For entrepreneurs, every new day is another episode of “Shark Tank,” a reality show in which a half-dozen business pros evaluate ideas, projects, businesses, and technologies — seeking to poke holes in their business plans, marketing concepts, or technological assumptions — on the theory of whatever doesn’t kill them makes them stronger.
That’s what start-ups face almost every day, whenever they meet with a potential investor or someone who can open investors’ doors. Entrepreneurs always have to be “on,” ready to give their elevator pitch — an extremely brief sum-up of what they do and why it’s worth paying attention to — on the fly, and to handle the objections that inevitably crop up.
Some companies do it better than others, said Hanan Brand of Jerusalem Venture Partners, a VC firm that runs numerous programs for start-ups, and those are the companies that usually get chosen by groups like JVP for funding. The competition is stiff; out of 700 start-ups that apply to get into JVP’s incubator program, only about 15 are chosen.
In a rare event, Brand and JVP gave The Times of Israel access to a high-level meeting between several start-ups and potential angel investors. The event, called Jerusalem Pitch Night, was co-sponsored by JVP and Siftech, the Jerusalem Entrepreneurship Club of the Hebrew University Students Union and HU’s Asper Center. JVP and Siftech, said Brand, have a common goal: to develop Jerusalem’s economy by encouraging young entrepreneurs to live and work in the city.
“Jerusalem has a lot to offer entrepreneurs, and the city benefits a great deal when start-ups locate here, providing jobs and enhancing the city’s economy,” said Brand.
The eight companies that presented themselves at the event are among those not chosen for JVP’s incubators, said Brand. “We are very limited in who we can accept, and the companies at this event were too early-stage for our investment strategy,” which usually includes companies that are ready for an exit within five years or so.
The companies at Pitch Night were much younger, and would probably need more time to develop their technologies. But they were the kind of companies that angel investors — usually individuals or groups that take a piece of a start-up in return for financial support — would be interested in seeing.
“It’s our way of giving back to the community,” said Brand. “It’s very difficult for start-ups to get the attention of angels or other investors, and by making the connections at events like this, we may be able to help a company get over a hump and move to the next level — at which point they may be ready for an investment program like ours.”
Among the apps and technologies on display was JusticeApp — which promises, says CEO Itamar Tsabari, to bring its users legal satisfaction. Currently in an alpha release, the app — which won a recent Startup Weekend contest — promises to take the confusion out of the legal process, ensuring that app users get what’s due to them.
“Let’s say someone crashes into my car,” Tsabari told the angel audience. “Who do I call? How do I file claims? How do I pick an attorney? There are 7,500 in New York City alone. How do I choose?”
The answers are right there in JusticeApp, Tsabari said. “First, the app lets you take photos or a video of the damage, and provides a checkoff interface that describes the damage; this saves you the time and effort necessary to type in the details, which is required by all other apps of this ilk.
“You can pick an attorney directly from the app, knowing in advance what their fee is. And users can file claims for free, up to a certain amount,” he continued.
Tsabari plans to collect fees from attorneys who use the referrals. “They are already paying for referrals from Google and other sources, so that is a good revenue model.”
Considering the huge number of lawyers in the US, it may seem odd that no one has already come up with an app to connect attorneys and clients, commented one angel investor. “Now I understand it, though,” Tsabari said. “It took a lot of time and energy to figure out how to do this without violating ethical or legal restrictions.”
Other comments from angels included questions about the commission model (a flat fee will be charged for simple cases, but Tsabari plans to introduce a percentage model for more complicated cases), and working with insurance companies (Tsabari nixed the idea, because there would be less money coming in from fees).
“You could call this ‘Get Lawyer’; it sounds a little like ‘Get Taxi,’” said one of the angels, referring to the app that lets you order a taxi via your smartphone in many large cities. Tsabari responded that, while one could look at it that way, “We’ve got a better model — we can get more in fees than they can get in commissions.” Overall, the angels felt that the JusticeApp presentation was well organized and answered many of the questions they had about the feasibility and profitability of a project like this.
Not faring as well under angel questioning was a “green” company whose technology aims to revamp the entire plastic-bottle industry, developing an ecosystem for use, reuse, and recycling in a manufacturing system. Instead of the standard round bottles that are used today — with some 400 billion of them ending up in dumps and landfills, despite aggressive recycling programs in many areas — “we took the concept of 1-time-use bottles and turned them into a brick that can be used in many ways,” said Gadi Pridan, the project’s presenter. “It’s like Lego — the bottle knows how to connect physically and remain connected.”
The square — or rectangular — bottle will have a connector on its side, allowing the bottles to be interlocked and remain together. As a result, bottles can be used at home or even commercially: A person could, say, collect them and build a project with them, such as a home garage or guest room (the builder would probably fill the bottles with sand or concrete). As with other do-it-yourself platforms, such as Lego itself, the system could spawn a cult of users, with websites dedicated to ideas on how to use the bottles in projects.
Besides being ecologically sensible, the system will also make transporting bottled drinks more efficient and cost effective: The square shape would ensure that every square inch of storage space in a truck or warehouse shelf was utilized, as opposed to the empty spaces you get with round bottles. “Instead of six bottles of a soft drink in a box, you could have eight bottles connected together without the box … more efficient to store and carry,” Pridan continued.
For manufacturers, the system also offers a way to build brand loyalty. “Companies can have few variations on their bottle connections, so customers will have an additional incentive to buy the same brand: They will want to utilize the bottles they already have,” Pridan said. “We believe there will be a lot of interest in this, from green organizations, manufacturers, and governments, which are looking to incentivize recycling programs.”
Pridan’s arguments may have been persuasive, but not all the angels were convinced. One major criticism: Instead of bringing in a bunch of bottles, and letting the potential investors play with them and see the system in action, Pridan and his team presented a slideshow of text-based information, with sparse graphics. The team brought in one lone bottle, without showing the system in action.
Changing the bottle-manufacturing system currently in place all over the world would be a major challenge, possibly a bit too much for an environmental start-up to take on, said one potential investor.
In addition, said another of the angels, there was no guarantee that users would play ball: Other environmentally sound packaging has ended up in the same place as the non-eco-friendly type packages, and it was unlikely that an industry would invest in a system like this without some sort of guarantee that the new design would be used in the manner Pridan and his team envisioned — and the only way to (possibly) guarantee that would be government legislation, a long shot at best.
And so it went in the JVP “shark tank,” with investors falling in love with some of the ideas (and giving out their personal phone numbers to the lucky “winners”), while sending some of the others back to the drawing board. If there was any lesson for entrepreneurs, it was this: Be prepared.
“You can see what investors go for. They’re open to a wide range of ideas,” JVP’s Brand said, reviewing the apps and technologies on display.
Other start-ups included a medical device to help diabetics; a system to let the blind use a touchscreen; an app to help users find clothing they like; and an app to connect music lovers with their favorite artists.
“A good business plan is key,” summed up Brand. “Having that is half the battle.”