The Angel Capital Summit featured presentations from 43 startup companies selected from the 238 companies that applied. The day started with a brief address from former entrepreneur and current Denver Mayor John Hickenlooper. Hickenlooper reflected that he also faced a relatively rough economic climate when founding the Wynkoop Brewing Company. But even in consideration of the recent real estate collapse, today’s entrepreneurs will have a tough time matching the $1/sqft/year lease Hicklenlooper managed at his initial location. Hicklenlooper thinks his business experience gave him a good basis to serve as mayor, since “Running a big restaurant is much like running a big city: There’s never enough capital, you need a diverse group of people to work together, and someone is always annoyed.” Finally Hickenlooper offered words of encouragement in these challenging times, stating his belief “that our optimism will be the road through.”
On that note it was time to start the day’s presentations with each company given 10 minutes to present followed by 10 minutes of questions. A sampling of the companies follows:
- Spatial Networking’s (presented by CEO Peter Batty) goal is to help people to know when they will be in close proximity with someone they know. A key difference between Spatial Networking and other services is its focus on where someone will be in the future, as opposed to his current location. The company’s product will be able to easily upload data from sources such as an outlook calendar or travel itineraries. Such knowledge could enable quick business meetings in airports or dinner for two instead of room service when in an unfamiliar city. Batty plans to target enterprises first – specifically those with multiple offices and employees often on the road like consulting firms. Cost will be in neighborhood of $5 per user per month and could quickly pay for itself from an company perspective if it enables employees to share cabs to the airport or meet up without the need for an extra trip. A consumer based application is also planned and the company is conducting a small beta test. The company wants $500K for a 20% equity stake to enable the entire team to work full time.
- Web2Storage (presented by CEO Ronald Brown) – Essentially, Web2Storage is offering a Windows-based product like Apple’s time capsule. The device would plug into a wireless router and allow users to backup and share files – all available with 1-click installation. A more fully featured product for small businesses is at the same stage of development. Web2Storage actually produces the software that enables these features with plans to license out to a company that would manage production. Evaluation units have been shipped and 9 deals for licensing are in the works. The company is seeking a $500K investment for a 20% equity stake in the company.
- VarVee (presented by CEO Stephen Cunningham) is trying to expand the use of online statistics in high school sports – think of each high school athlete having a stats page as detailed as the ESPN profile of an NFL player. The idea is coaches would upload the information, which would be processed by VarVee’s system and displayed in pages on the websites of local news outlets. Revenue would be based on advertising on the stats pages and would be shared with the media outlets. In a trial with volleyball and soccer in Colorado, over 20% of the coaches contacted selected to participate by uploading game stats. Several audience questions focused on the potential to use the product in the college recruiting process (e.g. premium subscriptions for coaches that would also give access to academic information) which may offer another source of revenue that Cunningham had not considered to date. The company has raised $325K to date and is looking for another $250K.
- Chata (pronounced Hota) Biosystems (presented by Chairman and CEO Ted Ziemann) offers products for laboratory and manufacturing. Specifically, they provide pre-mixed solutions in IV bags for a variety of tests (e.g. HPLC) that can simply be plugged into the machine. These pre-made media both ensure accuracy and save technician-time compared to having a technician manually mix them in the lab. More recently, the company also has developed a non-extractable plastic bottle that can hold solvents which previously would need to be packaged in glass or expensive Teflon-lined bottles. Further afield from the company’s core focus, Ziemann noted (although kept his discloser general as IP is in process) the company had recently developed a disinfectant that could kill methacyllin resistant staph which provides another interesting growth opportunity. The 29-employee company was profitable for three months of 2008 and expects full year profitability in 2009. The company is seeking $1.5M to enable growth and expansion including manufacturing, sales and working capital.
- ApopLogic (presented by President and CEO Richard Duke) – Duke expected the crowd of angels to be at least hesitant if not hostile towards a cancer therapeutic with the long runway to commercialization relative to medical devices. ApopLogic does face that long road for its lead product Berceptin, a targeted therapy that induces cancer cells to essentially kill themselves. Duke showed an impressive survival graph based on animal data typical of many new therapies, but noted that even with positive lab tests it is hard to predict human response. The target indications are small cell lung cancer and hormone refractory prostate cancer. What Duke thought would be of more interest to angels was the company’s veterinary product candidate, Fasaret. Fasaret showed an 80% response rate in a 5 dog trial from oral melanoma and is currently in a 56 dog study for bone cancer. This product presents a much shorter runway with USDA approval possible next year and broad sales by 2011. The company is looking for the last $250K of a $1M bridge round that will tide them over and allow them to prepare to go into the clinic before a $12M Series A round.
- flaik (presented by Steve Kienney) offers GPS tracking devices for skiers. The company’s products will be used at Steamboat and Copper Mountain this winter and be mandatory for all ski school participants (157K days of skiing). The company will be able to identify and contact ski patrol if any student strays more than 100 yards from his instructor. Beyond safety, Kienney also hopes to enhance the skiers experience by allowing them to track data like vertical distances and speed. Further down the road the company plans to sell business intelligence data back to mountains (e.g. to identify lift lines or busy runs). The company’s transponders – which are about the size of an iPod and can be rented for $5 per day – transmit signals which are carried over a cell phone network. Currently, the technology only works with GSM, which limits options to AT&T and T-Mobile, but the company plans to have the product operate with CDSA next year. The company expect to offer a downloadable version of the product for mobile devices. Flaik is seeking $500K of which they raised $100K in the 24 hours preceding the presentation.
- Tissue Genetics (presented by CEO Kimberly Gibson) offers a protein-based test for hereditary breast cancer. Hereditary breast cancer primarily results from mutations in the BRCA1 and 2 genes which result in the production of truncated proteins. Tissue Genetics lead product BRCAssured, which should be commercially available in 2009, is an antibody based (actually 4 antibodies) test that can identify the presence of non-truncated or normal proteins from a sample of the tumor biopsy tissue. The results are available in about four hours compared to the weeks it takes for genetic sequencing to yield the same information. Identifying breast cancer as hereditary can impact both selection of chemotherapy agents and radiation doses. According to Gibson, who has taken over the reigns as CEO from her previous role as COO, the company hopes to price the test at $1800, a significant discount to the Myriad sequencing test which comes in around $3200. Beyond the initial test, the company hopes to offer another test in breast cancer to identify patients who are more likely to respond to a new class of drugs, PARP inhibitors, and expand to other cancers like colorectal. Tissue Genetics needs $500K to expand their IP portfolio and continue commercialization efforts.
- VitruMed (presented by founder and President Dave Schechter) offers a medical device to make surgery for lung cancer less invasive. Early diagnosis significantly influences survival rates in lung cancer, but the current invasive nature of the surgery makes false positives a significant obstacle to wider use early diagnosis through CT scans in at-risk populations. VitruMed produces a device that could be inserted between ribs to complete lung resection. According to Schechter, along with being less invasive VitruMed’s device should offer superior weld strength which will minimize air leakage because the tissue closer is based both on heat and the injection of a biopolymer further reducing complications. Schechter believes the device should be eligible for the accelerated 510(k) FDA approval process, but is currently getting an outside opinion as this could substantially impact the expected launch date in Q4 2010. The company is asking for $200K in seed stage funding to better position them to get into a development agreement with a larger company.
- FacetoFace Health (presented by CEO Nowell Outlaw) is looking to humanize the online healthcare experience. Specifically, his company has created a search engine that will match a person with people who have similar health issues for one-on-one chat based on a profile that the user fills out. Revenue would be based on advertising that Nowell expects to generate very high CPM or CPC because ads could be highly targeted – provided by healthcare companies or clinical trial providers based on the users specific health condition. The company hopes to attract 100,000 members by the end of 2009 primarily through marketing and referrals from affiliate channels. While the product clearly offers a personal touch, it remains to be seen how much people will want to rely on anecdotal information from a person with the same condition for healthcare support versus searching the physician-written articles on sites such as WebMD. The company is currently trying to raise $750K in convertible preferred stock.
- Fluonic, Inc wants to improve the accuracy of infused medication delivery. The company produces a chip that uses electrodes to evaluate the amount of fluid that passes through and would be imbedded in tubing sets. This system promises much greater accuracy than the mechanical means used in pumps that are specced at +/-5-15%, but may actually operate at error levels of 50 to 100% resulting in complications and sometimes product recalls. The chips can work across a wide variety of medications and can be produced for about $0.05 each. The details on how the information from the chip will be relayed back to the pump still seemed somewhat undetermined at this point. The company is working to partner pump makers. The company needs pre-seed money of $250K to produce a demonstration kit that will facilitate relationships with pump makers prior to a seed round of $1.3M.
- Frontline Aerospace (presented by CEO Ryan Wood) produces a gas turbine recuperator for the Rolls Royce 250 helicopter engine that improves fuel consumption by up to 40%, significantly reducing fuel expenditures for helicopter owners and allowing them to fly greater distances on a single tank. There are currently 13,700 RR250 engines in operation (2000 military), with 800 new ones being sold every year. Frontline has established a price point at which this retrofit will pay for itself in 1-3 years, with the variability dependent on the cost of fuel and hours of flight operation. All told, Wood believes the product, named Microfire, will operate without competition in a market he values at $1.5B. He is seeking $750k for 4-6% of the company, with an extra 1% thrown in if the deal closes before the New Year.
- GroGreen Geohouse Farms (presented by CEO Buck Adams) seeks to transform food production and distribution in the United States by establishing a network of commercial scale hydroponic greenhouses at strategic locations that would provide fresh ‘locally grown’ produce to grocery stores within a days drive of the facility. Local hydroponics offers considerable advantages over land-based crops, requiring one-tenth the water and one-tenth the footprint of corporate megafarms, as well as offering produce that captures substantially more nutritional value. Hydroponics also demonstrates 50-75% faster growth of produce than that of land farms, can be grown year round, and also offer superior protection against inclement weather and crop-based disease. GroGreen is seeking $1.5M investment in Series A preferred stock on a pre-money valuation of $3M.
- Lingoport (presented by CEO Adam Asnes) is a seven year-old company with a track record of providing products and services that enable software companies to address internationalization issues within their code so products can be deployed overseas. Lingoport’s primary software – the Globalyzer – effectively scrubs millions of lines of client code and reports those lines containing language, characters, or measurements sets which would run afoul of international standards. Globalyzer, introduced in 2004, is in version 2.4 and the company plans to introduce version 3.0 in the first quarter of 2009. The company, boasting clients like Cisco, Yahoo!, and HP, is seeking $1 million to ramp up its sales and marketing team, based on a pre-money valuation of $3M.
- Zerista (presented by President John Kanarowski and CEO Charles Savage) has built a SaaS product designed to enhance the participation and interaction of attendees at conferences and trade show events. The primary feature of the product is the social networking function, allowing attendees to upload their profiles before the event and browse the profiles of other attendees, communicate with vendors, and set up face to face meetings. The tool provides detailed maps of the conference and exhibitor areas, the schedule and location of all events, and creates personalized itineraries based on a registered attendee’s selections. There are over 13,000 conferences hosted in the United States every year, and the market opportunity for those conferences boasting over 1000 attendees (the Zerista core customer) Kanarowski pegs at $100M. Zerista achieved 5 charter clients in 2008, including the 40,000+ Great American Beer Festival, and has more than 20 clients in the pipeline for 2009. Zerista has raised $500k to date and is seeking another $500k.
- Trueffect (presented by COO Scott Nelson) seeks a revolution in online advertising, shifting power away from those companies that sell the advertising and search space (Google, Microsoft) to the companies buying the advertisements. Trueffect plans to play a substantial role in this shift through its DirectServe platform, a product offering advertisers (say, Toyota) a greatly enhanced ability to recognize those customers with whom it has a relationship and target an ad specific to its knowledge of that customer. As an example, let’s say I spend the morning looking at a Toyota FJ on the Toyota website, but do not make a purchase decision. Later that day I surf over to the Huffington Post where Toyota is an advertiser. The company is able to recognize me (using special cookies) and display an ad specific to my FJ jones, instead of relying on the generic demographic data historically determined by third-party ad providers. The product has been certified by Google and AOL to serve ads on these networks. Trueffect is seeking a bridge to Series A, 100% convertible debt, 12% rate, 50% warrant coverage, with a $25k minimum.
- Xpressplay (presented by co-founder Matthew Kane) allows sports teams, from high school to professional teams, to digitize their game film and manage the process of film exchange among teams. Currently the rules for film exchange are determined by a team’s conference, which typically insists that coaches supply competitors within the conference copies of a given amount of game film. The requested film must be copied and sent, tracked and returned, requiring significant resources the coach could otherwise direct toward improving the team. Xpressplay has created digitized individual film libraries for each team, allowing coaches merely to grant access to other coaches through email requests for film and have that media transferred digitally to the requesting opponent. The company also provides enhanced features allowing the coach to edit video and make the pertinent segments available to any player with an Internet connection. 158 teams are already using the product, including 24% of Division One Basketball teams. The company, which has been operating since September, seeks $1M for a 32% equity stake, believing it can supply an 11x return with a strategic sale. Xpressplay maintains it will break even in year 3.
- AWhere (presented by CEO John Corbett) provides geo-spatial mapping software it considers “Googlemaps on steroids”, allowing customers to convert whatever data they desire into a graphical presentation snapped onto Googlemaps. Visualization and location intelligence allow a user the ability to spot trends invisible when the data exists as a spreadsheet, such as how sales of a given product are moving across geographies or which Walmart stores might fall within the cone of a looming hurricane. Yet it’s not just the customers’ data that can be accessed and visualized, but 3rd party and end-user information as well: POS sales, scientific, weather, business intelligence, real estate or marketing research. AWhere has nineteen employees and has booked $1.6M YTD with such customers as D&B/Hoovers and Monsato. The company is seeking a $1M bridge to an anticipated $5M round in the Spring of 2009.
