How raising capital in the Midwest differs from the coasts
Christina Hernandez Sherwood, eMed Editor, MedCity News
“Raising capital in the Midwest is a lot different than raising on the coasts," said Kurt Brenkus, CEO of Wisconsin-based Aver Informatics, which provides web-based collaborative data exploration software to the healthcare marketplace. "We had to hit the streets making the rounds with angel investors." In one early funding round, the company juggled 14 individual angel investors.
Aver found it helpful to identify a coordinator for the investors, Brenkus said, someone who had stature in the local angel community. After pitching to all the major angel groups in the state, a few put terms on the table. The coordinator gave deadlines, and aligned the different groups around one set of terms. "He would help communicate the needs of the company back to the investors," Brenkus said.
Here are some other entrepreneurial insights from Brenkus:
Learn to run a company on limited funds -- "There's always that chicken and egg problem when you first start a company," Brenkus said. You have to work feverishly to get a proof of concept, he said, and also to prove there's a market willing to buy what you're selling. "If there's any lesson learned, it's figuring out how can you rapidly iterate," Brenkus said, "and get out a working version of the software to potential buying customers." Once you prove there's a market for your product, he added, it's time to move onto the next round of funding.
Get into an incubator -- When the company was about three years old, Aver joined Startup Health, which was counterintuitive to board members who didn't understand the need when the company already had significant customers, Brenkus said. "My network as an individual could never be big enough," he said. "My investors' network could never be big enough. These incubators, their job is to cultivate potential investors." There are people in the healthcare market segment who want to see innovation thrive. "Being introduced into this community has opened so many incredible doors," Brenkus said.
Consider small, but highly effective, teams -- Brenkus won't hire until it hurts. "I have a very strict personal philosophy around this," he said. "I believe in very small, highly-effective teams." This means that the close-knit team of 10 at Aver has biweekly planning sessions, Brenkus said, and that he understands exactly what everyone is working on at all times. "By aligning your entire team by exactly what they're doing on a daily basis," he said, "you can get a ton done."
[Top photo by StockMonkeys.com]
[Bottom photo of Kurt Brekus and Matt Frohlinger]