The investment factor Featured

9:43am EDT July 22, 2002

Paul Hamerly, founder and president of Kitchen Basics Inc., had been running his Northeast Ohio business for two years when he decided to attend Innovest ’99, a statewide venture capital conference.

It was his first experience at such a conference, so he didn’t set his expectations too high.

“I did it principally for the exposure and the learning process,” Hamerly says. “I wasn’t there immediately to raise money, believe it or not.”

Like other presenters, he went through the training provided by the conference before the event.

Innovest gathers people representative of the event’s audience, including at least one investor and a professional presentation consultant, for the practice runs.

“One guy said, ‘You have a personal and conversational style that’s probably the best we’ve seen, but I think you should throw out your presentation and start again,’” Hamerly remembers.

The direct feedback, he says, was an excellent experience. In the end, Hamerly came out of the conference with more than he anticipated.

“Our booth was flooded, and I had four immediate potential investors. In fact, what happened was two people invested of the four,” he says.

He declined to say how much was invested, but noted it was a “respectable amount” for an individual investor.

“It certainly showed confidence in the company,” he says. “It increased the private offering to the point where we probably had another three to four months working capital for operations, so it may have postponed the need to raise money for the second round.”

Hamerly will join Innovest presenting companies again this year. He’s seeking approximately $1 million to complete the national launch of the Brecksville, Ohio-based Kitchen Basics brand of chicken and beef stock used in cooking.

The educational experience is one of the less tangible benefits of Innovest, says Charles Burkett, presenter coordinator for Innovest.

They learn about what investors are looking for and how to effectively tell their story, which is often difficult for the companies because they are so close to their business opportunity that it’s difficult for them to look at it objectively,” Burkett says.

At Innovest, presenters also learn about the group dynamics of investors.

“Just physically seeing four or five investors crowded around a business opportunity gives the presenter more of the momentum and interest than if they tried to do that on their own,” he says.

Investors also benefit from attending Innovest, says Josh Mondry, vice president and principal of M Group Inc., a Michigan-based private investment group.

M Group invested $5.5 million in Akron-based Accelent Systems Inc. after reading about the software developer in Innovest materials.

In addition to finding companies in which to invest, Mondry says, investors benefit from networking with other venture capitalists, attorneys, accountants and others at such conferences.

“The more people you know, the more people you meet, the more likely you are to increase your deal flow,” he says.

Burkett says companies which presented at Innovest ’99 have raised more than $65 million both on their own and through contacts from the event

“Although a good amount of that money is not a direct result of the conference, it still speaks to the quality of the opportunities that can be found at Innovest,” Burkett says. “It means investors and the market put that much money into the deals that were presented at Innovest.”

Joan Slattery Wall (jwall@sbnnet.com) is associate editor of SBN Columbus.