The hopeful item is news that Adams Capital is raising another fund.
The not-so-hopeful item is David Radin's report of a Tech Council presentation on how entrepreneurs get funding.
Patrick Stewart of Idea Foundry and Mike Morneault of Innovation Works, both publicly funded economic development agencies, are interested in creating jobs for the region. They judge investments, in part, by how many new jobs will be created. Kenn Moritz of Stonewood Capital Management and Sean Sebastian of Birchmere Ventures are venture capitalists who are more interested in the financial gains that they'll be able to bring to their partners or investors.
As if "create jobs for the region" and "financial returns for investors" are equally important or relevant to an entrepreneur. But they're not. The region desperately needs jobs, but start-up, entrepreneur-based companies rarely generate them. If a funding agency is looking to entrepreneurs to create jobs, the agency is wasting its money and entrepreneurs' time.
So, all is not lost for the entrepreneur with a good idea -- especially if that idea involves a technical factor that gives a competitive advantage. There is money to help you turn your idea into reality, move it into production and grow your company. But you have to look in the right place. According to Mr. Morneault, not everything is fundable.
Mr. Sebastian put it into perspective, by quoting the old adage about whether you should look at the horse (the company/product) or the jockey (the management team) before making investment decisions. He says before looking at either, he looks at the race -- to make sure that the market they want to enter holds enough opportunity.
This quote shows up at the very end of the column, and in the news business, this is called "burying the lede." The most important thing to come out of the presentation is the idea that the most brilliant technical innovation isn't the key; a rock-solid, experienced management isn't the key. Those things matter, but they don't matter unless the market wants the innovation. Got customers? Then you'll get funded.
Finally, there's an important thing that apparently didn't come out of the presentation, which is this:
For a lot of entrepreneurs, looking to venture capital (or even to Innovation Works or Idea Foundry) is simply looking in the wrong place. Since Spring Training has arrived, think of a baseball metaphor. Until you get to the public markets, venture funding and other institutional funding is the major leagues. Innovation Works is Double AA, or maybe (for some) Triple A. Many entrepreneurs with nothing but an idea are playing Single A -- or worse. If you need money to build a prototype, you're going to be riding a lot of late-night buses, carrying your own suitcase, and washing your own uniform. No VC is going to drive you around. Instead of looking to VC money, look realistically to how the minor leagues get funded. Build a record, find customers, and play your way to the top. Max out your credit cards. Leverage your house. Find a lawyer who can help put together "Friends and Family" money. Maybe, with some customers, you can get the ear of the Angel network.