The Demo Club investment forum (Feb. 7 at the Speakeasy Café) was well orchestrated, despite the informal, clubby atmosphere. The earnest entrepreneurs got red name tags (none is making money, after all), and they gulped water or soft drinks when they could. The decidedly skeptical would-be investors wore gold tags and were partial to beer and wine.
Demo Club is providing a training ground where local entrepreneurs get a chance to become Jedi Warriors, says founder Mark Long, sporting a shaved head and all-black attire. Long, an expert in virtual-reality gaming, certainly has Warrior credentials. Earlier in the day, it was announced that the two Seattle companies he co-founded (Zombie.com and The HQ Network) had been bought by Advanced Interactive Systems (AIS), the Tukwila-based maker of computer simulation games for the military. There’s talk AIS will file for an IPO this year.
Demo Club has very low barriers to entry (see “Mark Your Calendars”), says Long, and bigwig investors do attend. “Look, there’s someone from Madrona Investment Group.”
The success rate? Although Long doesn’t keep track, he suspects its good based on e-mails and lack of complaints. ShareYourWorld.com, for instance, a sponsor of the Monday-night event, was funded thanks to Demo Club (four Microsoft angels). They’ll sell anybody’s photos and videos (one is called “Seattle Loft Party”) for 25% of the proceeds.
Pygmalions By the Dozens
Some investors came with a specific startup in mind. Joe Piper from Integra BioHealth came seeking PDA Ventures, provider of specialized content to hand-held devices. But to his dismay, they didn’t show — already funded.
Drew Tulchin, of Active Angels, talked only to Blue Energy Canada, which harnesses the energy of ocean currents. His parting words: “There’s a lot of opportunity outside the Internet. ”
Dan Rosenberg of Maveron (the VC firm started by Starbucks CEO Howard Schultz) says this is his third Demo Club, even though it’s unlikely he’ll spot a deal. Maveron typically invests in more-developed companies and it’s national in scope. Among recent local investments, he says, is Portland-based Lucy.com, which sells women’s sporting goods.
Still other investors were in their element. Craig Chelius, Partner at Meridian Venture Catalyst says his firm typically provides $500,000 as seed money. One of their portfolio companies, Catalyst Research (no relation), was demoing. Meridian has also put money into Enthusiasm.com (whose founder Vipin Singh was making the rounds) and IdealRental.com (for apartment complexes — not up yet).
The two most oft-heard questions:
(1)”What’s your market capitalization, before additional investment?” That is, how much is your company worth? Surely a subjective measure. The answers we heard ranged from $4 million to $20 million. That latter figure was thrown out by Randy Apsel, founder of WellCare Networks, a “preventative healtchare” site that isn’t yet up and running.
(2) Do you have any “real” revenue? Ebid, for instance, has signed on the City of Portland as customer #1. But it’s getting paid only for time and labor ($150/hr), not its product — an online purchasing-management system. At some point, Portland will pay market rate, but until then it’s more of a publicity sale.
While some of the startups already had outside investors, many were looking for that first infusion, including: Ebid.com, OfficeParts.com, WebStrategic.com, Microsurfer, FastFocus.com, Vain.com.
To honor a request from some investors (to what end?), Vain.com did not set up a demo. However, in a room full of dark-clothed men, Vain’s CEO, Victoria Gentry, was a walking/talking billboard: statuesque with purple/red hair and a snug, bright red top.
Gentry, 36, moved to Seattle from New York in 1996 to start Vain, which now includes a salon, a wholesale distributor and the website. She invested $100,000 of her own money, but she says the business is now self-funding and looking for VC money to propel it into the Big League. Why Seattle? “I thought it was supportive of maverick spirit.”
Soula Jones is Content Chief at Seattle24x7.com
Best and Worse of Demo Club 2.2000
Best name: Vain.com
Worst name: Nationalplancenter.com — isn’t it obvious they sell architectural designs?
Weirdest display: OfficeParts.com — what’s with that styrofoam mannequin head?
Nicest guy: rep from Blue Energy Canada
Best vaporware: Webvenue.net — what is it that they do?
# of African Americans: 2
# of ponytails: 1
# of shaved heads: 1
# of baseball hats: 1
Mark Your Calendars
The next Seattle Demo Club forum is: April 3, 2000 (See www.democlub.org). The Austin, Texas Demo Club is May 1 (email@example.com) Know a company that should demo? Contact: firstname.lastname@example.org
Mark Long, who chooses the demoers, has three requirements:
***A demo of some sort. ***Company must be actively seeking funding.
***Company’s website cannot be lame.