Eight Startups Show How to Pitch, and How to Fail, in Just Three Minutes

The ideas ranged from practical taxi-sharing apps to fantastical dual-reactor biofuel plants. The response from venture capitalists ranged from “Get outta town” to “Get me some shares.”

It was Future Energy New York, a lightning pitch event by Ultra Light Startups in which eight proto-companies got three minutes each to pitch their ideas. It offered a hands-on primer on how to (and how NOT to) pitch a business plan, plus insight into how top investors including Andrew Garman of New Venture Partners and Mark Wight of GE Ventures are thinking about opportunities right now.

Ride-Sharing Wins Out

By far the best pitch of the night, the audience and VC’s on the panel agreed, came from David Mahfouda, founder of a taxi ride-sharing app called Bandwagon, which won the audience choice award for evening, and will present at the SXSW Eco startup showcase next week. In a three-minute lightning pitch, Mahfouda combined just the right dollop of high-minded idealism – lowering carbon dioxide pollution by incentivizing taxi riders and drivers to share seats – with oodles of pragmatic insight on his company’s growth strategy.

Combining a mobile app with a “high-touch” physical infrastructure that allows people to jump to the front of the line if they agree to share taxi rides at LaGuardia and other airports, Bandwagon planned to save consumers 40 percent on taxi rides plus plenty of time while making money selling taxi seats that currently sit empty.

The reaction from the investors: Where’s my checkbook?

“What a fantastic idea,” said Tom Blum, one of the 100 investors with New York Angels.

Since the panel was built as an immersive classroom for startups, panelists also had some ideas to speed Bandwagon’s growth. Garman of New Venture Partners and Willem Rensink of Shell International agreed that Bandwagon should shift its focus from saving customers money to saving them time, since that’s the commodity that busy business travelers truly care about.

Blum and Wight focused on growth strategies, Blum by emphasizing the need to sign exclusive contracts with other airports quickly to freeze out competitors, and Wight on building a community of users.

“I would leverage your initial people who love it to help you figure out where to grow. Where would they use it next?” Wight said. “Mine them, get them on your team.”

Electrically Assisted Manufacturing (EAM) Technology

Panelists also liked the pitch by Ronald Anderson of Anderal Technologies, which came in second in the best pitch competition. The company is commercializing university research that runs low-voltage pulses of DC current to make materials more malleable during the manufacturing process. The company already has won a $2.5 million investment from Ford, a $1.5 million grant from the Department of Energy and support from Boeing, and also is looking to sell to the medical device industry.

With so much interest from such diverse sectors, investors on the panel thought Anderal must have good idea. Its only problem now is focusing its efforts and avoiding overreach, they agreed.

“It sounds really big and exciting. A question for me is how do you avoid blowing through a couple hundred million dollars?” said Garman. “Find a customer that has a ‘bleeding from the neck’ problem not a ‘bleeding from the finger’ problem, and focus a lot of attention on that one customer.”

Crowdfunding for Solar

Another company that seemed to intrigue venture investors on the panel was Uvest Solar, which plans to combine the crowdsourced funds with its revenues from selling power to finance local community solar installations. Social investors will earn 5 percent to 7 percent returns, Crump said, while the company itself will earn about 33 percent.

“It’s Solar City meets Kickstarter,” Uvest founder Blue Crump said during his pitch.

Garman’s first question: Is Blue Crump really your name? Yes, actually, it is, Crump said.

After that was cleared up, panelists sounded intrigued by Uvest’s idea but skeptical of its numbers. Galan wondered how the company could support paying such low returns to social media investors while projecting a 33-percent profit for itself. And he found Crump’s answer—consumers will like it because it beats Treasury notes—problematic.

“It sounds like a pretty attractive business and it’s worth pursuing,” Garman said. “But if there were a journalist in the room and heard your answer to my question they’d probably kill you in terms of bad publicity.”

Blum doubted Uvest could win the returns it was expecting for itself, too.

“I deal with a lot of solar developers, and I haven’t had a single one come in and talk about 30-percent returns,” he said. “I’m hearing 12 to 13 percent.”

Plug And Play Solar Power

Elon Rubin, co-founder of Fulcrum Solar, presented his idea for a modular, plug-and-play solar array that could help commercial customers avoid solar’s notoriously high installation costs. The idea is simple, perhaps too simple, said the panelists, making the company vulnerable to larger players from almost day one.

“Getting patents would be very important because this is a very easy system to patent… and there are people who will be ruthless in cutting costs,” said Blum.

That leaves the company with two possible business models, panelists said: Go huge or go tiny.

“You’re going to need a ton of money because you’re really creating an expensive consumer product and that requires an expensive consumer channel with expensive promotion and advertising,” said Garman. “You need tens of millions to get it started.”

The other option is selling to nonprofits looking to electrify poor regions in developing countries, said Shell’s Rensink.

From there, the pitches devolved rapidly in quality. Maybe the entrepreneurs had wonderful ideas for transformative companies, or maybe they didn’t. On the basis of unclear, incomplete or highly conceptual pitches, it was hard to tell.

Scott Banta, a chemical engineering professor at Columbia University, proposed to build two separate high-tech reactors, one to make electricity and one to make biofuels. Investors were skeptical.

“It’s hard enough to get one massive area done,” Blum said. “You seem to be marrying two areas that don’t benefit form being married. We have no shortage of electricity in this country.”

Only at the end of his presentation, after questions form all four panelists, did Banta mention the point: To solve the intermittency problem of solar and wind power by pouring off-peak electricity into fuels instead of batteries. Investors, still bewildered, found this somewhat more intriguing.

“It sounds like you’re onto something,” said Blum. “But this is too much to pack into a three-minute discussion.”

There was a man who proposed taking carbon dioxide from coal burning power plants, mixing it with soap and a secret ingredient he couldn’t discuss, and using it to boost production from natural gas wells. How to reap the CO2 and transport it economically? He had no idea. Then there was David Sutton, CEO of Phosolar, a company that makes a blanket of fluorescent crystals that he said stores solar energy during the day and releases it at night.

What’s the efficiency rating, an investor wanted to know. How do you prevent a blanket full of toxic chemicals stored on a homeowners’ roof from leaking into the house, asked another. Sutton seemed to dodge the questions using increasing levels of hyperbole, at one point barking at the audience “Wouldn’t it be nice to take a $3,000 investment, turn it around and have them pay you the same amount of money you’re spending now?”

The panelists were blunt.

“I would work on the pitch because you left a lot of very big open questions,” said Blum, “and you had a way of answering the questions that didn’t build a lot of credibility in what you’re trying to sell.”

The message to the other startups and investors in the room was clear: Capital efficiency comes in sizes big and small. You may have a tiny taxi-sharing app or a technology that could revolutionize many different sectors of manufacturing. As long as you have narrowed your focus on a real set of potential customers and created a business plan where the commercialization expenses make sense, wise investors will be intrigued by either one.

 

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