Thorne Sparkman started off wanting to be an entrepreneur, but ended up meeting everyone in the Venture Capital world instead. His path from coming up with the big idea to selling the big idea was the basis for his talk on “Encouraging Local Tech Companies” at May’s First Friday.
While in Berkeley, CA, Mr. Sparkman co-founded Incubator, Inc., an internet business incubator which backed web-based start-ups from the university community. Mr. Sparkman settled into a fundraising role with the company, finding angel and venture capital for his community’s projects. One of those start-ups, Emptor (Accept.com), was bought by Amazon, making some Venture Capitalists (and Sparkman) very happy.
Mr. Sparkman saw how a great idea could pay off, and how investing in a good idea could pay off, too.
But they’re not all good ideas. In venture capital, he says, you have to kiss a lot of frogs. Venture investors generate many leads, in hopes that they’ll be in position to know about the next hot idea. A venture capital fund is looking for the company whose profits go from zero to 200 million in five years.
They’re all looking for the next Facebook.
Mr. Sparkman has spent the last several years at Slater Technology Fund, a firm that supports and encourages Rhode Island businesses. They work with a network of investors to provide seed money to new companies. Technically, the seed money is for the first 18 months, but because it takes six months to raise the next round of funding, businesses need to be showing a product in the first 12 months.
There were many questions for Mr. Sparkman, including what makes a company successful in the eyes of its investors, and what percentage of companies are successful. Attendees kept Mr. Sparkman’s presentation going until 9:30, after which he was available for individuals.
The businesses Slater Technology Fund invests in are geographically close. He attends their board meetings and is in email contact several times a week. Part of what his company brings to the table is guidance and advice, to make sure the investment is on track.
He says it’s as humbling to be a successful investor as it is to be a successful entrepreneur.
To encourage local tech companies who are taking their ideas from the lab to commercial application, Mr. Sparkman raises seed funding and connects the young companies with business resources.
He also works with young entrepreneurs at Brown University and the University of Rhode Island, and is a judge at the Rhode Island Business Plan Competition. He is also a mentor at BetaSpring, a Providence venture accelerator.
If you’re going to kiss a lot of frogs, you have to find them first.