1st of 2 parts
By JIM STOMMEN
MDD Contributing Writer
Kay Koplovitz is chairman and co-founder of Springboard Enterprises, a platform where entrepreneurs, investors and industry experts meet to build women-led businesses. Springboard educates, sources, coaches, showcases and supports high-growth companies seeking equity capital for expansion. She also is chairman/CEO of Koplovitz & Co. Koplovitz was the founder of cable TV networks USA Network, the Sci-Fi Channel and USA Networks International. She talked with MDD Contributing Writer Jim Stommen about Springboard's push for women entrepreneurs.
MDD: Tell me about the Springboard Platform.
Koplovitz: Springboard is a nonprofit organization that selects, trains and presents women entrepreneurs to raise venture capital for businesses that are high-growth, so they would be businesses in the life sciences like biotech, devices, diagnostics, clean tech, green tech and also in technology and media, which of course would include all kinds of software as well as digital media, meaning content, platforms, marketing, tools for mobile gaming, e-commerce and the like.
MDD: It's interesting that you mention gaming. Art Erdman of the University of Minnesota Device Design Center recently was talking about how medical technology needs to take advantage of the amount of money that has been put into the gaming field. He said, "There's been an awful lot of money put into gaming and we need to take advantage of the bright ideas that have come out of that."
Koplovitz: Let me say that in addition to Springboard I do a lot of personal investing and have a venture fund, more like a super angel fund that invests first-stage funds, and we see a lot more gaming coming in, I'd call it the gamification of the business sector, so it's not improbable that it should also perhaps be a part of the life sciences sector as well. I think there's going to be a trend over the next few years where you see gamification of different processes because people are getting used to playing games and learning by doing that so it's a teaching tool as well as an interactive one.
MDD: Springboard seems very much a step-by-step approach. Is any one step more important than the others on a relative scale, or is the key to success the fact that each step lays a foundation for the next one?
Koplovitz: In the world of venture capital that our companies operate in, it definitely is a process, and Springboard has a very specific process. It starts with selection of companies. We are talking about companies that are operating, that have proof of concept, that have customers. Many of them have revenue, so they're not just plain start-up companies; they are companies that have already raised some funding through angel networks, friends and family and so forth, and have done their own investing and are operating.
It's a little different on the life sciences side than on other tech sides, because on the life sciences side there are other verification benchmarks besides customers and revenues, which they wouldn't have at the stage they come to us. What they would have is customers in the sense that they would have done beta testing, or gone through first-phase testing with the FDA, so there are different benchmarks.
MDD: Do investors look at companies or people first when making investment decisions?
Koplovitz: From our perspective, we start with the selection process, because we're very keenly aware that people invest in people first and businesses second. So you're looking for people in our case, we're looking for women who we believe can drive and scale businesses and who are knowledgeable, who can build an "A" team as their management team. They won't have everything right in their business plan nobody ever does and they may even do a pivot from where they are as they go through the learning process; many companies do. But you really try to select those people who are able to drive a scalable business, to attract investors, to grow with the investment and know what to do with the investment. So that's No. 1 part of it is finding the right entrepreneurs.
VCs expect a certain amount of failure in their portfolios. You really do look for people you feel can deliver. You have to like the business, but if you like the business and don't like the person, you really shouldn't put your money there. A business model always morphs or tweaks in some way or another. There is always some transformation, and you expect that, but you have to believe in the person who is going to drive this across the finish line.
Secondly, once they get into our network what we do is go through the selection process after receiving applications. We get down to the semifinalists; they're all given in-person interviews and they present their companies before panels that we hold in different regions around the country and the panels rate them. Out of that we select our presenters for that year's class. For example, in life sciences this year we selected 11 companies to present.
We purposely made this a smaller class this year than we've done previously. We've been in business since 2000, so we have 12 years of doing this, and we previously would present anywhere up to 20 companies in life sciences, but we purposely chose a smaller class this year because we want to put more resources behind them in helping them build their companies and we were testing that model this year.
MDD: What happens after the selection process is completed?
Koplovitz: After the class is selected, we have a boot camp where they learn what venture capital is about and what VCs expect from them, and we also talk about strategic investors and grants in the life sciences there are grants, of course. We go through the paces of different ways of accessing capital to build their businesses, and then we assign them at the end of the boot camp three to five coaches to help them build out their management team, review their process, review their business plan.
That process is conducted over essentially two more months, and the coaches who are assigned to them are coaches we think are of particular value to that company to help them through what we see as some weak points in what they're doing and where they need more guidance and feedback.
After that period of time, we take them into strategic investors, venture funds, people who would be investing in that sector. The basis there for the life science companies is that we feel those meetings could result in a business partnership as much as they could an investment, because having the right business partnership can be more important than the absolute dollars they might get.
We stay with these companies for a number of years; they're part of our alumnae group. All told, we have 503 companies in our basket over 12 years, and we've probably seen 5,000 companies over that period of time. We stay with these companies until liquidity events, so until they go public, sell their company, and make money for their investors, we stay with them and help them through various growth phases. We have a very extensive human capital network and we're very strong on human capital as a gateway to financial capital that's very key.
So that's the step-by-step process. We conduct it over a six-month period and then they stay in our alumni group. We bring the alumnae back together at different points; they have the opportunity to come back into the network for online coaching on subjects of interest to them. It's a continuous process; companies can be with us for three, four, even 10 years in the case of some life science companies.
MDD: You have quite a record of success in helping spur the development of women-led companies. Could you relate some of the statistics?
Koplovitz: I will tell you that all of the classes of entrepreneurs across all sectors have a remarkable track record in raising money 80% of them raise the money they need, which is almost four times the national average. And 80% of these companies are in business today, which also is a very high performance rate.
The companies collectively have raised over $5.5 billion and about a third of them have had liquidity events for their investors, including 10 IPOs; half of the IPOs are in life sciences. It's a very high-performing group, much greater than the national average of those seeking such funding.
(In Part 2 of this interview next week, Kay Koplovitz talks about areas of growth in healthcare, the profile of a typical company involved with Springboard, navigating the VC minefield, the status of life sciences innovation and the involvement of alumnae in the Springboard program.)
Published: September 13, 2012