With plans to be in New York City yesterday, I ended my day in Manhattan a little later by attending a two-hour pitch-fest at NYU’s Stern School of Business.
CrowdPitch’s concept is simple enough: an audience (students, would-be entrepreneurs, startup groupies, bloggers) act as angel investors with pretend dollars in which to fund startup ventures. The companies are real, though, and have four minutes to make their case for getting the make-believe moolah.
A panel of Stern professors and other industry experts are there to critique the presentations, crunch the numbers on the business models, and then offer advice for when these companies face real angels and VCs.
While the overall quality of the pitches was high, you quickly learn that to attract investors, startups should strive to be scalable, frictionless, and vertically integrated—biz speak for nice fat margins with minuscule marginal costs and no competition.
After listening to representative from an on-line picture framing service, a space exploration company (indeed!), a business-for-sale aggregator, a yoga-as-therapy venture, and a GPS-based golf hole distance service, I began to feel a morsel of empathy for real investors.
You sense that this panel of industry experts has heard every variation and then some on the business ideas that were being pitched last night by these brave soles. They were reeling-off without missing a beat all the speedbumps, roadblocks and other obstacles on the journey to IPO-ville.
The learned panel admitted, though, that they hadn’t grappled with a space business before. They were in unfamiliar parsecs listening to Blaze Sanders,the founder of Solar System Express, describe a Sabatier Reactor, which would provide energy to spacecrafts on jaunts to nearby asteroids.
Their opinion: turn this into a skunks-work lab and perhaps seek government funding.
They were on far firmer ground with less exotic startups, say the on-line framing project, where you pick a frame and mount for your digital masterpiece using CustomFrameIt’s website.
They thought CFI’s service would have its margins squeezed by the actual frame maker, who is a separate and dominant player in the picture frame world.
Verdict on the on-line framing proposal: not vertically integrated enough.
The yoga-as-therapy business, which employs proprietary yoga techniques to help children with learning disabilities and special needs, has a compelling story: the founder, Kami Evans, used yoga to help a daughter born with cerebral palsy.
The panel quickly identified her underlying idea as a franchise model. But angel and VC investors view franchises as hard to scale, and there’s too much complexity and friction with all the various franchisees. This didn’t stop a company called McDonald’s—but VCs would never have funded it.
Their suggestion: since the founder positions herself as an expert, why not explore a publishing business model, book or web site.
The GPS-golf company, called OGolf, gives golfers a legal edge by calculating distances from the current ball position to various points on a visual of the course. Their app works on an iPhone and relies on OGolf’s high-contrast images of the various fairways.
Their use of on-board course imagery (no Internet connection required) and proprietary algorithms were all big points in their favor. And this is a software business, so the margins are nice. As was pointed out, this model only scales so far since there are only so many fanatical golfers willing to spring for a golf gadget.
The final assessment: OGolf is very fundable, but this group of three golf-shirt wearing founders should think about larger markets to conquer with their technology.
And my verdict on CrowdPitch: while there’s lot of wisdom in the panelists remarks, to quote an overused business axiom from Hollywood, nobody knows anything.
Anyone of these startups could make it. As the panelist themselves noted, a lot depends on the passion and knowledge of the founders, and there was plenty of business grit on display last night.
Related articles
- CrowdPitch (eventbrite.com)
- Solar System Express
- BusinessReel
- Elahi Yoga
- OGolf
- Startup Weekend NYC is Here. (technoverseblog.com)
