The Deconstruction of a Startup Competition

Fast-pitch competitions, in which cash-hungry entrepreneurs square off in front of a panel of judges, are becoming as popular as reality TV shows, like “Amazing Race” or “American Idol.”

Case in point is Tech Coast Angels’ fifth annual Quick Pitch competition, held on a recent balmy October eve in a leafy district of San Diego.

More than 500 attendees—including many investors with money—jammed the plush Irwin M. Jacobs corporate auditorium on Qualcomm Inc.’s sprawling campus to watch 13 entrepreneurs give two-minute pitches to seven judges. The judges included several TCA members.

The presenters had spent weeks honing presentations, with help from Connect, a nonprofit organization that serves as a booster for the region’s 6,000 technology companies.

The two-minute pitches give new meaning to the term “elevator pitch,” given the amount of information the presenters need to push across to the audience, and they have to do it with élan. Entries in this particular type of competition are judged on style, as well as substance.

Such competitions have become commonplace across the country, as venture capital has become scarce and as angel investors move in to fill the void.

After two hours, the judges—with the audience texting in their choice—picked three winners.

Orange County cleantech startup Atlantis Technologies Inc.’s CEO Pat Curran won best overall presentation. His company is developing low-energy desalination systems to clean industrial wastewater.

Keith Mullen, CEO of La Jolla, Calif.-based food snack startup Gamer Grub, won for best content. His company has come up with “healthy” snacks packed with vitamins for those who spend hours playing video games.

Derek Smith, CEO of San Diego-based Tesla Controls, won for best style. His company is developing energy-saving wireless lighting and controls for commercial and industrial buildings.

Mike Napoli, the TCA chairman who also served as a judge, said winning doesn’t guarantee anyone will raise capital.

“Many present, but few are funded,” he says.

Napoli says that one or two of the winners this year would be invited to make fully developed presentations before his members, which is the case for both Atlantis and Gamer Grub.

“It’s kind of like entrepreneurial entertainment,” said Napoli. “It gets the juices flowing for entrepreneurs to watch, to see the end results. Hopefully, other entrepreneurs will have aspirations of doing the same thing.”

Gamer Grub’s Mullen, who’s running his business out of a 900-square-foot studio apartment, has received lots of interest, in part because the business model is easy to understand. He says that three groups of investors have asked him for formal pitches.

Mullen is seeking to raise $1.5 million in a Series A round of funding and thinks he has a good shot at succeeding, as he’s already a going concern. The “quick-tear” snack packs are available at Fry’s Electronics, as well as in Best Buy and Toys “R” Us stores. And he’s struck a partnership with Microsoft Inc., further guaranteeing sales.

Many present, but few are funded.”

Mike NapoliChairmanTech Coast Angels

“Of course, it’s impossible to know for sure,” Mullen says of potential investors. “It’s like walking through a river and picking up rocks. There’s only going to be one or two that you pick up and put in your pocket.”

Mullen spent two months working with a team from TCA and Connect to shorten and fine-tune his presentation. He rehearsed three times a day for two weeks to make sure he delivered flawlessly.

“When I got there, I didn’t have to worry if I was going to have to screw up a word, which is so easy to do,” he says.

In fact, one of the presenters at the Quick Pitch event lost his place early on in his presentation, much to his embarrassment, though the judges noted he made a nice recovery.

Quick pitch or fast pitch competitions have become popular with TCA, one of the largest angel networks nationwide with 250 members located in five regions in Southern California. In addition to holding competitions annually in Los Angeles, Orange County and San Diego, TCA has held “speed-dating” events, in which entrepreneurs pitch investors one-on-one in short windows of time.

Napoli notes that the other TCA chapters limit presentations to 90 seconds, and in some cases, as little as 60 seconds. In regular group presentations, TCA allots 15 minutes for presentations and 15 minutes for questions, Napoli says. If investors like what they hear, they’ll hold intensive follow-up meetings with entrepreneurs in their offices, Napoli says. Members, who include former entrepreneurs and VCs, generally invest from $250,000 to $2 million.

In addition to Napoli, the judges included TCA San Diego branch past President Mike Elconin; Inland Empire TCA Vice President Molly Schmid; Ricardo Dos Santos, who runs Qualcomm’s venture investing arm; and serial entrepreneur Gary Sutton.

Nine of the 13 entrepreneurs onstage represented life science concerns, as to be expected in a biotech hotspot like San Diego.

Presenters included:

HumanCentric Performance, which uses wireless technology to monitor athletes in high heat conditions;

Visionary Pharmaceuticals, a drug discovery company seeking treatments for cancer and other diseases using small molecule therapies;

iTel Cos. Inc., which is working on a HIPAA-compliant video-conferencing system for mental health providers;

Lifetime Health Diary Ltd., which is developing Web-based software targeting nursing homes that want to save on nonreimbursable drugs;

Nascent Biologics Inc., which is developing a way to treat disease by boosting or suppressing the human body’s immune system;

Sirionis Inc., which is developing a device to enable anesthesiologists to administer patients the proper amount of fluids during operations;

TrueAngular Inc., which is developing devices and related software to correct posture;

I’ve received calls from people wanting to sell stuff to me, others trying to raise money for me, but no calls offering checks yet. I am still waiting.”

Derek SmithCEOTesla Controls

Ventrix Inc., which is seeking ways to repair heart damage; and,

Xen Biosciences, which works with scientists to transform biomarker discoveries into tools to treat diseases.

In addition to Atlantis Technologies, Gamer Grub and Tesla Controls, the other non-life-science entrant presenting at the event included San Diego-based SwoopThat LLC, which is developing a used textbook exchange.

Several startups from the group struggled to keep their pitch to two minutes while covering all their bases. Which raises the question: Do life science concerns have a bigger obstacle to hurdle because their businesses are more complex? Napoli says, “No.”

“I have seen many life science companies get their pitch across in 60 seconds,” Napoli says. “Two minutes is a long time.”

He adds that it’s all in the presentation and in the coaching.

“They feel they have to prove the science when 99% of the room doesn’t understand the science,” he says. They can’t get too much into the science.”

To be sure, life science companies sometimes do manage to impress judges. In 2009, San Diego-based Radical Therapeutix Inc. won the best overall presentation.

Nevertheless, the drug discovery company, which is developing small molecule therapeutics, is still looking for seed funding two years later. The founders are plowing ahead using $80,000 of their own funds, plus $1.25 million in grants from the National Institutes for Health and the federal Small Business Innovation Research program.

Meanwhile, Curran of Atlantis Technologies has hit the quick pitch payoffs. His presentation was a favorite with judges and audience members, in part, because he’s developing a process to take the salt out of wastewater from oil and gas wells using 75% less energy than current methods. He thinks he could have $5 million in sales in two years, and cash out for $50 million by 2016.

He credits his sponsor, a member of TCA, along with a team of experts supplied by Connect, for his success. Curran says that two TCA sponsors spent close to four hours with him at a local restaurant rehearsing his presentation. He says that the sponsor is now helping him get his business plan in front of the TCA.

“I guess I was lucky because the judges liked what I had to say, and they obviously want to hear more,” he says. “It’s a dream come true … the opportunity of a lifetime.”

But Smith of Tesla Controls is still awaiting that one telephone call.

“I’ve received calls from people wanting to sell stuff to me, others trying to raise money for me, but no calls offering checks yet,” he says. “I am still waiting.”

Tom York is a San Diego-based contributor. He can be reached at tom.york@gmail.com.