Our spotlight this week falls on one of Utah’s emerging young CEOs, Brock Blake of FundingUniverse. FundingUniverse was created with a twofold objective of first helping entrepreneurs prepare their ideas so that they can be funded, then connecting the entrepreneurs to angel investors. We caught up with Brock to find out more about his company and how it is helping facilitate deal flow for angle investors and entrepreneurs.
Silicon Slopes: First off, congratulations on being named the “#2 Startup to Watch” by Utah Valley Business Q magazine; that has to feel good!
Brock Blake: Thanks. It’s great to have the company receive public recognition, especially when the team has worked so hard. It’s a nice “pat on the back” for what we’re doing.
Silicon Slopes: For those who aren’t familiar with FundingUniverse, can you describe what services you offer entrepreneurs and investors?
Brock Blake: Sure. Essentially, we bridge the gap between entrepreneurs and financing sources. In other words, if you are an entrepreneur looking for funding, we can both help you prepare for investment capital and introduce you to an appropriate source. Most people know us for our connections with angel investors, however, we can also connect you to a bank, lender, or partner if appropriate. When it comes down to it, we are becoming the one-stop-shop for everything small business funding.
Silicon Slopes: How much of this process is automated through your Web site and how much of it needs human facilitation?
Brock Blake:The majority of it is automated through the Web site. Entrepreneurs have the ability to create a profile, post a business plan and upload a VideoPitch for investors to see. On the flip side, investors will login to the Web site to find investment opportunities that meet their criteria. Over 300 business plans are viewed each week by our investor database and about 30 of the entrepreneurs are contacted each week.
In addition to the Web site, we host SpeedPitching events, LivePitch events, and do some high-end one-on-one consulting.
(Side note: you should check out the SpeedPitching video on our Web site—the events are definitely a crowd favorite!)
Silicon Slopes: How do you ensure that you don’t burn through goodwill with investors by sending them bad leads? Is it easy to spot a serious entrepreneur from a pretender?
Brock Blake:Great question. It’s fairly easy to identify the legitimate opportunities from the pretenders. In fact, when a business plan is posted to our Web site, it will go through our proprietary rating system. It’s surprising to know that only 5% of the business plans posted actually get the highest rating.
Our investors appreciate that we take the time to screen the investment opportunities on their behalf. When they login to the site, they’ll see the highest rated plans first. Also, we both screen and coach the presenters that come to our SpeedPitch event so that the investors are only seeing the highest quality deal flow.
We highly recommend that entrepreneurs prepare appropriately before approaching an investor. If you start pitching as a “half-baked” deal, it can really ruin your chances with the investment community.
Silicon Slopes: What are the biggest differences between the companies that ultimately get funded and those that don’t?
Brock Blake:This is the million dollar question! I could probably talk all day about the types of deals that get funded, but I’ll focus my attention on four areas:
- Management team: Investors are looking for individuals that they believe can build a successful company and provide them a 10x return (at least) in 3–5 years. So, if you are an entrepreneur trying to raise capital, it’s your job to convince the investors that you can make that happen. Obviously, previous experience is the best indicator of future success, however, investors will also look at other qualities that you bring to the table.
- Market opportunity: Investors are looking for businesses that are penetrating a large and growing market because the potential for growth is much higher. In other words, if you are raising money for a lifestyle business that will be serving the local community, it will probably be much more difficult to raise money than if you were penetrating a global market.
- Competitive advantage: As an entrepreneur, it’s important to think about the current and potential competition. Most investors will look to see that you have a unique advantage that will both attract customers and keep competitors from stealing market share (barrier to entry).
- Traction: Because early-stage investing is so risky, investors would like to see that you have removed as much risk as possible from your investment opportunity. You can reduce risk by various accomplishments and milestones that show that the “dog will eat the dog food” (or customers will buy your product/service.
Silicon Slopes: You took over in 2005 as CEO after being approached by the company founders. How did you catch their eye?
Brock Blake:Part of the opportunity came through my existing relationships. At the time, I knew Paul Allen (the brainchild behind FundingUniverse) and Jeff Jordan (one of the early partners) from a previous company that Jeff and I started. Beyond that, I think that it was experience in the Junto Partners program that solidified the opportunity for me.
Silicon Slopes: Tell us a little about the growth of your company and how your expansion goals are panning out.
Brock Blake:This is an exciting time to be at FundingUniverse. We are growing in several areas including product offerings and new market expansions. On the product side, we are anxiously building out the debt side of our business so that we can help more early-stage businesses obtain funding.
I’m also very excited about what’s happening in a few markets outside of Utah. We have recently opened up the Northwest and have been received very well. It’ll be fun to duplicate some of the success that we’ve had here in Utah in other markets.
Silicon Slopes: Utah is well known for providing an environment conducive to starting a business. Any additional ideas on what Utah can do to further promote entrepreneurship?
Brock Blake:Utah is a great state for entrepreneurship. The community has fostered an entrepreneur-friendly environment filled with resources and networks that promote innovation and new ideas. That being said, I still believe that we are under-capitalized here in the state. There are plenty of great businesses that are not funded simply because there is a lack of early-stage VC funds and active angel investors. The situation is improving; the [Utah] Fund of Funds has helped, and there have been several new angel groups established. We are also pleased to help facilitate that movement.