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8 Minutes for a Million-Dollar Pitch

Firms get presentation tips, then address 300 potential investors, at a forum this week in L.A.

May 23, 2005|David Colker | Times Staff Writer

Eight minutes could determine the fate of Rick Holman's start-up company, Industrial Origami.

That is all Holman will get to spark interest among more than 300 potential investors gathering this week in downtown Los Angeles for an annual forum sponsored by Larta Institute, a nonprofit group that connects technology start-ups with funding. But before Holman makes his pitch to a crowd of deep-pocketed venture capitalists at the Wilshire Grand hotel, he must convince a small group in a drab conference room that he -- and his metal-folding company -- are ready for the spotlight.

If Holman stumbles here, he may never get to join the nearly 125 other companies presenting their big ideas one after another in an "American Idol"-style pageant with millions of dollars at stake.

"I was standing there concentrating on the first words of my presentation: 'Hi, I'm Rich Holman, CEO of Industrial Origami. Thank you for coming today,' " Holman said. "I thought if I get those right, I'll find my rhythm and keep on going."

Since Larta was founded with a state grant in 1993, the organization has fostered about $1.5 billion in funding for start-ups, nearly half of which has come about because of presentations during its annual forums, Larta founder Rohit Shukla said.

Mindful of the lessons of the dot-com crash, Larta requires presenting companies to have something more than just a cool idea.

"They can be start-ups, but they have to have validation in the form of product development or a team that will attract the attention of investors," Shukla said.

"During the bubble years we used to take companies that had not much more than an idea scribbled on the back of an envelope because that's what investors expected."

Indeed, Larta helped find funding for what later became infamous failures. Most notably, online toy seller EToys attracted about $40 million after its 1999 presentation and then flamed out when the dot-com bubble burst.

The forum in 2000 took place April 16, one day after the New York Stock Exchange fell 600 points and Nasdaq dropped more than 350.

"A lot of the investors who came to that forum spent the day in the hallway on their cellphones," Shukla said.

At a dress rehearsal for this week's forum, Holman, who like other presenters has been through a Larta mentoring process to help shape his presentation, is being given a final chance to hone his spiel before a small group of volunteer investors and business executives.

There is an edge to the proceedings. If a presentation is judged to be beyond remedy in the days before the forum, companies can be bounced off the event schedule.

Holman, 50, has a deer-in-the-headlights look as Eli Eisenberg, chief executive of Straight Line Management of Agoura Hills, counts down the last five seconds before he is to begin.

Then Holman launches into his presentation at top speed, gesturing stiffly as he tells the story of his company that has developed a way to bend sheet metal -- commonly used in the manufacturing of computers as well as appliances and automobiles -- without compromising structural integrity as much as traditional bending methods do.

He rushes through his PowerPoint slides, using a laser pointer to highlight the financial progress of the San Francisco-based company.

The presentation is not exactly smooth, but it gives the observers a taste of what Holman's company has to offer.

Besides, Holman had them from, "This is my fifth company, and all the other four made money for investors."

"It's important that you emphasize that!" said investor Stevan Birnbaum after Holman finished in only six minutes. Birnbaum is a partner in venture capital firm Arcturus Capital in Los Angeles. "The people you are speaking to will hear that -- if you have made money for investors in the past, you are not just another presenter."

For Holman, who has raised $4.7 million for Industrial Origami and hopes to get an additional $2.5 million this year, it's a revelation.

"When you are running an early-stage company," he said later, "you are so focused on the company and its message that you don't realize what happened with other companies in the past is going to be so important."

The mentors in the room suggest changes in the order of Holman's PowerPoint slides, bringing up other points that should be emphasized and suggesting that some be dropped.

When Holman mentions during the discussion that he and his wife have personally invested $700,000 in the company, the group quickly suggests he include that in the pitch. "Basically it says, 'I've got my own skin in the game,' " Eisenberg said.

And they want technical details about the product to be minimized. "The people you're speaking to are investors, not engineers," said venture capitalist Alexander Suh of Pasadena-based California Technology Ventures.

It's clear, though, that they like Holman's overall message and his company's progress.

Holman paid about $400 to be in the forum -- money well spent, he said, even if he doesn't attract investment at the event.

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