How networks play matchmaker for entrepreneurs, investors. Boston network is part college mixer, Arab souk
More than a hundred people are milling around the doors to the dining room. It's 7:30 a.m. and they have paid $20 to come to the monthly meeting of The 128 Venture Group. Attendees register under one of four categories: provider of new technology (company looking for people, money, or both); provider of capital (banker, venture capitalist, or private investor); provider of professional service (lawyer, accoutant, financial planner, and so on); or management team candidate (person looking for an equity position in a new venture).
The doors open and people quickly find seating. Michael Belanger, who with Stephen Ford founded the group four years earlier, says everyone has 60 seconds to introduce themselves and tell what they offer and what they need. The clearer people are about who they are and what they want, the easier it is for others to make contact. A microphone is circulated around the tables.
Following a short talk by a guest speaker, informal networking begins. The scene is a cross between a college mixer and an Arab souk as people weave through the tables.
``It's difficult to grab everyone you want to meet,'' Carl Carlson, president of Advisors Funding of Nashua, N.H., points out. ``Fortunately, they send a full attendance list to all participants, so I can phone those who got away.''
The 128 Venture Group is one of the three not-for-profit forums started by Mr. Belanger. The others are in New York and Baltimore/Washington.
Mr. Ford believes that the major benefit of these networks is education. ``You have a chance to meet with venture capital people and a variety of professionals on an informal basis. These are contacts that can help the entrepeneur move to the next level.''
New business networks provide a forum for increasing contacts across industry and profession lines. They have proliferated throughout the United States and other countries.
Le Network in Montreal was founded last year as ``a modern alternative to the `old boy network,''' say its founders, Howard Silverman and Jay Silverberg. Their organization is for profit. Besides monthly meetings, they produce a newsletter, a directory, and a networking handbook.
``Where people are particularly at sea is when it comes to finding money,'' says Burt Alimansky, head of the New York Venture Group. ``Networking is a very good solution. This kind of forum gives entrepeneurs a sense of community. Other people are facing similiar problems.''
The Mountain West Venture Group was formed in 1983 by Roy Jespersen of Wasatch Advisors in Salt Lake City. He cites a lack of venture capital as a moving force to forming the group. In an effort to stimulate investment in the ``Bionic Valley,'' the Mountain West group is creating a confidential listing of investors and projects that interest them. Once a year, the group sponsors an ``angels' fair.'' Individual investors are brought together to review new ventures screened by the board.
In ``Automation Alley'' (Ann Arbor, Mich.) during the first year of the New Enterprise Forum, 13 successful deals have been put together. Thomas Porter, the founder, sees this group as ``building an infrastructure for financing new ventures in the area. There are a lot of great ideas that aren't fundable by professional venture capital criteria.'' He notes that ``although we don't have a lot of women attending our meetings, this network is a great shortcut for women, who are traditionally outside the old-boy funding process, to make contacts.''
There are 40 to 50 similar groups throughout the US. Most are relatively new. Few keep track of marriages between business and money, or companies and management candidates.
William Wetzel, a business professor at the University of New Hampshire, puts the need in perspective: ``Individual investors or `angels' represent twice as much capital as venture firms. Each year they provide $10 billion to $20 billion to 50,000 to 100,000 firms. Angels learn about opportunities through a random old-boy network, which is horribly inefficient. Most investors would like the chance to look at 70 percent to 80 percent more deals.''
Professor Wetzel points out that location is very important to angels, who typically are entrepeneurs who understand the startup process and are interested in investing their money and experience in a business similar to their own.
In 1984, Wetzel started the Venture Capital Network, a not-for-profit equivalent of a computer dating service for investors and entrepreneurs. Wetzel says he has learned of at least nine successful marriages through his service.