British entrepreneur Jonathan May has largely avoided investment pitch competitions, because he said they often aren’t worth the time spent that could be put into recruiting more customers for his five-year-old software company.
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British entrepreneur Jonathan May has largely avoided investment pitch competitions, because he said they often aren't worth the time spent that could be put into recruiting more customers for his five-year-old software company.
But May, CEO of London-based Hubbub, which makes fundraising software for universities and nonprofits, made an exception for Connecticut Innovations' $5 million VentureClash competition, which recently took place at Yale University.
The chance of winning up to a $1.5 million prize was appealing, but it wasn't the only thing that drew May and the other 10 finalist companies to the pitch competition.
Time spent honing business plans and meeting and making connections with venture capitalists and other Connecticut corporate players proved just as valuable, said May, who recently established a handful of U.S. customers and wants to grow his foothold here. Connecticut, located in a Northeast higher-education market many times the size of what May's used to back home, could be an ideal location.
“I think everyone who came here gained at least two customers,” said May, whose company took second place and came away with a $1 million equity investment from Connecticut Innovations (CI). “They should do this competition every year.”
The contest was part of a new focus for CI to bring promising international companies to Connecticut. It resulted in deal offers to a half-dozen businesses hailing from six different countries.
CI regularly bets on startups — including $31million invested last year — but the contest allowed it to generate greater publicity and grow relationships with several major Connecticut companies, including Webster Bank, The Hartford, Synchrony Financial and Aetna, which all sent high-ranking execs to panel discussions on financial and healthcare technology during the daylong event.
VentureClash also launched at a time when CI is operating with a leaner staff.
“It was a smart way to invest five [million],” CI CEO Matt McCooe said. “Everyone loves to win. I think it creates a lot more interest.”
Gov. Dannel P. Malloy dropped in during the Oct. 20 finals to give a brief speech. He said VentureClash is a way to highlight the array of financial incentives the state offers to entrepreneurs and companies.
“I think it's a great way for us to showcase Connecticut, and to quite frankly get a message out that I think has been hard to get out,” Malloy told the audience.
He said that under his administration the state has invested in more than 2,000 companies, approximately 10 times the number before he took office in 2011.
Value beyond money
May's comments about the the ancillary benefits of VentureClash weren't unique.
As he waited on the competition's results, Aengus Moran, director at Irish medical software maker CSIS, said his attendance had also been worth it, whether his company won or not (it didn't).
“It gave us exposure to what we need to do in the U.S. market and also how people think over here as well,” Moran said. “Even if we don't achieve anything [in the contest], we know what to do next.”
CSIS had already been exploring the U.S. market, and intends to come here despite not winning. Moran said the company may not have looked at Connecticut without the outreach CI made to various countries promoting the contest.
Brent Ho-Young, CEO of Canada-based Dream Payments, which netted the top prize of a $1.5 million investment, said the connections with VCs and others that he made during the contest and its preparatory “venture camp” over the summer operated by The Refinery in Westport, made VentureClash a wise decision.
“Everything is about ROI and it's a big time commitment,” Ho-Young said. “I looked at it and asked 'even if we don't win, should we do this program?' It was an obvious 'yes.' ”
McCooe said that he and his team felt it was crucial to offer additional value to contestants in order to make the competition a success.
”A lot of these companies want money, but what they really want are customers and relationships,” he said.
For the companies that didn't win, McCooe hopes there still may be a future for them in Connecticut.
While the contest structure allowed for six winners, there were other future prospects among the 30 companies CI selected as semifinalists from the nearly 170 that applied.
CT presence will vary
There's still much to do before CI actually gives any money to its six VentureClash victors.
CI is conducting additional due diligence on its winning companies and its possible that not all of them will end up signing deals, McCooe said.
Those that do will be required to establish a presence and add employees (around 10 per company within two to three years) in Connecticut, he said.
CI could offer up to $500,000 in grants to the companies for moving and other costs.
McCooe said he'd like to continue VentureClash next year.
“To build the brand and generate momentum, you need to commit to three years minimum to really get the impact,” McCooe said. “I feel we're in for at least another year, but the [CI] board makes that decision ultimately.”
