Saturday December 9, 2006 -- If you've never been to a DigitalBridges Entrepreneur's Forum then you are missing out on one of the most exciting annual events at Middlebury. The event seems to be perennially under-advertised but every year the program director, MariAnn Osborne, manages to wrangle a crowd of interested spectators. This was my fourth time attending the event and the crowd was the largest to date that I can remember so kudos to MariAnn.

Michael Claudon opened the morning by welcoming the audience and sharing some very impressive statistics about the DigitalBridges program. The Middlebury Solutions Group has consulted for 31 start-ups and of those, 23 are still operating. Considering the high rate of failure for start-up companies, that is a remarkable testament to Michael and the DigitalBridges program. A table in Bicentennial Hall's Great Hall featured the products of just a few of the past DigitalBridges clients.

The 'Entrepreneur's Forum' portion of the morning consists of a 20 minute presentation from the company and their student consultants followed by a Q&A session. A panel of judges, this year Cairn Cross from FreshTracks Capital and Ken Merritt, Jr. of Merritt, Merritt & Moulton, gets to strike first and one question they're sure to ask is, "what's your exit strategy?" I'm not yet a venture capitalist so I'll try to limit my commentary on each company to the presentation itself and not the potential for 20x returns.

Peter Bingham, M.D formed Children's Rehabilitation Ventures to develop a breath controlled video game designed to promote respiratory health. Dubbed BronchoBats, the product will be linked to a video game that provides bio-feedback to the user in an effort to add some excitement to the tedious breathing exercises necessary to improve chronic lung diseases. Regular breathing exercises and the proper technique are vital to improving the health of patients with lung disease but the exercises are boring and there are few ways to effectively monitor the technique.

Dr. Bingham's goal of improving care for patients with respiratory disease with something as exciting as a video game is an easy objective to support. Unfortunately the presentation was about as dull as a breathing exercise. Dr. Bingham has a quiet voice that is no doubt soothing to patients but doesn't impart any excitement about the noble idea he's presenting. Having experience as a consultant for the MSG I know that a lot of the responsibility for crafting a good presentation falls on the students. Since the class sees these presentations several times before the conference, you would think they would be the first people to suggest that the slides be more than just fields of text. I'm guessing that the BronchoBats aren't far enough along to show screen shots of the product in action but they could at least elicit some sympathy from the audience with pictures of the patients that the device can help. They really needed something to make the presentation a little more exciting.

The judges table expressed some disagreement over the company's strategy for reaching the market and developing the next generation of the BronchoBats. Cairn Cross wasn't as supportive as Ken Merritt was about using direct to consumer distribution to reach the marketplace while simultaneously applying for FDA approval. Like Michael Claudon, I consider myself a disciple of Guy Kawasaki and personally support his claim that entrepreneurs can too easily get bogged down in R&D. Peter Bingham was apparently abandoned by his team as he had to field more questions from both the judges and the audience. The students really should have been standing with their client not only to support him with the responses but also to show that they took some pride in their work. Probably the most helpful comment to come from the audience all day was the suggestion that BronchoBats could be marketed to elite athletes. Breathing is a big part of success at the highest levels of athletic competition and athletes have the financial resources to try new products; not to mention the significant endorsement potential.

The next client was about as far away from medical devices as you can get. CSL Materials has developed a ceramic "tetrajack" that can be used to improve the compression strength of high-strength concrete. This presentation was much more engaging thanks to the judicious use of graphics. Several pictures were used to illustrate the property of concrete and where the weaknesses developed. Chris Sinton, the company founder, also had more inflection in his voice making him appear to be more excited about his product. Unfortunately he got bogged down in some of the logistics of how CSL planned to reach their customers and the presentation started to drag.

I would have liked to hear a little background information on Mr. Sinton so I understood what his experience was and how he got involved in this project. Again, the students didn't really get involved and never stood to present any information which again disappointed me. Although these companies are hoping to find some investment money at this conference, the students have spent an entire twelve weeks working on the project and they really should take some pride in their work. The judges were concerned with the amount of capital required to set up plants to produce the tetrajacks and the low margins outlined in the presentation. Entrepreneurs should note that venture capitalists are looking for margins that are at least 40% or better in most cases. If you can achieve those margins don't sell yourself short with "conservative" projections.

After a brief coffee break the presentations continued with Moped Lite. Founder Mark Wood opened with some jokes playing off the CSL presentation. It was nice to finally see a little humor for the presenters. Anyone who has done any public speaking knows how tough a task that is but the company founders should be passionate about their endeavor and convey that to the audience. If you're looking for funding for a start up you had better convey to your audience that you're excited and that you know what you're talking about; venture money invests in the people as much as the idea.

I digress, back to Moped Lite, a lightweight DOT approved moped designed for recreational use. The presentation outlined the initial target market: RV owners and had lots of data about this market. It missed an explanation of what DOT approval actually meant but that seemed to be a big selling point of the moped. Also, the funding requirements were skipped over pretty quickly which is a mistake because that's what any investor really wants to understand. The presentation ending was rather abrupt and led to an awkward silence as the judges weren't really sure if they should start asking questions. However, once Cairn Cross finally started things off he launched a lively discussion about the different state requirements for Mopeds. Jokes about the differences between New Hampshire and Vermont abounded and the audience had a good laugh. The challenge for Moped Lite is to get beyond the homebuilt prototype and have a product that they can present with some real pride. John Reed, one of the student consultants, really jumped in and took charge of the Q&A period which helped keep things on track.

The students really began to take a bigger role at this point and the final presentation began with a student, Rob White. Rob introduced Venue Czar but forgot to describe what the company did before he jumped right into the customer. Fortunately he backtracked and explained the service that the company offered. It turned out to be a good transition as he passed things off to Michael Howe who showed a screenshot of the Venue Czar interface. Realizing that I've now made the same mistake as Robb, I'll tell you what Venue Czar actually does. They offer a web-based solution to the chaotic process of booking live music at clubs and bars. They have a great concept to drive users to the site which they dubbed "The Triangle of Coercion" but Michael really needed to be more concise in describing the concept. He stumbled through a lot of the presentation and almost appeared that he hadn't practiced at all which was a shame because I thought this idea had the most potential out of all those presented.

The major concern amongst the judges was the danger that a slow roll-out of this system presents. The major media companies that control MySpace and Craigslist obviously have plenty of capital to fund a similar project. Without some very strong patent protections Venue Czar risks being the one who proves the merit of this system only to be pushed out by the bigger online players. Cairn Cross was very enthusiastic about the general concept of the business and repeatedly commented on that but he wasn't convinced that it should be a subscription based service. That wrapped up the morning session and the audience adjourned to the Great Hall for a delicious lunch.

Entrepreneur Workshop

The afternoon session of the conference was a panel of representatives from four groups that help to incubate entrepreneurship within the state.
The panel, asked to share their challenges that they see Vermont entrepreneurs struggle with, was comprised of:
- Richard Munkelwitz, Program Manager, Vermont Small Business Development Center
- Ken Merritt, Jr., Founder, Vermont Venture Network
- Kerry Swift, Associate Director of Technology Transfer, UVM Office of Technology Transfer
- Janice St. Onge, Director, Vermont Business Center
Moderator
- Michael P. Claudon, Professor of Economics, Middlebury College

The panel commented on the great network that was available in Vermont for entrepreneurs. It's a very tight community so as long as you're not burning any bridges, you're likely to find someone to help you through any challenges you might face. But that network comes at a cost. The nature of Vermont makes it very hard for businesses to really scale up and achieve the kind of growth that big time venture capitalists are looking for in order to generate the returns they demand. Fortunately for the state's economy, a "Vermont Model" that is supportive of the local workforce and the state as a whole has developed. The so called "Vermont Model" places the greater good above the dollar and sacrifices a higher payday to keep the company in the state.

Let's hope the DigitalBridges program can continue to help Vermont start-ups develop into sustainable businesses. If the program's track record is any indication we should all keep our eyes on these clients and all the other MSG alumni.

-Dave Nicholson
Co-president, DigitalBridges Club
Co-founder, Campus Storage, Inc