Cut to the Chase–week 17–Begins a new monthly feature

"Working to mature Tacoma's business climate, Technology forums have recently hosted discussion panels to inform local entrepreneurs about the funding...

” In photo at right: Jamie Chase, guest columnist. Working to mature Tacoma’s business climate, Technology forums have recently hosted discussion panels to inform local entrepreneurs about the funding process. Once a month, Cut to the Chase will also assist in the informational process, featuring an investor profile. Financial representatives will outline investment criteria, fund availability and investment focus for their venture group. This first column will feature Thong Q. Le, a business development associate for Washington Research Foundation (WRF) Capital.Local high-tech entre-preneurs may remember Thong Q. Le from the Tacoma Technology Consortium’s venture capital panel discussion. Le, age 25, is responsible for the identification, development, and assessment of investment opportunities concerning biomedical products, high-tech devices and Internet related applications.WRF Capital is a division of the Washington Research Foundation that manages seed funds for investment in early stage companies.Founded in 1981, the foundation manages licensing activities for patents related to early research-based technologies from the University of Washington.Revenue from these licensing activities and investments provide the funding for WRF Capital. Investments are made in start-up companies that have strong ties to the University of Washington and other nonprofit research institutions in Washingtonstate.WRF Capital prefers to make founder stage, initial seed and series A investments. Le directs business development activities for the $40 million venture fund, which places between $50,000 to $1.5 million in a company through multiple funding rounds.Although, WRF Capital is not invested in Tacoma’s businesses, they have recently assigned an outreach person to assess opportunities in the area. Le was the natural choice for this position. He lives in and has many ties to America’s #1 Wired CityA lot of interesting things are going on here, said Le. I’m talking to a couple of companies in TacomaLe’s interest in Tacoma fits the trend of investors visiting the #1 Wired City. Last week several Seattle-based venture groups listened to business pitches at Tacoma Venture. In comparing the investor climate in Seattle to Tacoma, Le stated that currently more deals take place in Seattle. The environment is more mature, said Le. But I’m not going to limit myself. I am in Tacoma to see what is going on.Le wants investors in Tacoma to know what he is searching for in a good investment opportunity. He outlined some of WRF Capital’s investment criteria, which include: 1. Having a definable product or service; 2. Being able to articulate this product or service concept concisely and demonstrating that it will have a strategic advantage in the market. He asks several questions when analyzing product marketability examples of which are, Does it address a large potential market? Can they claim a leadership position in that market?WRF Capital, like many investment groups, evaluates the management of potential funding recipients. Le said that experienced management or the ability to attract experienced management is essential to receive funding.Le also looks for a high return on investment and strong proprietary intellectual property position. WRF Capital is unique in its desire to fund companies that have a significant technology-based link to a research institution in Washington. This could come through intellectual property license or company funded R&D, said Le.A top priority for all venture groups is the ability for business leaders to project definable milestones. Investors want to know how the valuation of their investment will improve. Le asked, What can I expect from the money I put in? I want a clear exit strategy in two to seven years. This can come through an acquisition, IPO, merger, or leverage buyout.A good business plan should convey this information. Le said it should be concise and to the point. He wants a business plan to tell him that the opportunity is really compelling.He is open to investment leads that come through trusted professional relation-ships. The first written information he likes to review is a one to two-page executive summary.It outlines the content in their business plan so that I can get a flavor for what the deal is about, said Le.He also prefers a complete business plan to a private placement memorandum (PPM) in initial discussions. A PPM is a document that contains offering for purchase of shares and risk factors. WRF Capital evaluates plans from a team-based approach. Le said that everyone works collaboratively on evaluating and deciding plans and funding.I draw upon the experience of my colleagues when performing initial due dilligence and when looking closely at technologies and emerging opportunities, said Le. We all grow through this collaborative due diligence process.Le has reviewed business plans and made investment decisions at WRF Capital for five months. Prior to joining WRF Capital, Le founded several start-up companies and performed medical product research for leading investor groups, reputable biomedical companies, and early-stage companies. His direct experience consulting to start-up companies assists in his evaluation of business models. Le started his first business in college. It was a software company, Crimson Test Prep, Inc., that developed Internet-based educational software and training applications. The business was acquired months after conception. Le has also started an Internet portal business and functional foods company, both of which resulted in a successful exit for his investors.WRF Capital is located at 2815 Eastlake Ave. E., Suite 300 Seattle, WA 98102. More information is available at: www.wrfcapital.com. Executive summaries should be e-mailed to thong@wrfcapital.com. “

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