. Pitch Dingman sessions are limited to 10-15 minutes so you want to get the idea understood quickly so you have time to receive valuable feedback.”

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Do you have a business idea still in the “back-of-the-napkin” stage? Come to a Pitch Dingman informal session held every Friday 11am-1pm in the Dingman Center for valuable feedback from one of our Entrepreneurs-in-Residence. Our team of veteran entrepreneurs are here to share their advice and expertise.

For more information, visit the Pitch Dingman Homepage

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Dec 02 2011
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Center Stage

Center Stage w/ Steven Begleiter ’92, CEO of KBL Group International

Why did you start your own business?
I worked for my dad after graduating from the University of Maryland. He owned a sweater manufacturing company but two generations have two different points of view. He made the decisions and the rules, so I decided to go out on my own and start KBL. About five years later, I acquired his company.

How is the economy affecting KBL right now?
People are worried about their rent and mortgages. Apparel doesn’t make the top of the list, so we try to focus more on specialty items. The economy affects us as it affects everyone. It’s tough out there, but you can’t wave the flag and give up. You have to find new avenues for doing business.

Why are you involved with the Dingman Center?
There is a group of us that were in the TEP fraternity together at the University of Maryland and we’ve all been fortunate in our professional success. I wanted to get involved in working with students to help them start businesses. It’s is enjoyable to meet bright kids with fantastic ideas.

What is your greatest entrepreneurial challenge?
As an entrepreneur, you have to believe in your vision. A lot of people will want to tell you the way it should be, but you have to be willing to take the road less traveled.

For those who don’t want to start their own business, why is entrepreneurship important?
An entrepreneurial attitude is always important.  Right now you really have to think outside the box to do business.  The only constant in business is change.  Things that have been successful for the past 20 years aren’t working anymore.  Many companies are taking new avenues that they didn’t have to in the past.  Whether you are starting your own business or working for others, new ideas are a company’s lifeline connecting the past to the future.  It is entrepreneurship that drives these ideas which in turn creates new business opportunities, revenue streams, and jobs.

What advice do you have for someone starting a business?
Change always creates opportunity. The financial aspect of starting a business is a huge distraction because you need a lot of money these days. But being small and nimble today is an easier way to manage in this environment. As new opportunities evolve, you have to be flexible.

It’s always difficult to start a business. But if you have something you believe in, today’s the day to do it. As an entrepreneur, you’ll always have to overcome hurdles.

Steven Begleiter '92, President & CEO of KBL Group International

Steven Begleiter is third generation in the garment business and is the Founder, President, and Chief Executive Officer of KBL Group International. Steven is responsible for KBL’s overall vision, strategy, and execution. Having been a kid in the shipping room working for his father, starting his own business, and now running a multinational company; Steven has taken on many jobs in his career. He graduated from UMD in 1992 and lives in New Jersey with his wife Karen, and 2 children, Alex and Corey. Connect with Steven on LinkedIn

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Nov 29 2011
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Events Gallery

Pitch Dingman Competition 11/17/11

As part of Global Entrepreneurship Week (November 14-20, 2011), the Dingman Center sponsored a Pitch Dingman Competition for student entrepreneurs to compete for $2,750 in seed funding to launch or grow their business!

CONTESTANTS:

Beagle: Philippe Azimzadeh and Julian Capps
Beagle is a mobile app that connects students who needs things done with people willing to do them.

Community Ladders: Bill Varettoni
Community Ladders provides very affordable, one-on-one financial planning and advisory services for every stage of life and is devoted to consumer protection, group bargaining power, and upward mobility.

Comrade Brewing: David Lin
Comrade Brewing Company is focused on providing world class beer that is locally brewed and owned, focusing on ingredients. Located in Denver, Comrade Brewery is a tasting room model where over ¾ of the beer is sold direct to consumers.

NeverBoredU: Duncan Graham and Tim Tolino
NeverBoredU  is a website that serves students by letting them know everything going on all the time. The goal of NBU is to permeate college life internationally as the place people look to find out what is happening on and off campus.

Saylo: Martinas Terskin and Karen Turner
Saylo  is a mobile app that lets you create and join location-relevant conversations, allowing you to communicate, one-to-many, with the people around you.

Congratulations to all of our winners!

1st Place ($2000) : NeverBoredU
Second Place ($500) : Saylo
Audience Choice ($250) : Comrade Brewing

The Dingman Center Staff would like to extend a special thank you to our judges:
Steve Begleiter ’92, President & CEO, KBL Group International
Doug Palmer ’92, CEO & Founder, Palmer Financial
Neil Davis, MBA ’81, Vice President of Operations, Emerging Technology Centers
Protiti Dastidar, Tyser Teaching Fellow

Take a look at the pictures below for a photo recap of the November 17th Competition

This slideshow requires JavaScript.

Are you interested in competing in a future Pitch Dingman Competition? Start by attending a Pitch Dingman informal session; every Friday from 11am to 1pm in the Dingman Center (2518 Van Munching Hall). No need to have a well-developed business plan, you can come with your idea still scribbled on the back of a napkin.
http://www.rhsmith.umd.edu/dingman/students/pitch/

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Nov 22 2011
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Center Stage

Center Stage with Ed Barrientos, CEO of Brazen Careerist

What is your involvement at the Dingman Center and why is it a special place?
I sold my company in 2005 and found myself retired at 40 years old. I wasn’t sure what I wanted to do next, but I knew I wanted to be involved in technology. In 2006, I heard about the Dingman Center and its Dingman Center Angels investor network. There was great interaction between the angels and the companies presenting. It’s such a great resource for me to find investment; to be tapped into the angel network. I was asked to come on board as an Angel-in-Residence, which is a great opportunity for me to be more than just a participant. I became a member of the team that gets to help vet the companies that present. I have really loved the connection with students.

What are you most focused on right now?
What’s taking most of my attention is Brazen Careerist. It’s one of my biggest investments and it’s a company I’m also leading. It had started in Madison, WI and then relocated to Washington DC about a year ago. What started as a part-time CEO-ship has become a full-time, 120-hour-a-week job. So far we have not taken traditional venture capital funding. We’ve pursued an angel-centric strategy, but wouldn’t discount VC funding.

How do you approach angel investing?
Every angel investor has a different philosophy. I typically invest in fewer companies and usually have two to four firms at any given time that I’ll spend a lot of time and energy on. What sets angel investors apart is that our know-how in dealing with startups actually changes the risk equation. In a startup, my background and involvement can affect the outcome.

What’s been your greatest entrepreneurial challenge?
The single biggest frustration has been dealing with investors that don’t understand the very unique world of startups. They may have other great experience, but it’s important to understand the world of startups. Oftentimes people think of startups as small versions of companies, but it’s really not like that. Startups are experiments and things are constantly moving. Metrics of profit, revenue, etc. don’t always make the most sense. It’s important to educate people on the true nature of startups.

What is the single most important piece of advice you could give going into an investor pitch?
You need to strike a fine balance between enthusiasm and arrogance. An pitch session is a scary place, with seasoned entrepreneurs and investors. For some people, the defense mechanism is often arrogance. Nothing will sink you in that kind of setting faster than arrogance. On the other hand, you want someone that’s enthusiastic and confident; someone that’s not afraid to answer questions directly.

Ed Barrientos has been a member of the Dingman Center Angel Investor network since 2007, and an Angel-In-Residence since 2010. Ed is CEO and Chairman of the Board of Brazen Careerist, a career focused social networking site targeting Gen Y. He is also Managing Partner of Zeitgeist Holdings, L.L.C., an angel investment firm focused on investing in early stage technology companies. From 1996 to 2005, he was President and CEO of Arc Second Inc., a high growth market leader in the field of laser based, high-precision GPS. Barrientos led Arc Second to a successful exit (acquired by Metris NV of Belgium) at the end of 2005. He sat on the Board of Directors of Metris NV, and worked as an active Board member through the Company’s IPO (2006) and its acquisition by Nikon (Japan) in 2009.  Connect with Ed on Twitter @snowcrash65.

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Nov 10 2011
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Tips & Advice

How do I know if my idea is good?

By: Asher Epstein, Managing Director, Dingman Center for Entrepreneurship

The entrepreneurial process begins by identifying an unsolved need in the market. At the Dingman Center for Entrepreneurship we focus on answering five key questions to help determine whether an idea is a good one to pursue.

1) What problem are you trying to solve?
Is your problem an aspirin or a vitamin?  An aspirin is an acute problem that needs a real solution (ex: pounding headache).  A vitamin offers a nice to have solution but the pain isn’t as sharp. The pain caused by the problem being unsolved is the first step to identifying how many people and potential customers will value your solution.

2) How big is the problem?
Is the market large and identifiable enough to make a worthwhile solution? You may have only one customer but if the pain is very acute the solution may still be worth pursuing if the customer is large (ex: Department of Defense). The challenge with many smaller customers is to figure out how to reach them all cost effectively.  In either case, you need to make sure you know exactly who is going to open up their checkbook or wallet and buy a product or service from you and make sure that your effort and investment will pay off.

3) Who are your competitors?
Evaluate solutions in the context of “like” and “kind” competition. “Like” competition is Miller Lite vs. Hook and Ladder Golden Ale (a Dingman Center company). “Kind” competition is a cold soda at a ball game on a hot day. The soda might not be as good as a beer but it will solve the problem of thirst. Your solution needs to beat both sets of alternatives to be valuable.  The best way to assess an idea is to figure out how to get someone to pay for a pilot of the solution.  If you are truly solving someone’s problem, people will appreciate that a partial solution is better than no solution. The challenge is to adjust the risks of the “half” solution against the benefits. Figure out how to limit the downside if the product fails to deliver. Entrepreneurship is about managing risk on an ongoing basis.

4) Is the right team in place?
Do you have the right skills and resources to solve the problem that you have identified? Do you need additional team members to help you?  If you can’t convince other talented people to buy-in, it is probably a sign your idea is not strong. It is important to understand the daily role you will play in your business.  For example, as a start-up technology CEO a lot of your time will be spent with customers and investors, not developing software. As a food retailer, you need to be open at the hours when people eat not just 9-5. When you pursue a venture it can become all consuming. If you don’t want to do the work it may be a good idea, but not a good fit for you. Ideas alone won’t make you successful – the hard work is implementation.

5) Is your idea worthwhile?
Worthiness can be defined in a variety of ways.  A lifestyle idea allows you to spend time with your family and provides a stable, but limited income. A high-growth idea is a venture that focuses on providing high returns to investors.  Both ideas are worthwhile as long as investments and expectations are clearly defined.  Social ventures and double triple bottom lines (environment, social benefit, charities, etc.) are worthwhile as long as the proper metrics are utilized — a failed non-profit doesn’t do much for the world.

 Asher Epstein is the Managing Director of the Dingman Center for Entrepreneurship. He is responsible for overseeing the center’s strategy and operations including business incubation, technology commercialization, global programs and startup funding services.

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Sep 12 2011
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Uncategorized

Welcome to the Dingman Center Blog

Welcome to our first blog for the Dingman Center for Entrepreneurship. This is where you’ll hear from our entrepreneurs-in- residence, students, faculty, experts and more. We’ll tackle the challenges of entrepreneurship–from the idea to the pitch to the first million in financing. Also stay tuned to reviews from our events, photos from competitions and updates on our China and Israel programs.

If you’re getting the entrepreneurial itch this summer and think you may be the next Mark Zuckerberg, contact us to set up a time to meet with our entrepreneurs-in-residence for feedback and advice.  To make an appointment, email us at dingman@rhsmith.umd.edu.

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