Tuesday, January 13, 2009

Apply for Shotput Ventures for the summer

Duke alumnus, David Cummings, contacted me about Shotput Ventures, which hopes to launch startups during the summer.  Below is more information.

David has two successful comanies, Hannon Hill, and Pardot.  


Shotput Ventures, a technology startup accelerator fund, will launch a three-month program this summer to give entrepreneurs a shot at converting passion into profit.

The group, which includes MFG.com’s Mitch Free, will invest up to $250,000 in eight to 10 potential companies. The deals will be small -- $5,000 per team and $5,000 per founder -- and focused on what the eight partners know well: capital-light, Web companies.

The concept is to help people with ideas, who might not have access to a small amount of money needed to get the idea off the ground, Shotput partner and architect David Cummings said.

“You have an idea and you can put 110 percent into it for three months, build something [and] prove it,” he said. “After three months you’ll have something tangible, you’ll have some beta customers.”

Cummings likens the selection process to applying to grad school.

“We are really trying to understand the person, what they want to do, why they want to do it,” he said. “The talent, and the ambition is much more important than already having something done.”

During the summer, the entrepreneurs will get mentoring from Shotput partners and access to veteran entrepreneurs, bankers and investors at weekly dinners. For the final exam, the class must pitch to the money men -- VCs and angels.

Cummings expects about a third of the class to walk away with institutional money and another third to bootstrap their way forward.

Investing in companies is riskier business, investing in mere ideas can be financial suicide. Shotput hopes to burn some of the risk by betting only on those sectors its partners are familiar with -- social networking applications, business-to-business marketplaces, e-commerce and marketing automation.

“If we don’t understand the idea or the space,” Cummings said, “we’re not going to [invest in it.]”

Making the right deals defines the success of any venture fund, said Mike Blake, managing director at valuation firm Adams Capital and co-founder of StartupLounge.

“It’s really tough to overcome a mediocre deal,” he said

For its effort and money, Shotput will get 5 percent to 10 percent in common stock in its portfolio companies.

“If we get five-times our money back,” Cummings said, “we’ll have done extremely well.”

Shotput Ventures addresses an unmet need for seed stage capital, said Greg Foster, partner at Atlanta-based Noro-Moseley Partners. Foster, however, suggested it might be difficult for Shotput to make a significant return given the relatively small stakes.

“It’s also more difficult for common shareholders to achiever a higher return multiple on their investment,” he said. “The [portfolio] company would have to be really successful to the degree that common shareholders receive a significant benefit.”

Regardless, Atlanta’s tech investors will be watching the Shotput model. By helping transform ideas into companies, Shotput creates future investment opportunities for the guys higher up the food-chain.

That, in the end, could be the legacy of the Shotput boys.

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