Winners! - University of San Francisco Business Plan Competition (2008)

Now the results from the 2008 University of San Francisco International Business Plan Competition:

Grand Prize
Carnegie Mellon University - Dynamics
"Dynamics has invented a low-cost paper-thin, flexible computer. The platform technology is piloting as a security card solution. A proven credit card solution eliminates $22.5 billion of fraud annually by changing a portion of your credit card number both visually (via a display) and magnetically (via a programmable magnetic stripe)."

Second Place
Duke University - Cerene Biomedics
"We are developing an implantable medical device to prevent focal epileptic seizures by delivering targeted thermoelectric cooling to the brain. Brain cooling has been proven to eliminate seizure on-sets; however this has been technologically unfeasible to date. Our device could provide first-line therapy for ~230,000 US refractory epileptic patients."

Finalists
Stanford University - Endurance Rhythm
MIT - Project Einstein
University of Michigan - GIDEON

The University of San Francisco Team led by recent USF EMBA alum, Rob Lahaderne, and leveraging a Lawrence Livermore National Lab technology as part of a new USF-LLNL cooperative effort, gave an outstanding performance, coming in a close second in a highly competitive life science division and earning an Honorable Mention for the contest. Rob will compete again soon in the Draper Fisher Jurvetson Competition.

"New Form Medical Devices: USF
New-Form Medical Devices incorporates Shape Memory Plastics (SMP) to reduce blood trauma from hemodialysis. This business venture has been organized to design, evaluate, and launch medical devices that use SMP as designed and evaluated at Lawrence Livermore National Laboratory. These components will be targeted to hemodialysis centers and home users."

The Professor John Miller Team Spirit Award went to a courageous can-do team from Cambridge University.

The Sustainable Business Award went to an alternative energy proposal from Yale University.

The other award winners will be listed on the University of San Francisco Entrepreneurship Program website shortly.

The Venture Capital Confidence Index - A Leading Indicator

Mark Cannice, Chair of the University of San Francisco Entrepreneurship Program, provided some great insight about how venture capital and venture capital activites may foreshadow overall financial market activity.

In his video interview on The Wall Street Journal Online, Mark pointed out that venture capital operates at the "intersection of public and private finance," providing an interesting future perspective regarding the health of the financial markets. If VCs are seeing fewer exit opportunities via IPOs or acquisition, that may serve as a leading indicator regarding the overall financial market.

The complete video interview on MarketWatch is available for public viewing (no logins/subscriptions required).

Angel Capital Moving to Debt

I read an interesting article on VC Experts today regarding the movement of Angel Capital from the traditional equity stake in early stage firms to debt instruments. This seems to make sense for angel investors if the payback period for their initial investments is 5-7 years or longer. And considering that following the traditional model of creating a portfolio of 10+ investments in order to meet ROI expectations, angel investing can create some anxiety disorders over time.

Angel capital is becoming more and more vital to seed and early stage companies. A couple of months ago, I examined how Venture Capital is moving up the ladder from the seed and early stage investments into latter stage and near-exit companies. Seems no one wants to take the risk once borne in days past, and the impatience for payback and ROI plays havoc for venture capital firms and their investor return requirements.

With angel investors, a debt-to-equity arrangement make sense in the right scenarios. In a debt-to-equity arrangement, the investor might be able to eek out some return with less successful companies that didn't make the 10x or 100x returns hoped for, but still manage to yield positive cash flow and the ability to repay a loan instrument. These surviving firms might not explode into IPOs, but the debt-to-equity arrangements allows for recovery of the initial investment with an interest rate reflecting appropriate risk levels and in shorter time periods.

When I founded my own consulting firm, we were initially staked in a debt-to-equity arrangement. Our investor was an angel and a very close personal friend. Knowing that the company didn't have to be "all or nothing" for our investor to recoup his investment took some of the stress out of the agreement. This is a key part that's often overlooked when it comes to working with angel investors. While angel groups are becoming more formalized and organized, there is almost often a long-standing interpersonal relationship between investor and target. This can make for tough sledding if not handled properly.

I find the migration of venture capital and the continued establishment of angel capital to be a fascinating development in the start-up world. I invite your thoughts and views on this.

By the way, here's a link to the article of VC Experts.

Update! University of San Francisco International Business Plan Competition

I spent the day today at the Hotel Kabuki in San Francisco, serving as a coach to aspiring young entrepreneurs and companies in developing their "elevator pitch" and venture capital presentations during the University of San Francisco International Business Plan Competition.

Although the competition is a compilation of student-led groups that have been vetted at previous competitions, I wasn't quite sure what to expect.

As one of the coaches, I worked with Judith McGarry of Keen Consulting and A.C. Ross of Indigo Partners (and a few other colleagues) to listen to five student group presentations and then provided advice on how to tighten things up. Judith consults with firms seeking venture funding, and clearly understands Silicon Valley and what it takes to get funding. Her breadth of knowledge in numerous industries is striking. A.C. is a Silicon Valley veteran with vast experience on the strategy consulting side of the equation.

We watched presentations about software for the nanotechnology industry, online men's shopping, product development for emerging economies, online media, and HDTV. After spending the day, my observation is that some people are just more prepared that others.

The creme always rises to the top. The most interesting and compelling of the day - the presentation that turned into an collaboration session - was Project Einstein out of MIT. Couple of guys that are launching a men's clothing online shopping site with a strong Web 2.0 flavor to it. I think they have a chance! The presenters, Bob Meese and Will O'Brien, were very well-prepared and have clearly thought through the concept realistically. Their concept hit home as I remembered my painstaking afternoon in Macy's a couple of weeks ago trying to find the right casual shirt and sportcoat for my Spring wardrobe... Nice job guys, and good luck!

To check out this company, and all of the others in the competition, the semi-final and finals are open to the public. Check out the schedule and stop by - worth the price of admission for sure!

Is Yahoo! acquiring assets or problems?

Over the last couple of years, Yahoo! has been on a perpetual shopping spree in recent years – acquiring social media and social networking companies to boost its status in the Web 2.0 world.

18 months ago, a Business Week article by Catherine Holahan – “Yahoo’s Strategy: Growth By Acquisition” – supported Yahoo’s strategy, promoting the relatively low cost of these acquisitions. In 2006 for example, Yahoo! acquired Del.icio.us for about $20 million. Smaller acquisitions of maturing start-ups put Yahoo! in the position of a late-stage venture capitalist – pick a portfolio of seemingly good bets and expect that a couple of them will pop. Not a bad idea if you're flush with cash and need some new products.

That was then, this is now. More recent acquisitions are well above venture capital money - Blue Lithium for $300 mln, Zimbra for $350 mln, Maven Networks for $150 mln, and Right Media for $680 mln. As I wrote in a previous article, it seems that Yahoo! gave up cash for a goodwill asset on the balance sheet. More importantly, Yahoo! appears to have become a quilt of media companies, Web 2.0 technologies, and social networking tools that hardly generate revenue.

Back in January on TheDeal.com, David Shabelman suggested that Yahoo! consider more acquisitions - possibly of Monster.com, Expedia, and Shutterfly (among others). At some point, Yahoo! seems almost addicted to acquisitions as if the next one will be their saving grace or missing piece to the puzzle.

Shabelman also suggested that Yahoo! might combine Right Media and BlueLithium and spin out the combined company as an IPO. To break even on the acquisition costs of these two companies, the IPO proceeds would have to exceed $1 billion. To provide some perspective, Vision China’s (VSIN) IPO hit the market at about $544 mln in late 2007 and Digital Domain (DTWO) is scheduled to hit the market at $72-84 mln. This isn’t exactly a thriving IPO market for technology companies.

Corporate finance maneuvers of acquisitions, spin-offs, and juggling won't save the future of Yahoo! I have more thoughts on this, especially when compared to Google’s ability to grow its business more organically through innovation and development. Stay tuned for more….