It’s warm in the Mt. Hood room at the Portland State University Business Accelerator. The smell of coffee is heavy in the air. Voices quietly comingle around the large space. As it gets closer to 8:00 a.m., the number of people arriving slows and the room begins to feel full. It is Shelley Gunton, Executive Director of the Center for Innovation & Entrepreneurship (CIE) at PSU, who steps to the front of the room and asks everyone to take their seat. Today is the kickoff of Lab2Market 2012.
Lab2Market is a day and a half long workshop for innovators and entrepreneurs that focuses on elevator pitches, market validation, business models, and funding options. The workshop is presented and sponsored by DFJ Frontier, a West Coast venture capital firm that backs passionate entrepreneurs and provides business assistance. Other sponsors include Ater Wyne, Geffen Mesher, and the Portland State Business Accelerator. At the conclusion of the event participants will have the opportunity to take what they’ve learned and pitch their business ideas to a panel of judges. The best pitch will receive a prize of $1,000.
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Several days before the event Joe Janda, Director of Innovation & Intellectual Property (IIP) at Portland State University, and Shelley Gunton sat down to discuss Lab2Market: what they thought participants would learn, the benefits they thought participants would garner, the event’s history and overall impact and the roles IIP and CIE would play before, during, and after the event.
“The idea of Lab2Market,” Gunton said, “is to bring people from across campus and from the local entrepreneurial ecosystem together to help them work on their ideas around their particular innovations and develop those ideas into elevator pitches, to dig into their business models, and to give them a sense of how to examine and evaluate their markets.”
“It is an intensive day and a half,” Janda added. “I’ve been to the event a couple times now and it’s amazing how much people learn, reflect, innovate and at times even change their ideas about their businesses.”
“And there’s the networking opportunities as well,” Gunton said. “During the event participants will have a fair bit of interaction with people from the business community who are attending as coaches, advisors and, ultimately, judges in the elevator pitch competition.”
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Sell me the vision, get me into the story.
~ Frank Foster, Managing Director, DFJ Frontier
The day begins with introductions and goals set by Gunton and Melissa Appleyard (Appleyard is one of the PSU faculty members who originally brought Lab2Market to the University seven years ago). From here on out the event will prove its intensity: back to back lectures on venture capital, business models, business viability and best practices for making an elevator pitch, all bookended by pitching practice sessions during which the event’s participants will receive real-time feedback. After a brief presentation detailing the individual elements of an elevator pitch and how they come together, this year’s 31 participants, whether ready or not, will have 30 seconds to pitch their business idea to DFJ Frontier team members Managing Directors David Cremin, Frank Foster, Scott Lenet, and Associate Jon Bassett.
The elevator pitches are as diverse as the individuals giving them: some are based on burgeoning ideas with practical applications, some on engineered materials based on proprietary technology, some ideas target children and their parents, and others are web-based analytics. Some of the businesses are already up and running while others are still in the idea stage. What all the pitches need to have in common is the formula for success as presented by Cremin and Bassett. According to DFJ Frontier, a successful elevator pitch must be short (five to six sentences) and should have three basic components: 1) a simple explanation of what the company does: we make…, we sell…, etc.; 2) an explanation with evidence of why that’s important and therefore worth investing in: research shows that 99 percent of Americans are unhappy with the widgets currently on the market; 3)an explanation of what advantages the company has (in human resources, in product design, in market share, etc.) that will make the company successful.
In the first practice round, most of the elevator pitches fall far short of what the DFJ Frontier team considers successful. It’s unclear what some businesses do—the scientists and engineers in particular have a penchant for explaining in great detail the technical aspects of their ideas or products. Few have specific evidence of why their product/service is important, and many have troubles convincing the team from DFJ Frontier that their businesses will be successful. It seems an eye-opening practice round for everyone, but with the on-the-spot feedback, constructive criticism and participants scribbling notes in feverish paces it’s apparent that they’re beginning to re-envision, not only their elevator pitches, but the way they think of their business ideas en masse.
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“It’s really interesting when you look at the list of participants,” Gunton went on. “They have business ideas for everything from biomarkers that link certain drugs to certain cancers to a platform for self-publishing comic books. What’s exciting is that behind every idea is an innovation that will be brought to the table during this workshop. Every one of them has the opportunity to commercialize and further develop that innovation into a business of their own and create economic development and impact.”
“A good example,” Janda said, “is DesignMedix. It was at the first Lab2Market event that David Peyton, who had come up with chemical compounds that could be used to combat drug-resistant malaria, met his business partners. Six years later DesignMedix is doing well. And getting back to Shelley’s comments about innovation, one of the benefits of Lab2Market for Innovation & Intellectual Property is that I am often times able to approach PSU innovators and help them think about how to navigate their intellectual property through the PSU rules and regulations and make sure that everything is clear and nicely done to allow them to do what they want to do, be it commercialize the technology on their own, or license their innovations to existing companies.”
“I think Lab2Market can play an important role in how innovations are catalyzed that includes bringing these entrepreneurs together,” Gunton went on. “So often an entrepreneur or innovator works feverishly at an idea, but in isolation. When they have an opportunity to work together in a group, often that prompts further iterations and development, not to mention the network connections that can crystalize into partnerships, mentorships, or even investments. And, really, securing capital and an excellent team are two critical factors for any entrepreneur.”
“Aside from the possibilities the event offers,” Janda added, “Lab2Market helps alleviate some of the real-world difficulties innovators and entrepreneurs face, such as knowing your market, your customers, and what your funders are going to think about your business model, whether its viable, whether the assumptions you’re making about your product are reasonable or not, whether you’ve missed anything.”
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Market research will allow you to be an investor in your business and not a gambler.
~ Scott Lenet, Managing Director, Los Angeles
There’s much to say about the advantages of networking and having the opportunity to share an idea with a group of individuals sharing similar goals, but learning the nuances of a successful elevator pitch is one of the best reasons to attend a Lab2Market event. After their presentation on the essential components of a pitch and the practice workshop that followed, the DFJ Frontier team begins a series of lectures detailing the planning and research participants should put into the construction of their pitches. Of these four lectures, the talks on business models and market validation provide the attendees with a sense of the work that needs to be done if they are to prepare a successful elevator pitch.
“Your assumptions about what drives your business model are more important to us than anything else,” says Scott Lenet during the lecture on business models.
Assumptions, Lenet explains, are attempts to predict future business outcomes. The idea is to help these innovators and entrepreneurs fortify the second and third components of their elevator pitches with research-based predictions about, for example, the lifetime value of a customer, revenue models, and cost forecasts. The goal is to hook a potential investor with the pitch to them prompt a follow up meeting to learn more about the idea. The entrepreneur will then need to be prepared to answer more detailed questions.
The lecture on market validation also helps participants add depth to the second and third components of their pitches. The issues addressed are three-fold: what can an entrepreneur learn from potential customers about the viability of their product/service; do customers need the product/service they’re offering; and the ways an entrepreneur can find this information. The lecture focuses on ways innovators and entrepreneurs can approach their ideas from different angles to derive the questions they need to ask of themselves and potential customers if they are to prove there is a need for their product or innovation.
“When you’re starting with nothing but an idea,” says DFJ Frontier team member Jon Bassett during the lecture, “market validation will help you get investments.”
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“I think the big problem Lab2Market is intended to solve,” Janda went on, “is to help innovators and entrepreneurs get their ideas across in a crisp, clear, concise way that communicates the value of their product. In past years I’ve seen participants go from presenting something that nobody can understand to presenting something that people say, ‘I’ll sign up for that right now.’ Entrepreneurs, innovators, people trying to get a business started at the early stage need to be able to communicate their idea not just to investors, but to other audiences as well, and I think Lab2Market really gives them the tools to do that.”
“That’s a good point,” Gunton added. “Too often the entrepreneur assumes that we all understand what they’re working on and why it’s important. And, yet, often we don’t because we’re not researchers or in the medical field or engineers. Typically, if they can get their pitch down to something their grandmother can understand, it helps them distill their idea into a short pitch that everyone understands. This is a key component of Lab2Market.”
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Be passionate, fun, articulate, extraordinary.
~ David Cremin, Managing Director, Los Angeles
It’s the second day of Lab2Market and the elevator pitch competition is about to begin. The practice round of pitches this morning was a clear indication that the lessons of yesterday had sunk in—each came on in a studied, unhurried pace, participants spoke clearly and most had a concise statement of what their company did and why their innovations were important. Yesterday’s dense scientific tangents and non-starter ideas had morphed into exciting and engaging explanations of how the participants felt their ideas could change the world. After the practice round, the group broke into smaller groups of like ideas and innovations and went off to attend coaching sessions with investors, intellectual property and commercialization specialists, and successful entrepreneurs from around Portland’s entrepreneurial ecosystem.
For eleven participants selected by the coaches, the final pitch competition begins as lunch is wrapping up. The competitors are a diverse group ranging from a small press to a company that manufactures shielding materials for glass. The evolution the pitches have undergone over the course of the 24 hours is nothing short of dramatic. Between the lectures and real-time feedback provided by DFJ Frontier yesterday and the intense personalized coaching after this morning’s practice pitches, this final round comes off like a series of well-honed, calm, and passionate pitches; it is more than apparent that everyone in attendance is a winner here.
“Lab2Market has been an excellent event,” says Rhiannon Rassmussen-Silverstein, one of the event’s participants and PSU alum. “Well put together and the sort of crash-course in elevator pitching that every aspiring entrepreneur should look into. Talking to the DFJ Frontier team provided incredibly valuable insights into the financial and research sides of business. Overall, it was refreshing and exciting to see the innovations and drive that we have right here in Portland.”
Rassmussen-Silverstein’s comments echo statements made by Joe Janda and Shelley Gunton just a week before: “It’s tough trying to distill down all of the advice needed to be successful, particularly in a day and a half. The DFJ Frontier team does this in a way that’s encouraging, real, and entertaining. I’ve been through the Lab2Market curriculum several times now, but each time the information DFJ Frontier presents helps me to think about how the content can be applied to many different types of innovations and projects.”
“What I really hope to get out of the event,” Gunton added, “is 32 people who come away from the course feeling they really got some value here and that they’re excited about continuing to pursue their idea, and they feel that PSU is there to support them with a variety of resources to help them move along that pathway to success.”