“Don’t cry because it’s over, smile because it happened.”
~ Dr. Seuss

I guess this is as formal an “announcement” as I’m going to give on this, but after a lengthy period of soul searching, I have made the very difficult decision to largely step away from StartupLounge.com.

Five years ago or so, when Mike Blake and I came up with the concept of StartupLounge, neither one of us had any idea of what we were getting ourselves into.  Truth be told, I think if we had known how much work we’d need to put into something like this, we may very well not have started it at all.  Some folks have called StartupLounge “influential” or “important”, and I suppose to some extent it is.  But really, at the core, it is/was really about helping people help themselves, then to help others – and about 2 guys having fun yapping on a mic every now and then. And I will tell you – I most certainly learned more about our collective craft than others probably learned from me.

My reasons for stepping back from heavy involvement in StartupLounge is complex, and somewhat difficult to explain.  A big part of it is the time commitment required to record and produce podcasts (40 hours a pop), organizing events, PitchCamp, evangelizing, etc.   I simply do not have the time anymore to contribute at a high level in order to continue making a difference.  And when you’ve poured your heart and soul into something for as long as we have with StartupLounge, it makes the decision a very emotional one, to say the least.

Another huge factor in my decision is simply the level of energy required to perform my duties at my day job (StarPound).  Although we have a great deal of work ahead of us, the team is really doing some great things there. We’ve recently raised another round of capital, and are heads down on a ton of different things right now.

Finally, and perhaps the most important reason, is my family.  As it stands now, I am rarely home in time for dinner (thanks in part to Atlanta traffic).  I have a wife and two young daughters at home that I hardly ever see these days.  And this needs to change.  So, something has to give.

I should also add that there has been some speculation that my health is suspect, and that this somehow is contributing to my decision.  This is patently not true.  Sure, I’m battling a kidney stone right now (ouch!), but this too shall pass (literally and figuratively). Trust me. I’m as fit as a horse.  Then again, they shoot horses when they actually do get ill, so maybe that’s a bad analogy to go with.

Through StartupLounge, I have met some incredibly wonderful people over the past several years.  Entrepreneurs, most of which want to do something great.  Investors who actually want to engage with them.  And a wealth of community leaders and stakeholders who want to make a difference. I place an extremely high value on these relationships, and hope to continue nurturing them for years to come.

One person in particular, though, has meant the world to me throughout this journey.  Mike Blake.  I have come to rely on his wisdom and sensibilities for so, so many things.  Not just professionally, but personally as well.  I can only hope to one day even begin to repay him for the friendship, comaraderie, and contributions he has made to my life. Mike and I remain the best of friends, and I appreciate his understanding and patience throughout my rather circuitous decision making process.

With all of that being said, I should add that StartupLounge will continue on.  The inimitable  Josh Watts has agreed to replace me as the co-host of our podcast.  If you don’t know Josh, you should.  I can’t think of a better person to step into that role.  He has a solid understanding of early-stage entrepreneurship, technology, and carries with him a wicked sense of humor that will help keep the StartupLounge podcast as entertaining as ever.  So for you die-hard listeners of our podcasts, rest assured, it will continue to be worth tuning into. Who knows?  I might even make a cameo appearance every now and then :)

All of the free StartupLounge events will continue, including PitchCamp, Startup Seminars, and of course, the thrice yearly StartupLounge gathering in Atlanta.  Expansions are already underway to carry the philosophy and beliefs behind StartupLounge to other areas, including Savannah and Raleigh/Durham.  Mike is 100% committed to doing this, and his continued leadership will turn this into a reality.

As for me, well, it isn’t like I’m completely falling off the face of the earth.  I’ll still be around, helping as many people as I can, where I can.  I just may not be as visible. I will continue to attend StartupLounge events when I can, as well as others.  I continue to take enormous satisfaction in helping others achieve success, be it through mentoring, speaking, coaching, etc.  Oh, and continuing to learn new things myself.  I can’t imagine my life without those things, quite frankly.

Enough rambling from me.  I now return you to your regularly scheduled programming.  Peace out.

Cheers.

Urvaksh did a cool writeup on it as well.  He brought along an Atlanta Business Chronicle photographer as well … hoping to see some cool shots soon!  We should have the pics from our own photographer up on the site by next week …

Thanks to Allen Ulbricht from PeachPods And Anna McCullough from Adams Capital for jumping in and helping out at the badge table.  Man, that was a mess!  Lesson: Don’t let me and Blake manage the badges – that’s just a goat rodeo waiting to happen.

The next event will be in late May or early June, most likely.  We’ve also posted the date of the next PitchCamp session … if you are interested in attending, sign up now, it will fill up fast with only 12 slots available.

Cheers.

E.g. “Hi, how are you?”  “Great!”  “So who are you, and what the hell does your company do?  And please don’t cling to me for 20 minutes trying to explain it.”

:)

The only stipulation is that you must already be accepted for attendance at CapitalLounge that night.

For more information, or to RSVP check it out:

http://www.startupgauntlet.com

Cheers.

If you’ve already applied and been accepted to attend, you should receive an email tonight with directions to the new location.   If for some reason you do not receive an email tonight, check your spam folder (doh!), or go to the StartupLounge.com web site and pull up the event details page – if you’re logged in, you’ll see the information on the new location there.

We apologize for the inconvenience, and look forward to seeing everyone on the 25th!

Cheers.

Let me repeat – PitchCamp will NOT be held at the Galleria, but on the 3rd Floor (Hodges Room) at the ATDC. You can get address/map info here:

http://www.atdc.org/contact/

Thanks to Lance and crew at the ATDC for helping us out!

Cheers.

As I mentioned in my last post, our next Capital Lounge event is this Wednesday, 8/27. This is going to be far and away the best event we’ve done, on so many levels. More quality deals, more investors (4 to 1 company to investor ratio), and a couple of pretty big announcements, including one in particular that, to quote Mike Blake, that will “change the face of of the Atlanta early stage capital ecosystem.”

There can be no sacrifice of the vision.

If you’ve ever planned a big event before, you obviously know all of the logistics and planning that go into it. CapitalLounge is no different. It’s a ton of work, for sure. But one thing that we do that many other groups don’t do is vet the attendees. This adds an order of magnitude to the effort required to pull off this event.

A key reason for the success of the CapitalLounge event is our vigilant effort to restrict attendance to direct capital providers and entrepreneurs with fast-growth potential. Investors and entrepreneurs are able to get maximum value from the event when they can spend their time establishing relationships with one another, rather than be distracted by other entities (hordes of service providers, job seekers, low quality deals, investor-wannabe types, etc.)

For the upcoming event, roughly one (1) out of every 4.5 applications was rejected for one reason or another. That’s a lot of filtering – and that equates to a lot of work. We have to do it this way – otherwise, we end up becoming the thing that we are trying change. There can be no sacrifice of the vision.

We get a lot of questions (especially from those whose applications are rejected) about the criteria we use, how we review applications, etc. Even though a lot of this information is automatically emailed to the applicant if their application is denied, I thought it might be instructional to provide a little more insight into how we select entrepreneurs, investors, and observers for this event.

Some General Background Info

Much like an investor is going to take just a few seconds to make a quick judgment call on whether or not they wish to look at a particular deal, we do the same. But we have to do it while drinking from the firehouse of applications that come pouring in each time we announce this event. First impressions go a long way, obviously.

95% of the applications that are approved gain that approval generally within a minute of us looking at it. The other 5% come from those that we have to research, those that appeal and change our mind, etc.

Also, because of the volume of applications we receive, coupled with the fact that this is a not-for-profit, grassroots, volunteer community effort, we can’t respond personally to each and every application that gets rejected. Sorry – we have day jobs, too. Please keep that in mind before writing us nasty-grams.

The Signup Process

Before I begin, it is important to talk about the actual signup process. For some reason, some folks seem to get confused about the process, despite it being described very clearly (and in detail) on the site. The first time you apply, it is a 3 step process – for future events you’d like to attend, it is a 1-step process.

First, you have to create a free community account. No biggie – name and email address are basically all that is required.

Second, you have to login, and create at least one active profile. A profile is way for you to model your presence within the ecosystem. Since you can have multiple profiles associated with your account, it facilitates parallel entrepreneurs that have multiple deals going at any given time, entrepreneurs who are also angel investors, etc.

A note regarding profiles is in order. What you put in your profile is important – it isn’t just fluff or crap to store in our database. Obviously, it is the first thing we look at when we are evaluating the merits of you being in the room. If you give us little information to go on, then that’s what we’ll use when we look at your deal. If you get rejected because you put some lame one-line pitch in (e.g. “We’re a software company”), don’t complain when you get denied.

Finally, once you have a profile, you can simply visit the event calendar on our site, and apply to whatever events you want (CapitalLounge, PitchCamp, etc.). Of course, for subsequent events, you can skip steps 1 and 2, since you will already have your profile in the system.

How We Evaluate Entrepreneurs

There are lots of reasons why we reject an application from an entrepreneur – more so than any other classification of attendee. Here are some of the more common ones:

The event is simply full:

Due to the extreme demand for this event, coupled with the limited size of our venue, we have instituted a cap on the number of deals that we can facilitate at each events. It is entirely possible that we are simply full for the current event. The chances of this happening are much higher the closer we get to the date of the event. We typically approve applications for somewhere between 125-150 companies for each event.

Geography:

The venture must be located in the Southeast United States (preferably in Georgia) or anticipate a relocation to Georgia in the near future. While we certainly want to pull regional deal flow, deals from Georgia will take precedence over deals from other parts of the region. Again, the closer we get to the actual date of the event, the worse your chances are of getting in if you are a non-Georgia company.

Service Providers:

The primary business of the applicant must not be the provision of consulting, legal, accounting, design, marketing, recruiting or other professional services for cash. This is obvious, and a core part of our StartupLounge mantra. In fact, I’d go so far as to say we helped pioneer the “no service providers allowed” rule in Atlanta. We’re proud of it. It’s a key reason why this event rocks. It’s a key reason why a lot of other events aimed at entrepreneurs are not as successful – because those events are often overrun with service providers, and that scares off most legitimate entrepreneurs and investors.

We do realize that often times, entrepreneurs have to bootstrap their company by earning money doing whatever they can. Often, this means the entrepreneur is not only the founder and CEO of Acme Software, but also a marketing consultant for hire (or some other service profession). I will admit that these are almost always judgment calls on our part. There is no silver bullet. While we want to help every entrepreneur we can, we also have a responsibility to the larger StartupLounge community to preserve the integrity of the event by keeping service providers out. Often times, we’ll talk to the entrepreneur to make sure that they realize that they are there to represent their startup, not their services business.The few that have gone against their word won’t be coming back.

If we do approve the application of someone who also has a services business going to pay the bills, it is absolutely imperative that they represent only their startup while at our event. Representing the services business in any form at our event, be it verbally in conversation, handing out another set of business cards, following up with someone after the event and attempting to sell them services, etc. would most likely prevent the entrepreneur, their guest, and their company from attending future events, and could likely generate some ill-will out there among the StartupLounge community of entrepreneurs and investors. Our community is incredibly protective of the environment that we are trying to create at CapitalLounge, and most violations – even slight perceived ones – get back to us as organizers pretty quickly.

Non Fast-Growth Company

The primary business of the applicant has to “likely be of potential interest” to investors as a fast-growth opportunity. This type of venture will eventually employ between 20 and 500 people, have sales growth of at least 20 percent projected each year for four straight years, and target five-year revenue projections between $10 and $50 million (at least). Typical industries would include (but are not limited to) information technology, healthcare/medical devices, life sciences/biotech, pharmaceutical, nanotech, alternative energy/cleantech, and new media. Ventures within industries such as newspapers, gambling, franchises, real estate, food/spirits distribution, pornography, or other such markets are not a good fit for this event.

While we are certainly staunch advocates of small business, the CapitalLounge event is not aimed at providing the level and type of capital needed to launch small businesses that are generally not considered to be venture-capital type opportunities. These include, but are not limited to: franchises, restaurants, consulting businesses, professional services such as accounting, brick-and-mortar retail opportunities, fitness clubs, health spas, faith-related businesses, real estate development, distributorships, and certain consumer product ventures. If your application described what would be considered a “lifestyle” or services business, we would almost certainly deny your application on this basis.

We do recognize that sometimes, companies that would not initially be classified as a “fast-growth” opportunity could take off, and turn into billion dollar companies. Unfortunately, we can’t predict the future, so we have to draw a line in the sand somewhere.

Freshness of Deals

We strive very hard to keep the event “fresh” for our investor community by trying to get as many new deals in the room as possible. New deals will almost always take precedence over deals that have attended the event at least 2 or 3 times in the past.

Lack of Progress

If it is our perception that the venture has not materially progressed since the last “n” times that you attended CapitalLounge (if applicable), your application to attend will likely be refused. Examples: After attending CapitalLounge for 2 or 3 events in a row (better part of a year!), you still don’t have a web site, your product hasn’t launched yet, you have no PR stream, your expectations of investors were and continue to be out-of-synch with the current market, etc. In short, you seem to be waiting for someone to write you a check in order to further your idea.

We did a lengthy “Under the Bus” segment on this type of entrepreneur in our recent podcast with Noro-Moseley Partners.

Low Quality Deal

If your deal is perceived to be of a level of quality beneath what we consider to be the “minimum threshhold”, your application will likely get rejected. We research each new deal that is submitted prior to making a decision on them. Things that may count against you: not having a web site, having an email address from a free email provider such as Yahoo! or Hotmail, some negative information from your past that we found on Google, you have a day job as a service provider – but no web site for your new venture, you have a web site for your services company but not your new venture, etc.

Yes, this is subjective. We realize this, and it isn’t going to change – because it can’t. Think of this as an aggregate of things. If there are too many yellow flags on your deal, you will likely either get rejected outright, or go into the hold queue pending further research.

I could give you lots of examples of some of the things we’ve seen, but obviously I don’t want to embarrass anyone. Trust me, though – we’ve seen it all.

Lack of Information

If we simply cannot find enough information about your venture to make a decision, we will likely have to reject the application. For example, you have no web site (or the one you provided doesn’t work), and the one-line pitch you provided on your application is nebulous (“We’re a technology company” .. WTF?).

We simply don’t the time to fill in those kinds of blanks. You’ve got to give us *something* to work with.

Sneaking Someone In

You have specified someone to attend with you as your guest, and that person does not meet the established criteria (or does not appear to be associated with your venture). You wouldn’t believe the things we’ve seen. Thankfully, we’ve prevented a lot of them, but occasionally, someone manages to sneak in (or sneak someone else in).

How We Evaluate Investors

Track Record – Known Entities

All investor attendees must either themselves be an investor with a known track record of investing or work for a recognized private equity investment firm.

If you claim to be a venture capitalist, but we’ve never heard of you, and you have no web site – your application will most likely be rejected. VCs have web sites, and their investment histories are easily found through Google. Don’t apply telling us that you are a VC representing a $250M fund, if the only thing we’re going to learn about you via Google is that you used to play penny stocks.

If you claim to be an angel investor, and our due diligence on you does not reveal a track record of investment activity (including deal references, public records searches, references from angels we do know, Google searches, etc.) – your application will most likely be rejected.

If you are an “angel investor” who also sells insurance, you probably aren’t going to get in. We realize that a lot of angels have day jobs, too (most actually do). These are typically handled on a case-by-case basis.

If you have a known track record of angel investing, it gets a lot easier to overlook your day job.If you are already a member of certain (but not all) Angel groups (e.g. AngelLounge), this could help your cause. Being a member of an angel group that is dubious will likely hurt your chances, however.

No Brokers

Investment bankers, capital brokers/finders or other placement agents are excluded from attendance, with the exception of those entities that commit their own capital, and certain wealth managers that represent high-net-worth individuals desiring to make alternative class investments.

If an investor entity offers professional services, they must also have their own capital to commit in order to gain entrance to the event. This is handled on a case-by-case basis. While we (mostly me) do not prefer this model to a pure risk model, the entrepreneur has to decide whether or not to engage this type of investor.

Pay-to-Pitch Entities

If you offer “pay-to-pitch” events for entrepreneurs, your application will likely be rejected. We believe that access to capital providers should be as transparent as possible – we philosophically disagree with the middleman model.

How We Evaluate Observers

Observer slots are reserved for members of the media, academia, certain industry bloggers, government, certain non-profit organizations, and guests that we choose to invite at our sole and absolute discretion. If you apply for an observer slot, and you are not obviously representing one of these entities, your application will be refused.

The Appeal Process

We do have an appeal process in place for those whose applications are rejected, but feel they should still be allowed to attend. Details of this process are contained in the email itself. However, I will say this – repeatedly arguing with us if your application has been rejected is probably not going to help. We have been known to change our minds. We can (and want to be) be convinced.

Generally speaking, though – if you are rejected and you file an appeal, we’ll ask to review your executive summary, one-pager, etc. This is really the only way to really see what the business is all about. We have, in the past, initially ruled out an entrepreneur based on their one-line elevator pitch alone – because it didn’t sound like it would be a good fit for the event – only to reverse the decision after reviewing the executive summary. Several times, actually.

So if you do appeal, come strong.

Easy Ways to Get Rejected (or possibly Banned!) from CapitalLounge

1. Lie to us about something
2. Try to sneak in when you don’t get in on your own merit
3. Try to sneak someone else in
4. Treating our event as a sales platform
5. Signing up for our event, being accepted, and then not showing up without either notice or explanation
6. Screwing one of our investors or entrepreneurs
7. Repeatedly writing us nasty grams because your application was rejected
8. Make no progress in your venture in the 3 months between events
9. Whine about superficial stuff
10. Make NO progress… (worth repeating)

Closing

The selection process isn’t perfect, and we realize that. And we iterate it constantly. Any suggestions for improvement are obviously welcome!

Cheers.