... by Matt Noah We help people build and enhance their network of contacts in the "com and .com" world.
... by Matt Noah Published
Monday, September 25, 2000
Eric Wieffering / Star Tribune
SANTA CLARA, CALIF.
Sixteen slides, 15 minutes, $10 million.
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| Toby Velte practices his speech. |
Practicing his sales pitch in a Silicon Valley hotel room Wednesday night, Toby Velte considered those the most important numbers for him. In slightly more than 12 hours he would stand in a room full of people he's never met and try to persuade some of the world's best-known investment firms to financially back his company.
FireSummit, based in St. Paul, is developing software that analyzes and manages computer network traffic. It's also one of the 50 companies that have trekked to Silicon Valley for the first National Entrepreneurs Conference. Twenty-six of the companies are from Minnesota.
The conference is the brainchild of Matt Noah, a former engineer who quit his job with ADC Telecommunications in Minnetonka to start NetSuds, a networking forum for the Twin Cities' young, busy technology crowd. Coincidentally, the Minnesota contingent left for Silicon Valley Wednesday, the same day that 1,200 business, civic and academic leaders gathered in St. Paul to ask why Minnesota wasn't creating enough fast-growing technology companies.
One school of thought is that Minnesotans simply aren't generating enough good ideas. Another is that Minnesota investors are too tentative about putting money into Internet technology companies.
But the Minnesota delegation that boarded Sun Country flight 791 to San Francisco doesn't see much symbolism in their pilgrimage. Most had already raised money from Minnesota investors to start their ventures; now they must raise a lot more to keep them going. For entrepreneurs, money is like air, and Silicon Valley is like a giant oxygen tent.
On the bus ride from the airport to the hotel in Santa Clara, the entrepreneurs all but ignored the backdrop of the shimmering blue ocean on one side and rolling foothills on the other. Instead, the landmarks they excitedly pointed out are the gleaming corporate headquarters of Oracle, Excite@Home and Verifone. Perhaps the investors who'd made those companies fixtures of the New Economy would do the same for their fledgling firms.
The opportunity to gain access to Silicon Valley investors was compelling enough for most of the companies to pay $5,000 to attend the conference. Lodging and airfare added another $1,000 per person, and most sent at least two representatives.
A pitcher warms up
Toby Velte's first run through of his PowerPoint presentation doesn't go well. In his hotel room, using only a laptop, his delivery is monotonous and slow. With two slides remaining he's already over the 15-minute limit.
Chris Chilton, FireSummit's vice president of marketing, took notes during Velte's reading and offers some gentle suggestions. Punch up this section. Emphasize that accomplishment. Pare down.
Velte grabs the sheaf of papers from Chilton. "What other notes did you put in here? 'Toby's an idiot? Toby can't talk?'"
Chilton laughs. "You did fine."
Nobody uses the term "whip smart" anymore, but Velte might make a good case for its reinstatement. The 32-year-old St. Paul resident may not look the part, but he is a geek twice over. Velte has a Ph.D. in computational neuroscience, the study of how nervous systems work. Last year a paper he co-authored appeared in the Journal of Neurophysiology just a few months before the publication of a book he co-authored "Cisco: A Beginner's Guide.".
Velte, who began programming computers at age 11, wants to make the most of his intellectual gifts.
"In academic research, differences are measured in decades and a contribution is measured in lifetimes," Velte said.
With FireSummit, he hopes to make a big difference, quickly, by using biological principals to develop "thinking" computer networks. FireSummit's software, which will be released next month, allows companies to set priorities for the voice, data and images streaming across its networks, and creates a system that is self-monitoring and self-correcting.
In theory, this will help companies save money by making better use of the bandwidth they have rather than simply adding network capacity. But the concept of a thinking network still is difficult for many executives to grasp.
"We're so far out there, so new, that companies don't know they need us yet," Velte said.
But FireSummit has one big thing in its favor, at least when it comes to raising money: Network infrastructure is red hot. Velte raised $2 million from individuals in the Twin Cities and elsewhere, enough to hire 35 engineers and executives to develop a beta version of FireSummit's software. Two weeks ago Velte raised another $1 million from an Arizona investor and signed a letter of intent to merge with a network service company in Eden Prairie. The deal would mean distribution for FireSummit's program, and Velte would be CEO of the combined company.
All that activity has left Velte with little time to rehearse the presentation that Chilton put together. Though it will be the first time he's pitched directly to big name venture capitalists, Velte says he's not nervous. "I know what they're going to ask before they do," he said. But just to be sure, he spends about four hours honing the message.
Game time
The conference formally kicks off at 7 a.m. Thursday. At 8:30, executives from 16 of the companies line up to make minute-long "elevator" pitches about their company.
They play to a room mostly of other start-up entrepreneurs; the venture capitalists apparently have decided that the 15-minute presentations and panel discussions are more worth their time.
Velte feels the same way. FireSummit was the first company to sign up for Noah's trip, and it got the first speaking slot on Thursday. Velte won't make his minute pitch until the following morning, and he plans to return to the Twin Cities right after it, about 4 hours before the conference officially ends.
Noah has managed to snag general partners from some of the best-known venture capitalist firms in the region to sit on panels and listen to the presentations. The panelists in Velte's room, for example, are general partners at New Enterprise Associates, which just raised $2 billion to invest, and Patricof & Co., which just closed on a $1 billion fund, half of which it wants to invest in technology companies.
"The money is burning a hole in my pocket, so I'm looking to put it to work," said general partner Michael Duran. It is music to the entrepreneurs' ears.
Velte's low-key presentation goes smoothly. He has incorporated many of Chilton's suggestions, and managed to leave enough time for questions. The panelists appear to be taking extensive notes while he speaks. No questions follow, but Richard Grogan-Crane, a general partner with Crescendo Ventures, tells Velte "this is a real hot space, something we're definitely interested in."
The companies that follow FireSummit don't generate much reaction from the panelists, and some of the venture capitalists serving on the two panels leave the conference at 10:30, during the first break.
Asim Beg, CEO of Seleriti Corp., a Minneapolis company that helps other firms present bills and receive payments online, is scheduled to present later Thursday. He's looking to raise about $2 million, but he's not optimistic because that's less than most of the venture capitalists are willing to commit. He's also a little disappointed that there are fewer venture capitalists in the audience and roaming the corridors than he had hoped. Most also appear to be associates, rather than partners.
"I'd be very happy if somebody gets funded because it could have a symbiotic effect," Beg said, as word got around the Silicon Valley network that Minnesota had some hot technology prospects.
Velte doesn't expect to leave Santa Clara with a $10 million commitment. But he figures it's worth the chance to practice his pitch. "The best we'll probably be able to do is pique their interest, let them know we're here," he said.
It appears he's done just that. Three venture capitalists give Velte their cards and promise to follow up with phone calls. As he makes his way into the hallway, he's collared by Gokul Hemmady, who runs ADC Telecommunications's venture fund.
Velte met with some ADC representatives shortly after starting FireSummit, but there were some concerns about how the company might compete with other ADC investments. Those concerns no longer exist, Hemmady tells Velte, and he'd like to meet again.
Velte seizes the opportunity. "If we're going to do something, we need to do it fast," he says.
Hemmady nods, and they agree to try to meet today.
The irony of having to travel 1,500 miles to set up a meeting in Minnetonka is not lost on Velte. "But if it works out," he said, "it will have been worth it."
Eric Wieffering can be contacted at ewieffering@startribune.com
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