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.

ABOUT THE FIRM

___ 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.

ABOUT THE TEAM

___ 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).

ABOUT THE DEAL

___ 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.

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.

Frank Ballantine at Dykema
Online Bio: https://www.dykema.com/professionals-frank_ballantine.html 
Contact: 312-627-2509 or fballantine @dykema.com
Firm Size: 450 lawyers nationally ($$$ , but startup discounts) broad scope and depth of skills for all business needs
Clients: Confidential, but over 50 times outside general counsel, countless equity and debt transactions, 100+ M&A deals
Expertise: Strategic and legal counsel, entity formation and governance, IP protection and licensing, equity and debt financing, incentive compensation, M&A and joint ventures
Industries: AI, Fin Tech, Saas, mobile, software, digital security, tech services and development, healthcare and medical innovation, specialty materials, advanced manufacturing
Involvement: Advisory board of two venture funds; have invested personally  in 24 startups, venture funds and PE funds; served/serving ex officio on 26 client Boards of Directors, founding sponsor Hyde Park Angels, finals judge Booth Business School New Venture Challenge and Harvard Business School Regional  Business Plan Competition,  speak regularly on emerging growth corporate finance at Chicago business schools

Craig Bradley at Much Shelist
Online Bio:  http://www.muchshelist.com/attorney/craig-c-bradley
Contact:  312-521-2780 or cbradley@muchshelist.com
Firm Size: 85 attorneys ($$$).  Wide range of talent for all needs.
Clients:  Hireology, UrbanBound, UICO, Mediafly, Vertex, FourKites, Goby, Regenerative Medical Solutions, RedWave Energy.  100+ deals since 1993.
Expertise:  formation, fund raising, distribution, partnering, licensing, IP, M&A, compensation.  Highly rated by Chambers.
Industries:  technology, software, internet, communications, life sciences, health care, energy, materialsInvolvement: director at ITA, faculty at Kellogg, founder Wildcat Angels, steering committee for TEDxMidwest, 1871 mentor and speaker 

Matthew Brown at Katten Muchin Rosenman (or his partner Jeffrey Patt)
Online Bio:  http://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
Online Bio:  http://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

Leslee Cohen at Hershman Cohen
Online Bio:  http://hershco.com/hershman-lesleecohen.html
Contact:  312-445-9628 or lcohen @hershco.com
Firm Size: 2 attorneys ($$).  Partners with other small firms on an as-needed basis.
Clients:  CompassMD, Cognitive Advisors, Mobile Doorman, Trusted Mobile, Realync, Resident Gifts, StockTrendSpotter, BeyondTags.
Expertise:  formation, fund raising, distribution, partnering, licensing, M&A, compensation.  Super Lawyers Top 50 Women Lawyers and Top 100 Lawyers in Illinois 2012-present.
Industries: real estate, technology, retail, health care, education
Involvement: She has been named a Top 10 Lawyers in the State of Illinois by Super Lawyers. Co-founder of SBACConnects, mentor at WiSTEM, Elmspring, Bunker, Start-up Instititute, 1871 speaker, co-founder Coalition of Women’s Initiatives in Law.  Outstanding Service to Entrepreneurs Award from the Herald Daily Business Ledger.

Jon Fieldman (Independent)
Online Bio:  http://fieldmanlawgroup.com
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
Online Bio:  http://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 Bio:  http://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 Bio:  http://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 Bio:  http://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 Bio:  http://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

Ben Kern at Winston & Strawn LLP
Online Bio:  http://www.winston.com/en/who-we-are/attorneys/kern-benjamin-d.html

Firm Size: 900 attorneys in the US, Europe and Asia ($$$$, but flexible for startups)
Contact: 312-558-3747 or bkern@winston.com
Clients: Fruition Partners (sold to CSC); Base (FutureSimple); SIM Partners; Amstatz; Momentum Dynamics; Synapse Games; Liquidus; also represents venture capital investors and large strategic buyers and investors.
Expertise: venture capital, M&A, joint ventures, strategy investing and acquisition, technology transactions
Industries: software, SaaS, technology services, devices and medical devices, wireless, life sciences, gaming, new technologies

Bart Loethen at Tucker Ellis LLP
Online Bio:  https://www.tuckerellis.com/people/bartly-loethen
Contact: bartly.loethen@ tuckerellis.com
Firm Size: Founded in 2003, Tucker Ellis LLP has strategically grown to more than 215 lawyers serving clients nationwide from seven locations ($$$).
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: board SmartBet

Galen Mason  at Michael Best
Online Bio: https://www.michaelbest.com/People/Galen-Mason
Contact: 312-596-5814 gmason @michaelbest.com
Firm Size: 300 attorneys in 13 offices ($$$, but flexible for startups including deferred and discounted fees).  Wide range of talent for all needs.  Very founder focused.
Clients:  Lumere, Tillable, Reconstruct, Serra Ventures, Network Ventures, Woodlawn Partners
Expertise:  formation, venture fund raising, M&A, outsourcing, regulatory, IP, litigation, strategy. Runs a Series A venture capital index fund focused on the Midwest, Service Provider Capital.
Industries: software, hardware, consumer goods, manufacturing, technology, social media, private equity.
Involvement: co-founder of Catapult Chicago, co-founder of Service Provider Capital

Ken Obel at goodcounsel
Online Bio:  http://www.mygoodcounsel.com/bio/
Contact: email contact@mygoodcounsel.com or using contact form on site is best.
Firm Size: 3 attorneys and paralegal ($$).  Partners with other lawyers for other full-service needs (e.g., patent prosecution).  Often fixed-fee projects instead of hourly rate based.  Also offers subscription-based Counsel-as-a-Service packages.
Clients:  ItemMaster, Neighborhoods.com, Pictarine, SingleHop, SkinIO, Upfront Health Services
Expertise: Entity formation and structuring, co-founder matters, debt/equity financing rounds, incentive compensation, commercial agreements. Also offers internal legal process automation to streamline client operations and reduce contract cycle times. Was the co-founder of a local startup (Fox & Obel Food Market) and served for 10 years thereafter as general counsel for early-stage companies (HighBeam Research, Viewpoints Network), so has firsthand legal and business experience in startups. An avid cyclist, Ken is willing to hold an introductory meeting on a ride with you. Two recommendations from other lawyers on this list.
Industries: SaaS platforms, information technology, EdTech, consumer, healthcare
Involvement: Class mentoring at Northwestern/Kellogg. LawMeets judge at Northwestern University Law School

Michael Rosenthal at Polsinelli Shughart
Online Bio:  http://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 Bio:  http://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).

Anthony J. Zeoli at Freeborn & Peters LLP
Online Bio: http://www.freeborn.com/attorney/anthony-j-zeoli

Contact:  312-360-6798 (Phone); azeoli@ freeborn.com (email)
Firm Size: 125 attorneys ($$$).  Full service law firm, with expertise for all needs.
Clients:  Range from entrepreneurs and small, privately held, businesses to multi-million dollar entities. 
Expertise:  Specializes in the areas of real estate, commercial lending, private equity, securities/private placements, M&A, crowdfunding, peer-to-peer (P2P) lending, Regulation A+ offerings, and general corporate law. Industry-recognized crowdfunding, Regulation A+ and JOBS Act expert and author of the Illinois Intrastate Crowdfunding Exemption (House Bill 3420).
Industries:  Real estate, crowdfunding/P2P lending, technology, commercial finance and general start-up.

Involvement: Board member and Secretary of the CfPA (Crowdfunding Professional Association) and an active member of CFIRA (Crowdfund Intermediary Regulatory Advocates); Board member of the New York Distance Learning Association (NYDLA); Mentor and a student advisor at the University of Illinois at Chicago.

Bruce Zivian at Barnes & Thornberg
Online Bio: https://www.btlaw.com/en/people/bruce-zivian
Contact: 312-214-5601 or bzivian @btlaw.com
Firm Size: 600 attorneys in 18 offices in U.S. ($$$$, 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


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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.

Market Research for Startups from Red Rocket Ventures

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.

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.

HAVE EXPERIENCE WORKING WITH STARTUP ACCOUNTS & BUDGETS

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

TYPICALLY WORK WITH BIGGER ACCOUNTS & BUDGETS, BUT DO LARGER STARTUP PROJECTS

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