Closing the Deal: AlphaLab prepares companies for life after Demo Day

By Matt Pross, Staff Writer

You don’t often hear the terms balance sheet, financial model and cash flow statement thrown around in conversations around the proverbial water cooler, but after spending some time at AlphaLab’s Southside offices, it would seem that financial terms like the aforementioned were recently added to popular lexicon. On top of building companies from the ground up in about four months, the entrepreneurs at AlphaLab all take a crash course in finance before pitching to investors at Demo Day in mid May.

To ensure that its portfolio companies understand and are conversant in the necessary particulars to close investment deals, AlphaLab brought in a variety of experts over the last few weeks to answer questions regarding the financial side of building a company as well as gaining investor interest and closing funding deals that will set a company up for future success. Representatives from Birchmere Ventures, Pittsburgh Equity Partners and Cohen & Grigsby P.C. all spent considerable time with the AlphaLab companies answering questions and sharing war stories from previous relevant experiences. These roundtable sessions were eye-opening to say the least and really helped me to understand all of the financial variables that must be understood and planned for to start and grow a successful company.

A consistent theme throughout all of the roundtable sessions was the importance of coachability. Like anyone who invests their time and money in a person, project or company, venture capitalists desire to work with and invest in entrepreneurs that will listen to their advice and avoid costly mistakes that others have made in the past.

“Coachability is very important to us,” Ed Engler, Manager Partner at Pittsburgh Equity Partners (PEP), said. “You can listen to others, take their advice and avoid their mistakes, or you can ignore them and make all of the same mistakes yourself, which happens to be very expensive for your investors.

“On the other side, entrepreneurs need to look for the right investor as well,” he continued. “You want an investor who can provide mentorship, experience and information that you don’t already have. Like any healthy relationship, the relationship between investor and entrepreneur should be give and take. You also want to make sure that your expectations and goals are aligned with your investors.”

Engler and his partner, Steve Robinson, have provided mentorship to every AlphaLab round since it’s founding in 2008. Robinson echoed his partner’s advice regarding finding the right fit in an investor.

“You want to look for value-added investors,” Robinson, Managing Partner at PEP, explained. “People that bring more to the table than just money. Also, you need to make sure you are totally aligned with a VC before you take their money in terms of expectations for the company and the direction it will take.”

Of course, at the incredibly early stage that all of the AlphaLab companies are at currently, the exact direction that each company will eventually take is not set in stone. But, as both Engler and Robinson said, it’s all about being on the same page with investors, being realistic regarding customers and future goals, and most importantly, being honest about every aspect of the business.

“Integrity is the most important thing to us when we are doing our due diligence,” Engler explained. “Just like every other potential investor, we will call every customer that is mentioned in your pitch to check and make sure the information we received is accurate. Never embellish customer numbers when speaking with investors because we will find out!”

TEQ Startup Project: Bruno Works

As part of the TEQ Startup Project (TSP), we’ve been hanging out at AlphaLab getting to know the latest class of tech startups. We’re also making our rounds to check out Pittsburgh’s co-locating spaces. These are the sweet parts in the city where startups are sharing spaces and resources and, hopefully, ideas, too! Here’s a little insight on Bruno Works:

The colocation craze that has swept through Pittsburgh’s neighborhoods has now entered downtown with Eve Picker’s latest real estate venture Bruno Works.

Bruno Works is bike friendly!

Bruno Works is bike friendly!

Located at 945 Liberty Avenue above the ToonSeum, Picker’s Bruno Works has created an affordable option for startups looking to land their first professional digs. She also runs her businesses No Wall Productions and We Do Property from the site.

The well-worn wood floors, brushed steel, warm color palate, pervasive smell of fresh coffee and all around kick-ass vibe of the space appears to be a fitting place for young tech companies to call home. Picker likes to call them “tiny little startups.”

More than a dozen individuals have claimed desk/office space and Picker says there is room for at least 40 to fill the two floors.

Having made a name for herself as an expert in inner city regeneration, specifically downtowns, Picker believes colocation sites like Bruno Works are perfect for creating synergistic connections.

“One of the best things about Bruno Works is the low cost rent, the place is ideal for small businesses and entrepreneurs who are looking for an office space

Bruno Works space gives entrepreneurs a flexible and warm work environment.

Bruno Works space gives entrepreneurs a flexible and warm work environment.

in a prime location, such as Downtown Pittsburgh, who may be operating on a small budget,” said Taylor Durham, CEO of Dark Horizon Studios, a start-up video production company.

“The layout of Bruno Works is incredible because it’s not the traditional cubicle office I think so many of us are used to. There’s an open kitchen area, multiple conference rooms, a lounge area and an open space studio to gather for large projects or meetings. Honestly, I don’t think you’ll find anything like this in the area that presents this cozy, laid back atmosphere in the middle of a fast-paced, bustling business district like Bruno Works, it’s definitely a rarity.”

Amenities at Bruno Works include a make station, mail boxes, high-speed internet, as well as printing, faxing, copying and shredding. For a small upgrade in cost, tenants can even get a permanent window seat. There is also a flex pass option to access the Beauty Shoppe in East Liberty.

Learn more at brunoworkspgh.com

Up next: more goodness from AlphaLab and Revv Oakland is ready to celebrate 1 year housing tech startups…Keep yinz dial tuned right here.

Classing Up AlphaLab

Phil Anderson dropped serious SEO knowledge on the AlphaLab companies.

Phil Anderson dropped serious SEO knowledge on the AlphaLab companies.

AlphaLab is more than just physical space for technology startup companies to launch. It’s not just the plywood offices, desks, meeting spaces and well-stocked kitchen to fuel 18-hour work days.

Perhaps the most important aspect is the knowledge sharing. AlphaLab sets up regular information sessions on business basics that can easily be overlooked in the heat of getting a company off the ground.

This past week, AlphaLab brought in alum Phil Anderson of BudgetSimple to give the fledgling companies a primer on Internet marketing and search engine optimization.

Apple laptops were glowing in a semi-circle complete with pizza, wings and breadsticks as Anderson imparted valuable knowledge on this often-neglected topic that can make a true difference in a startup’s plight.

Digital Dream Labs’ Justin Sabo said these types of courses are truly helpful. He admitted that developing an SEO and Internet marketing strategy has been high on his list, but focusing attention to it has been tough. The hour-long presentation put it back on his radar screen.

Anderson kept the presentation engaging, fun and relevant by actually reviewing some of the AlphaLab companies’ web sites and marketing strategies. Anderson talked candidly about his experiences marketing his Beerby and BudgetSimple apps while providing tips to avoid common Google AdWords strategy mistakes and e-mail marketing insight.

Anderson said he enjoys being able to provide knowledge and help guide the next wave of entrepreneurs.

Yet another installment in the TEQ Startup Project (TSP) where Techburgher and TEQ have been following the current class of AlphaLab companies. We’re also exploring other facets and resources for Pittsburgh’s tech startups. Up next is Bruno Works. Look for more coverage in TEQ magazine and TechVibe Radio.

ACT Operations Research Chooses Pittsburgh for Growth

PAt Callaghan runs ACT OR's Pittsburgh presence.

Pat Callaghan runs ACT OR’s Pittsburgh presence.

When Italian-based ACT Operations Research (ACT OR) decided to grow its North American footprint, Pittsburgh was a logical choice to set up shop. After all, Pittsburgh is close to many of ACT OR’s partners, research universities, customer base and home to seasoned software business development executive Patrick Callaghan.

He took on the role of building ACT OR’s stateside presence in 2012, and he is ecstatic about the opportunity to be part of a math-based engineering company that provides advanced forecasting, optimization and simulation services.

Callaghan worked closely with ACT OR during his days at Rockwell Software and was always impressed with the company’s capabilities and approach to business.

“It was a natural fit for me,” said Callaghan. “What I like about the company is that we want to be world renown for what we do and we are driven by results.

ACT OR is set up with two distinct business lines. ACT OR’s Optimization & Simulation Division provides proprietary math based modeling  for demand and risk based forecasting, simulation and optimization. Its Process & Control Division upgrades and optimizes plant/facility performance and safety with control systems design and simulation.

Callaghan explained that ACT OR works in a multitude of different industries, including manufacturing, retail, distribution and warehousing. The company is also doing research and development in the financial industry by working with hedge funds to optimize returns.

ACT OR is always looking into new uses of the technology and finding ways to improve it.

“We have strong university ties and constantly do research and development for improvements and new technologies,” Callaghan said. He noted that ACT OR will not add new features to its software until they have been thoroughly researched and proven to help customers.

What makes ACT OR unique in the marketplace, according to Callaghan is its use of neural networks to model complex relationships between inputs and outputs or to find patterns in data. Couple that with its expertise in learning machines and genetic algorithms, and the business really starts to charge away from the competition.

Formed in 1996, ACT OR is a privately held company headquartered in Rome with offices in the UK and USA (Charlotte, N.C. and Pittsburgh)

 

Risk Discovery Announces New Services and Added Locations

Entrepreneurial  Resource Group (ERG, llc) and Granite Bridge Advisors Inc., announce the formation of a joint venture to launch Risk Discovery Services, JV , with business locations in Boston and Pittsburgh

Enterprise Risk Discovery Services identifies operational risk within a business, pinpoints, prioritizes, documents and proposes tactical strategies for ameliorating those risks before someone else does – or a business failure or disaster occurs.

Risk Discovery is based upon the premise that “Risk and Value are Opposite Sides of the Same Coin.”

These services are partly in response to the recent Dodd-Frank enactment that increases personal liabilities for members of the board and executive team members, and to the fact that risks exist in all quarters of business and need to be uncovered or discovered and controlled or eliminated.

The RISK DISCOVERY staff brings the abilities needed to locate and personify risks, establish priorities that reduce or eradicate risks in a reasonable time frame and document the actions needed to be taken to protect the business, stakeholders, brand and reputation of your business.

The return on this investment can be impressive and Risk Discovery Services issues a third party, independent opinion of business risks.

Get more information at www.rdsjv.com.