Tuesday, August 28, 2012

Lesson #119: How to Screen Venture Capitalists

Last year, I shared my definitive checklist for startup success, which included the things you needed to accomplish before approaching venture investors, to increase your odds they will be interested in funding your business. In this lesson, I am going to provide the inverse: a definitive list of things a venture investor should offer you, before taking money from them.

___ What is the firm's track record of success? Have them list their best performers.
___ Does the firm have a "brand name"? Some startups are perceived as being better investment/startup opportunities, if a big name firm is involved. This may help you attract other investors and business partners in the future. But, there are plenty of great lesser known investors.
___ How big is their current fund overall? And, more specifically, how much is still available for future investments. You want a firm with deep pockets, for this round, and the next.
___ Is this their first fund, or their fifth fund? The more funds they have raised over the years, the more successful their investments have been, attracting new capital over time.
___ What business contacts can the firm help make introductions for you? Their Rolodex is often more important than their capital, to help you more quickly open doors to business partners.

___ What is the specific Partner's track record of success? It is less about the firm, and more about the person you will be working with day-to-day.
___ Does the Partner have specific business experience, or only financial experience? It is always better to have the input of another successful entrepreneur who has actually been in the trenches.
___ Ask to speak to references from CEO's of their portfolio companies. Nobody will give you a better sense to the value provided and personality of the Partner, after the deal closes, than these CEOs.
___ Who from their firm will be sitting on your board of directors? Often times the senior Partner who does the deal, is not the more-junior person who will be filling their board seat.
___ What experience does the Partner have in your industry, as not all startups are created equal? Look for domain expertise in your industry and desired go-to-market strategies.
___ What is their personality and style? You will be spending the next five years with this team, make sure you can get along with them (in good times and in bad).

___ Are the investment terms, valuation and deal structure fair and in line with market levels? You can benchmark multiple VC offers against eachother, and research investment terms trends for a business of your size. Only work with firms that you feel are treating you fairly. A good startup lawyer can help here.

I have said this before: not all cash is the same shade of green. So, choose your investors wisely, to increase your odds of long term growth and business success.

For future posts, please follow me at: www.twitter.com/georgedeeb.

Monday, August 20, 2012

Chicago's Best Lawyers for Startups

Getting a good startup lawyer right from the beginning, can often be the difference between "off to the races" and "oops, why didn't we think of that before".  Picking a good lawyer often revolves around their expertise with startups, expertise in your industry, expertise for your specific project, bench strength of their firm, affordability, references and personality fit with your organization.  So, speak with several, to assess who is best for your business and liking, before making your decision.

There are several worthy lawyers in Chicago, with deep expertise in serving the startup community.  Below is a list of some of my favorites (in alphabetical order), having worked with them over the years.  You will be well-served by any of their counsel.

Craig Bradley at Edwards Wildman
Online Biohttp://www.edwardswildman.com/professionals/detail.aspx?attorney=1134
Contact:  312-201-2606 or cbradley @edwardswildman.com
Firm Size: 650 attorneys on three continents ($$$, but flexible for startups).  Wide range of talent for all needs.
Clients:  SA Ignite, Hireology, BitBend, Sweet Perk, UrbanBound, Regenerative Medical Solutions, RedWave Energy.  100 deals since 1993.
Expertise:  formation, fund raising, distribution, partnering, licensing, compensation.  Highly rated by Chambers.  One recommendation from another lawyer on this list.
Industries:  technology, software, internet, life sciences, energy, materials
Involvement: director at ITA, faculty at Kellogg, founder Wildcat Angels, sponsor VentureShot, steering committee for TEDxMidwest 

Matthew Brown at Katten Muchin Rosenman (or his partner Jeffrey Patt)
Online Biohttp://www.kattenlaw.com/matthew-brown/
Contact:  312-902-5207 or matthew.brown @kattenlaw.com
Firm Size: 650 attorneys on three continents ($$$$, but flexible for startups).  Wide range of talent for all needs.
Clients:  BCV Evolve, eSpark Learning, LiveOne, Eved, Bloom Nation, Vaporstream, iKonverse
Expertise:  formation, fund raising, transactions, compensation, M&A, governance, strategy, IP.  Two recommendations from other lawyers on this list.
Industries:  technology, software, healthcare, financial services, entertainment
Involvement: director at Chicagoland Entrepreneurial Center, sponsor Booth Seed Con, sponsor New Venture Challenge, sponsor Clean Energy Challenge

Chris Cain at Foley & Lardner (or his partner Galen Mason)
Online Biohttp://www.foley.com/christopher-c-cain/
Contact: 312-832-4553 or ccain@ foley.com
Firm Size: 900 attorneys in 21 offices in three continents ($$$$, but flexible for startups including deferred or discounted fees).  Wide range of talent for all needs.
Clients:  StyleSeek, VLinks Media, Bid Med, Procured Health, Shiftgig, Tap.Me, Tech.li
Expertise:  formation, fund raising, M&A, outsourcing, IP, litigation, strategy.  Former general counsel at Sonic Foundry and CPA from Arthur Andersen.
Industries: software, hardware, technology, social media, private equity.
Involvement: co-founder and host of Catapult Chicago

Jon Fieldman (Independent)
Online Biohttp://www.fieldmanlawgroup.com/about.html
Contact: 312-961-3844 or fieldman @fieldmanlawgroup.com
Firm Size: sole practice ($$).  Partners with other lawyers on an as-needed basis.
Clients:  Policy of non-disclosure.  But, many venture-backed startups.
Expertise:  Formation, fund raising, employment, litigation, IP, contracts, strategy.  A former partner with Sidley & Austin and a former CIO/COO (with deep business experience).
Industries: technology, finance, manufacturing, distribution, transportation, retail, food & beverage
Involvement: past-chairman of Lumity, member Friends of Blaine, producer of Transformational Leadership events

Scott Glickson at McGuire Woods (or his partner Ben Kern)
Online Biohttp://www.mcguirewoods.com/lawyers/index/scott_l_glickson.asp
Contact: 312-321-7652 or sglickson @mcguirewoods.com
Firm Size: 950 attorneys in 19 cities in U.S. & Europe ($$$$, but flexible for startups).  120 in Chicago and 30 in tech practice.  Wide range of talent for all needs. 
Clients:  Sagence, Give Forward, ContextMedia, Code Academy, Akoo, Northstar, Future Simple, Fango (sold to GrubHub), FeeFighters (sold to Groupon).  Worked for me at iExplore.
Expertise: formation, fund raising, licensing, outsourcing, IP, team building, partnerships, disputes.  Two recommendations from other lawyers on this list.
Industries: information technology, clean tech, healthcare, private equity
Involvement: director emeritus ITA (20 years), director i.c. Stars

Michael Gray at Neal, Gerber & Eisenberg
Online Biohttp://www.ngelaw.com/mgray/
Contact: 312-269-8086 or mgray @ngelaw.com
Firm Size: 175 attorneys ($$$$, but flexible for startups).  Wide range of talent for all needs.
Clients:  Built in Chicago, FireStarter Fund and others that are confidential.
Expertise:  formation, fund raising, M&A, IP, agreements, employment, compensation, taxation, estate planning, strategy.  Former VC, understands both sides.  Highly rated by Chambers.  Six recommendations from other lawyers on this list.
Industries: information technology
Involvement: member IVCA, member ITA, speaker 1871, speaker Booth School

Darren Green (Independent)
Online Biohttp://www.fizzlaw.com/lawyers/darren-green
Contact: 847-205-0977 or dgreen @dgattorney.com
Firm Size: Sole practice ($$). 
Clients:  Total Attorneys, Local Offer Network, Inventables, Ad Gooroo, mFoundry, Body Shop Bids, Belly, Lightswitch, Code Academy, BankVue, Luxemi, Moving Station, Psylotech, Revenew
Expertise:  formation, fund raising, IP, M&A, JVs, agreements, compensation, employment, T&Cs, strategy.  One recommendation from another lawyer on this list.
Industries:  information technology 
Involvement: professor Northwestern Law School (teaching venture capital), partner Old Willow Partners (buy-out fund), writer Chicago Tribune

Greg Grove at Much Shelist
Online Biohttp://www.muchshelist.com/attorney/gregory-d-grove
Contact: ggrove @muchshelist.com
Firm Size: 85 attorneys ($$$).  Wide range of talent for all needs.
Clients:  Voxsup, Engage-a-Pro, Noblivity, Conceivex, Pegasus Biosolutions, Blossom Coffee, Guardian Angel, Lemnos Labs
Expertise:  formation, fund raising, M&A, IP.  Silicon Valley based lawyer for 11 years. Former electrical engineer (MIT).
Industries: software, internet, communications, technology, electrical devices, healthcare tech
Involvement: sponsor and host of Founder Institute Chicago, speaker and free hours at 1871 

Jim Jerue at Horwood Marcus & Berk
Online Biohttp://www.hmblaw.com/professionals-directory/james-l-jerue.aspx
Contact: 312-606-3202 or jjerue @hmblaw.com
Firm Size:  52 attorneys in Chicago ($$$).  Wide range of talent for most needs.
Clients:  eSpark Learning, KLUTCHclub, Smarteys, Vibes Media, HireBrite
Expertise:  formation, fund raising, M&A, partnerships, employment, contracts, taxation, estate planning. Two recommendations from other lawyers on this list.
Industries:  technology, healthcare
Involvement: mentor Excelerate Labs and Chicago Booth Accelerator, sponsor and investor Hyde Park Angels, co-chair private equity subcommittee at Chicago Bar Association

Bart Loethen at Synergy Law Group
Online Biohttp://www.synergylawgroup.com/Synergy_Law_Group/bartly_loethen.html
Contact: bart@ synergylawgroup.com
Firm Size: 10 attorneys, almost entirely startup focused ($$$).  Been referred to as the "Most Progressive West Coast Style Firm in Chicago".
Clients: policy of non-disclosure, but has a great list (e.g., Bart has done my legal work for Red Rocket and MediaRecall).
Expertise: formation, fund raising, taxation, litigation, M&A, IP, licensing.  Two recommendations from other lawyers on this list.
Industries: technology, high growth, healthcare, software
Involvement: sponsor Excelerate Labs, sponsor Impact Engine, board SmartBet

Ken Obel (Independent)
Online Biohttp://www.mygoodcounsel.com/bio/
Contact: 312-380-9406 or ken @mygoodcounsel.com
Firm Size: sole practice ($$).  Partners with other lawyers for other full-service needs.  Often fixed-fee projects instead of hourly rate based.
Clients:  Kove, First Stop Health, CityScan, RightAtSchool, Zaplee
Expertise: formation, fund raising, compensation, agreements, negotiation, licensing.  Served for 10 years as an in-house general counsel for startups (so first hand experience as a startup). An avid road cyclist willing to work while biking!  Two recommendations from other lawyers on this list.
Industries: information technology, consumer
Involvement: free startup legal clinics at Entrepreneur @NU, Entrepreneurs Unplugged and Evanston Technology Innovation Center

Michael Rosenthal at Polsinelli Shughart
Online Biohttp://www.polsinelli.com/professionals/mrosenthal
Firm Size: 600 attorneys nationwide ($$$$, but flexible for startups).  40 lawyers in tech practice, many with computer science and engineering degrees.
Contact: 312-463-6318 or mrosenthal@ polsinelli.com
Clients: C-Sam, ViMedicus, Advanced Molecular plus many venture firms (e.g., Adams Street, River Cities, Amiti, Psilos).
Expertise: formation, fund raising, strategy, partnerships, IP, compensation, M&A, JV's, litigation, data privacy, a bridge to capital/strategic partners globally.  Highly rated by Chambers.  Three recommendations from other lawyers on this list.
Industries: information technology, healthcare, medical
Involvement: member IVCA and ACG, sponsor of Chicago chapter of Startup Leadership Program, sponsor Illinois Business and Investor Forum and Chicago New Media Summit

Spencer Wood at Polsinelli Shughart (or his partner Teddy Scott)
Online Biohttp://www.polsinelli.com/swood/
Contact: 312-873-3677 or swood@ polsinelli.com
Firm Size: 600 attorneys nationwide ($$$$, but flexible for startups).  40 lawyers in tech practice, many with computer science and engineering degrees.
Clients:  policy of non-disclosure.
Expertise:  formation, fund raising, M&A, IP, tech development
Industries: technology, software, internet, medical, financial, digital media, life sciences, clean tech, energy.
Involvement: lecturer at Tribeca Flashpoint Academy, mentor at PROPEL and Chicago Innovation Mentors, hosts Venture Capital Group meetings of Business Network Chicago (BNC).

Bruce Zivian at Perkins Coie
Online Bio: http://www.perkinscoie.com/bzivian/
Contact: 312-324-8433 or bzivian @perkinscoie.com
Firm Size: 850 attorneys in 19 offices in U.S. and Asia ($$$$, but flexible for startups).  Wide range of talent for all needs.
Clients:  policy of non-disclosure.
Expertise:  Formation, fund raising, JV's, distribution, compensation, licensing, IP.  Three recommendations from other lawyers on this list.
Industries: biotech, medical products and devices, web based services, software
Involvement: director Urban Students Empowered

If you think I am missing anybody, or think you should be included in this discussion, feel free to add your thoughts in the comments field below.

For future posts, please follow me at:  www.twitter.com/georgedeeb.com


Wednesday, August 15, 2012

Lesson #118: Market Research for Startups

Early this year, I had the pleasure of mentoring the 2012 class of entrepreneurs at Founder Institute Chicago. Here is the presentation I delivered on "Market Research for Startups". The lesson provides high level guidance on: (i) what types of markets to pursue; (ii) how to find data on your market; (iii) how to define your competitors; (iv) how to cost-effectively do market research; and (v) how to determine if you can win, or if you should walk away. This lesson helps entrepreneurs with learning how to do the necessary market research upfront, before wasting a ton of money on a bad idea. 

Here is a link to the matching video for the audio part of the presentation: http://redrocketvc.blogspot.com/2012/06/video-george-deeb-teaches-market.html.

I figured it was easier and more useful to simply share this presentation and matching video file, than to try to recreate it into a standalone textual post.  Happy reading.

For future posts, please follow me:  www.twitter.com/georgedeeb.

Tuesday, August 7, 2012

Chicago's Top Web & Mobile Design, Development & Marketing Agencies

I am often asked who are some of the better web and mobile design, development and marketing agencies in Chicago, to assist with your startup's digital technology or marketing needs.  Below is a list I have built over time of some firms to consider, including some of the key services offered, as promoted on their websites. 

You will notice some of these firms are one-stop-shops for all of your needs, and others are specialists for specific needs (e.g., mobile experts, ecommerce experts).   There are plusses and minuses of either direction, so do your homework here, based on your needs.  I also split the list between "startup friendly" and those that "typically work with bigger budgets", so most of you will focus on the the former.  It is also important to note, that on rare occasion, some of these firms may consider trading a portion of the cost of the project, in exchange for equity in your business, if you want to explore that option with them to reduce your cash costs.  And, before engaging any of these firms, be sure to check out their past work and speak to their past clients as references.

www.weareakta.com UX/UI design for web and mobile
www.colorjar.com  web stategy, design, development, consulting
www.digitalintent.com  startup strategy and development
www.doejo.com  branding, product, mobile, ecommerce, design, packaging, social, video
www.8thlight.com  design, development, UX
www.4tegroup.com  IT staffing and development
www.fueled.com  design and develop mobile apps, web, video
www.gammapartners.com  web design/develop, mobile, search, social
www.heymann.com web design, SEO, social, CMS, integrated marketing, consulting
www.logicalmediagroup.com search, display, analytics, social, email, video, mobile, web dev, ecommerce, affiliate
www.lyonscg.com  ecommerce design and development
www.killswitchcollective.com  web design/develop, branding, print creative, multimedia, broadcast
www.orainteractive.com  design and development for web and mobile
www.pathf.com web/mobile product design, development, execution, marketing
www.plumtreegroup.net  web/mobile design, development, marketing, video, branding
www.sandstormdesign.com strategy, branding, web design/develop, copywriting, UX, SEO, social, analytics, research, testing
www.socialkaty.com  social media marketing, content creation/distribution
www.thoughtworks.com  web design/develop, consulting, testing
www.vokalinteractive.com  100% mobile strategy, design, develop, execution
www.wireflyinteractive.com  branding, web design, flash animation, online marketing
www.acquitygroup.com  strategy, execution, UX, tech
www.americaneagle.com web design/dev, hosting, consult, integration, search, multimedia, social, mobile
www.banddigital.com  tech development, strategy, creative, mobile, intelligence
www.fuor.com  digital marketing agency, display, search, social, mobile, content, email, analytics
www.gorillagroup.com  strategy, marketing, web design/ develop, managed services
www.ideo.com  design products, services, spaces, interactive
www.iprospect.com  search, local, display, ecommerce, global, social, mobile
www.launchwhatsnext.com  engage, promos, digital/video/mobile, shopper marketing/merchandising, trade marketing
www.magenic.com  development, apps, intelligence, UX, QA
www.manifestdigital.com  strategy, UX, creative
www.reachlocal.com  search, social, display, video
www.rightpointconsulting.com  strategy, UX, digital marketing, technology
www.riseinteractive.com  interactive marketing, SEO, PPC, email, social, display, affiliate
www.sapient.com   manage tech changes, strategy & development
www.sprinc.com  software design/dev, coach/consult, project management, IT staffing, process management, social
www.vibes.com  all mobile (platform, strategy, campaign mgmt, analytics, CRM, development)
The above excludes all the major marketing agencies in town (e.g., Starcom, DDB Digital, Ogilvy Online)
If you think I am missing any important firms here, please add them in the comments section below.
For future posts, please follow me at: www.twitter.com/georgedeeb