At times, entrepreneurs seeking funding through the traditional venture capital process can start to feel like Michael J. Fox’s character in “Secret of My Success.” As a newly-minted college graduate who leaps from small town, USA to the Big Apple, Fox’s character shuttles from one interview to another, only to hear the same refrain: “We can’t hire you without job experience.” Fox commonsensically replies: “How can I gain experience if no one gives me a job.”
Many early stage companies seeking seed funding run into the same paradox – venture capital firms that are reluctant to enter an investment opportunity until the startup has seed funding and is seeking a later round of financing. This leaves executives of the prospective investment wondering how they are supposed to land later funding rounds if no one will provide that critical seed money.
A maturing technology community tends to be one that plugs these gaps and finds ways for these early stage companies to find this seed funding to get the ball rolling, which is why today’s Washington Post story by Kendra Marr highlighting a growing number of efforts by local technology leaders to identify promising innovations and supply seed funding for them is such a healthy sign for the region.
The Post article kicks off by highlighting a newly-launched investment firm, LaunchBox Digital, that will provide seed money, advice and guidance to DC-area Web and wireless startups. At the same time, the investment firm will also invest larger amounts in more mature companies. The investment firm pulls together a who’s who of local tech leaders – Ted Leonsis, AOL vice chairman emeritus, Proxicom founder and ObjectVideo chief executive Raul Fernandez, as well as a pair of former FCC Chairmen and the co-founders of Motley Fool.
And retracing even a step further in the evolution of a startup, the DC area has witnessed an acceleration of the tech transfer community – which involves transferring promising technology and research developed at Universities and research institutions into commercial ventures. Last month Gerard Eldering, the former Director of the Technology Transfer Office at The MITRE Corporation and well known within the Washington, DC venture capital and research community for his role in transferring promising technologies and applications into successful start-ups, launched a tech transfer venture creation firm.
Eldering’s firm InnovateTech – also featured in the Washington Post article – assists universities, non-profits and for-profits in identifying their high potential technologies that could be the basis of a startup, and then assembling the management team and funding around each venture.
The Post article also references how earlier this year the Maryland Technology Development Corp. (TEDCO) unveiled a program providing university teams money to determine if a technology developed in the lab could be transformed into a commercial product.
Much of these efforts reflect the enthusiasm on display at the ExecutiveBiz Web 2.0 Conference earlier this month. Innovators bringing to market promising technology and applications, and investors finding a wider and deeper pool of talent and innovation to invest in. While not every entrepreneur will be able to fly back home in a private jet like Michael J. Fox, first class isn’t out of the question.
Brian Lustig is co-founder of Lustig Communications, a Rockville, MD-based communications firm that works with growing technology and government IT firms. Lustig is also a contributor to local business and industry publications.
InnovateTech, a company mentioned in this blog entry, is a Lustig Communications client.