By Amy Duncan, Goldfish Consulting Inc.
It’s not about introducing entrepreneurs to investors, but preparing for the pitch. That’s what Steve Hoey said when I asked him about the Springboard program at CONNECT. Mr. Hoey is Senior Director of Springboard and Innovation Research with CONNECT. CONNECT has been involved with the San Diego technology and life sciences communities for over 30 years connecting entrepreneurs and C-suite executives to people, capital, and resources they need for success.
Their flagship program, Springboard, is CONNECT’s startup acceleration program designed to assist entrepreneurs with strategic guidance from experienced mentors. It is a mentoring program that pairs early-stage life science and tech companies with mentors to help them crystallize their business model and the commercialization strategy to prepare for investment.
“Our sweet spot is companies who have moved beyond the ‘ideation’ stage,” said Mr. Hoey. “It’s not a program for individuals who have a business idea, but don’t yet have the plan, technology, or prototype in place.” Those are too early for Springboard. Most companies in Springboard have a prototype, are moving toward commercialization, and are looking to define the commercialization strategy in order to seek funding to support scaling their business.
Mr. Hoey addressed where the funding comes in. “Springboard is not an access to capital program,” said Mr. Hoey. “There’s no funding. It’s not an introduction to investors program.” Instead Springboard helps the entrepreneur develop their business model and determine their value proposition for potential customers, licensees, investors, or acquirers. “We help them think that through,” he added.
In contrast to what Springboard is not, applying companies should be at the prototype stage or moving toward minimal viable product. If it’s a therapeutics company, it should have its core scientific team in place. “One of the challenges life science companies face, particularly when the founders are scientists, is bringing someone on the team with commercial experience to effectively think about commercialization,” said Mr. Hoey. “Companies applying to Springboard should have given some thought to expanding their team beyond the scientific founders, to include commercialization experience.” They should understand their target market and ideal customer. “They should have a grasp on the pain they are solving with their solution, how it’s differentiated, and a preliminary look at the competitive landscape,” said Mr. Hoey. These areas are all refined in the Springboard program, but if entrepreneurs haven’t given them any preliminary thought before they come to the intake meeting, they won’t clear that hurdle. Companies need to be far enough along to benefit from the mentoring the program provides.
Mr. Hoey explained the “traction gap” as another hurdle for entrepreneurs ultimately seeking funding. To explain the traction gap, he compared a fresh graduate at the top of their economics program, but never had a job to someone with one year of business experience. “You are less hirable than someone who has one year of business experience,” he said. While Springboard helps entrepreneurs define their commercialization strategy, if they are able to execute on that strategy while they are in Springboard, they may well be investible at the end of the program. “Executing on the commercialization strategy, in investor eyes, is the key element that defines if a company is investible, which is whether they have traction,” said Mr. Hoey. “It is not automatic that you’re investible when you complete Springboard, or any accelerator for that matter.”
It’s essential to execute on the business model. Springboard helps entrepreneurs think through all the elements of the business model including how to go to market and how to develop the company further. “Springboard companies are working through their investor pitch deck through all this,” said Mr. Hoey. “The investor pitch deck should be strong, but in the end you also have to show that you’ve executed on that model that you’ve outlined.” Some companies are investor-ready at the end of Springboard, while others need to grow their business or execute on that business model. Companies typically receive funding anywhere from 3 to 18 months after they complete the program.
While Springboard does not introduce entrepreneurs to investors, CONNECT has a new, highly competitive program, called CapitalMatch that addresses this stage. The program accepts applications multiple times throughout the year. There is a life sciences track and a technology track. Any company in San Diego can apply. “A select number of applicants will be invited to pitch to a small panel of investors who will determine whether they are investor-ready,” said Mr. Hoey. “Introductions to investors are made for the investor-ready companies.” A number of Springboard companies apply to CapitalMatch separately. “We’ve separated the access to capital from the mentoring program,” said Mr. Hoey. “We want the companies to be focusing on developing the right value proposition, team, and model to commercialize the technology.”
CONNECT Springboard has shepherded a number of successful companies including Events.com, ecoATM, Freedom Meditech, and Benchmark Revenue Management, which merged with Avadyne Health. Since 2005, alumni companies have raised almost $1.5 billion and created 5,000 new jobs. In 2015, Springboard alumni companies had their most successful year raising funding to grow their businesses, securing almost $200 million combined.
If you are moving toward commercialization, and need help refining your commercialization strategy for subsequent fundraising, then CONNECT’s Springboard program may be a good fit. Visit the CONNECT website http://www.connect.org/ to learn more about the programs and download the Springboard application.