USC Associate Professor Peter Beerel knows how to get his message across to sleep-deprived electrical engineering students and effectively present his research to peers at professional conferences.
But last Wednesday he was a newbie struggling to get his message across to deep-pocketed investors who could bankroll his entrepreneurial dream.
Beerel was among 13 Los Angeles academic entrepreneurs getting a potential big break at the inaugural First Look LA, a sneak-peak investor event co-sponsored by the region’s three largest research universities.
As chief executive of a freshly minted tech start-up, Beerel largely ignored his luncheon salad and concentrated instead on chatting up potential investors at his table. He also was going over in his head key points of his 10-minute pitch for later that afternoon.
“I’ve been involved in start-ups before, but this time it’s my baby,” said Beerel, whose Timeless Design Automation has patented technology that is supposed to enhance processing power and battery life of today’s increasingly multimedia cell phones.
Earlier this year, Beerel’s institution joined with cross-town rival UCLA and CalTech to develop new ways to showcase very early-stage opportunities from their academics. Several dozen venture capitalists and angel investors attended, some of them local but many flying in from as far away as San Francisco, Seattle and Boston.
First Look, which USC hosted this time, is the culmination of a several month effort by Entretech, a Pasadena-based non-profit, to get the three universities to better cooperate in promoting Los Angeles as great place for venture capitalists to invest. The plan is to have one or two of these events a year, with each campus taking a turn as host.
“We have investors coming to our campus weekly, but the idea was why not make it more worth their while by letting them see what’s going on at all three institutions,” said Fred Farina, assistant vice president of CalTech’s Office of Technology Transfer.
Dumbing down
While Los Angeles has become a huge draw for venture capitalists specializing in digital media, engineering and life science entrepreneurs still struggle to gain the investor notice.
“You wouldn’t be able to do a “first look” event like this in Boston,” said Earl Weinstein, a former Boston venture capitalist recruited by UCLA’s Office of Intellectual Property to coordinate its spin-outs. “In markets like Boston and Silicon Valley the community is so intertwined and picked over that everybody knows what everybody else is working on. Here, there are lot more hidden opportunities.”
Beerel’s most important take-away from the coaching he received prior to the event: Cut those Powerpoint slides down to 10 or fewer and don’t cram too much information into the pitch.
“I don’t like to think of it as dumbing it down to my audience,” he said. “I have to emphasize the value of the technology rather than the details of how it works.”
After his presentation, which was held behind closed doors to protect the intellectual property, Beerel didn’t get an offer to fund but he was excited by the response he received from investors.
“I got a few business cards and some positive feedback about what you’d expect from an event like this,” he said. “We’ll just have to see what develops.”
Also presenting at the conference was UCLA husband and wife team Paul and Madhu Bajaj. They are hoping to commercialize a modified human protein that in the test-tube looks to be a safer alternative to Trasylol, used during heart bypass surgery to reduce the need for blood transfusions.
Key to any effective pitch is a good hook. But sometimes the bad news of a competitor can be a godsend. Earlier in the week pharmaceutical giant Bayer AG suspended sales of Trasylol after a Canadian study linked the drug to a significantly higher risk of death than alternative medications.
“My sense is that there will be much more interest,” said Madhu Majaj, who has been relying on federal grants but now needs at least $1 million to move to her drug closer to human clinical trials.
Like Beerel, the pair said they received no formal funding offer but strong interest from various venture capitalists.
Investor expectations
Venture capitalist Bob Metcalfe, who attended First Look, remembers well his own struggles in the late 1970s to woo investors to back a technology called Ethernet today the core standard for linking computers within businesses and other indoor spaces.
Metcalfe, a product of MIT who was working for Xerox’s research arm at the time, said that he had been making an unsuccessful investment pitch for months when it finally dawned on him what he was missing an exit strategy for the investors.
“I’d be telling them what I was going to do with their money, but not how they were going to get it back, with profit,” said Metcalfe, who soon was able to attract investors once he showed how they would be able to cash out of any success.
Metcalf went on to build up 3Com Corp., which he retired from in 1990, into one of the biggest networking technology companies in the world.
Now general partner at Polaris Ventures in Waltham, Mass., Metcalf recognizes the irony of investor quick-pitch events like First Look, which forces ivory-tower academics to turn themselves into pitchmen.
“I overheard someone I consider one of the biggest brains in semiconductors going on in some detail with a VC about the expectations of limited partners,” Metcalfe said. “This guy ought to be able to concentrate on developing chips, not cluttering his mind with that kind of stuff.”
