But then came the breakthrough. Claflin, who sought out Shoba at the forum, had failed to persuade his partners at Claflin Capital to invest in the NewsMarket. However, he called Shoba to say that he'd decided to personally invest, and he gave her the name of a big VC firm he knew well. She didn't expect to get a call. But 48 hours later she did. And that was followed up by two meetings with the partners.
By the time the reunion rolls around, Shoba is thick in the throes of negotiating a term sheet.
Lucy, post forum, took a $500,000 loan from her current investors to keep Chaoticom going. But she still needs a major backer in order to make good on product-development dates. "We're getting in front of customers now, but you only get one chance -- so you have to be able to deliver what you're promising," she says. She is now willing to do a VC deal for $4 million -- half as much money as she asked for at the forum -- to get it done faster.
For the benefit of other Springboard alums gathered at the reunion, Lucy relates her latest VC encounters. "It used to be they didn't call you back when they meant no. Now they will call you back when they mean no," she says. But Lucy, ever cheerful, shares her "Three Ways to Know a VC Is Really Interested."
1. They must use the word excited at least three times in any discussion with you.
2. They must ask for a detailed "cap table" (that's capitalization table); then you know they are really pricing the deal.
3. You're talking to a partner at the firm.
A.G. is getting VC meetings but no talk of a term sheet. So she is redoubling her efforts to land a first major client and is seeking reinforcement from angels. "We may end up with 18 angels, which could make things complicated with VCs," she says. Her Springboard coach, Clark Waterfall, of the Boston Search Group, warned her, "You don't have a choice."
At the reunion, she announces that she has commenced talks with 10 more VC firms, thanks to her new Springboard connections. Ask her what she's learned, and she happily complies with her own crib sheet of the stock questions that "VCs ask when they don't know what else to say." A few of her favorites: What's the mission of this company? Translation: Are you willing to change your model? What are the founders looking for? Read: Will the founders get out of the way when the time comes?
But A.G. insists she's not discouraged. "It's still interesting," she says. "I still get raked over the coals. 'Is it realistic to think you can do this level of sales in this time frame?' I've had to do some fancy dancing. But they're good hard questions."
Curtain Call
Scene: Five months after the forum, April 2002.
April Fool's Day marks one year since Lucy quit her big-company job and took the reins at Chaoticom. But she has no regrets. She is waiting for a term sheet from one of three VC firms, including one she reconnected with at the Springboard reunion. Lucy has been courting all three seriously for months. She thinks this is the month.
A.G. has made surprising leaps. On March 10 she closed on a $1.3- million angel round with 15 investors. Now she is deep in term-sheet negotiations with a well-known Boston VC firm, a connection she made indirectly through the Springboard forum. "Springboard," she says, "has been a good branding device for me." Her only disappointment: she can't buy a motorcycle now. After all, she has investors and employees to consider.
Shoba has the best news of all. "I'm raising 50% more than I wanted to raise, and I had to turn people back," she reports. On February 20 she signed a term sheet for a $3-million "A" round that included Tom Claflin, three VC firms, and an angel investor. She met four of the five investors directly through Springboard. In early April she is nervously awaiting a closing date. "You hear all kinds of horror stories, like VCs who walk away even after the term sheet," she says. But Shoba is also counting her blessings.
The progress of the three women gives some credence to a bold prediction by the leaders of the Springboard nonprofit: that by year-end the New England presenters will not only outperform the market but uphold the nearly 40% rate of financing. That's not so wild a dream, says Claflin. "I was really impressed by the quality of the people there," he says.
Shoba says she's a changed woman. "Before, I was embarrassed to go up there and say that what I have is an unbelievable opportunity," she says. "Talking about the company is in many ways like talking about yourself. Springboard said that's OK." She pauses to reflect on how far she's come. "My lead investor told me, 'There's no doubt you knock people's socks off when you pitch.' And I was thinking, 'If you only knew ..."
Susan Greco is a senior writer at Inc and is coauthor of the new book Customer Chemistry: How to Keep the Customers You Want -- and Say "Good-bye" to the Ones You Don't (McGraw-Hill, 2002).
On-Line Resources
Are you ready to present? Learn more about what investors listen for now at www.inc.com/keyword/vc. You can also find related stories about raising capital, as well as about the birth of Springboard and the new network for female entrepreneurs.
More related links:
Elements of a Winning Pitch
Directory of VC and Entrepreneurial Boot Camps
Was It Worth It?
Shoba Purushothaman, 39, CEO, the NewsMarket, New York City
Best part of Springboard: "At a practice session, a VC said to me, 'Stop selling me your product and sell me the investment opportunity.' That was a turning point for me."
And the worst:
