Posted: October 23, 2005
By: Arundhati Parmar - The Journal Gazette

Nothing Ventured...
Competitions inspiring local venture capitalists

The $10,000 sure came in handy.

A local entrepreneur, Scott Hartford, and his partner used that money won in a regional business plan competition last November to open an office at the Northeast Indiana Innovation Center and buy software, among other items.

Hartford, co-founder of Zieben Engineering Systems, believes that participating in the competition was invaluable. His company took third place out of about 30 teams to win the $10,000.

“It was a real boost to the ego of the company and to our confidence,” Hartford said.

The “Opportunity for Indiana Business Plan Competition” – held at Indiana University-Purdue University Fort Wayne on Nov. 22, 2004, where Hartford scored $10,000 – was one of the first venture competitions in the area. Just in the past month, at least two more venture competitions have been announced – one in Fort Wayne and the other in Indianapolis – to highlight innovative companies and expose them to venture capitalists looking to invest in the next killer application.

With that aim, Fort Wayne-based FourthWave LLC brought together 28 area investors to create an early-stage technology investment fund called adVenture Fund that will provide startup capital to area entrepreneurs to develop and bring their technological innovations to market.

In September, adVenture Fund announced a venture competition with a cash prize of $5,000. Area entrepreneurs have submitted 10 proposals,and the winner is expected to be announced in November.

“Indiana is a very much ‘show me’ kind of state,” said Donald Willis, chairman of Fourth Wave LLC, who has invested $200,000 in the adVenture Fund. “This competition will show that (FourthWave) is not the only one that can have good ideas. We want to create a forward-moving economic development sense in the community.”

The adVenture Fund has raised $850,000 and provided venture money worth $125,000 in total with two area companies: Gentec, a Fort Wayne-based manufacturer of professional ranges and ovens for the high-end residential market; and Schwartz Biomedical, which is dedicated to the orthopedics market.

Karen Goldner, director of special projects with the adVenture Fund, believes the competition serves a dual purpose.

“We are doing this to highlight the innovative technology that comes out of this region,” Goldner said. “(But) another thing that it achieves is that it keeps our name in front of entrepreneurs. It is a marketing strategy.”

Giving innovative companies a chance to shine at venture competitions is common.

How you do it is what distinguishes you, said Bruce Kidd, who admits he has organized and participated in many run-of-the-mill venture conferences in the past.

“Most venture conferences are just beauty pageants where five, 10, 20 companies come and make a 15-minute presentation to venture capitalists, and this is an opportunity for (them) to see what’s out there,” said Kidd, the former vice president of Indiana Venture Center Inc.

He was scheduled to leave the Indiana Venture Center on Friday to take a new position as director of entrepreneurship at the Indiana Economic Development Corp.

In late September, Indiana Venture Center, a non-profit based in Indianapolis, and the Venture Club of Indiana hosted the Venture Idol contest in Indianapolis. Framed loosely on the “American Idol” competition, it brought together about 200 investors nationwide and armed them with wireless voting machines. The idea was to make it fun and interactive.

“There was a lightning round – a 60-second elevator pitch; it was like a get my attention in pretty much the time you would spend with someone in an elevator,” Kidd explained. “We made the stage look like an elevator, and the audience voted on the top 10.”

After the audience voted, the top 10 vote-getters came back and used up to five PowerPoint slides to explain their idea.

“They were saying, ‘Here’s my idea, and here’s the pain it’s going to solve in the marketplace.’ ” Kidd said.

Four winners took away the top honors, all in an atmosphere that was fun and interactive but at the same time provided investors a glimpse into new innovations from Indiana.

“It’s not that our deals were any better than any you would see elsewhere, but we managed to shake things up a bit,” he said. “There was even a panel of judges – the celebrity panel, if you will – that provided feedback to every single company.”

That feedback can be valuable to a startup because it can validate that his/her ideas have commercial potential.

For Hartford of Zieben Engineering, who participated in last year’s business plan competition at IPFW, the process of putting together a business plan proved crucial.

“It was an opportunity to have our business plan critiqued by members of the business community in Fort Wayne and the academic community at IPFW,” he said.

Zieben Engineering is a design and development company that works with medical-device makers and large suppliers to bring new products into the marketplace.

When Hartford and his partner put together the business plan, they focused on the growth of the orthopedics market in the past as well as its projections for future growth because of an aging population.

“We cited the success of medical-device manufacturers (which led us to) conceive of a service-oriented business focusing on design and development of new medical device technology,” Hartford recalled.

He added that the time of the business plan competition, Zieben Engineering already had a couple of clients and was generating revenue.

“That helped to validate parts of the business plan,” he said.

Hartford expects the business to continue to grow.

He hopes to hire a designer and a project coordinator in the next few months. In 2006, he and his family hope to relocate to Fort Wayne from Plymouth.

He added that Zieben Engineering is working with a client concerning a product used in cardiology and not simply focusing on the orthopedics market.

“We have lived up to the business plan by focusing on medical-device technology (broadly) rather than just the orthopedics market,” said Hartford, currently Zieben Engineering’s general manager and CEO.

Before the competition, Hartford and his partner invested their own funds and “sweat equity.”

But taking part in the venture competition exposed their company to the Northeast Indiana Innovation Center, a technology incubator in Fort Wayne.

Now a client of the Innovation Center, Hartford said Zieben Engineering is generating revenue and is able to support itself profitably.

“My gut feeling is that things would not have gone as well as they have (without participating in the venture competition),” Hartford said.