5 startups practice “The Pitch”

You could call it the business equivalent of a pre-season game.

The score didn’t count on the final record, but the bruises and bumps — and the lessons — are all real.

On Wednesday, five companies from around Virginia and North Carolina laid it all out on the line for a group of angel investors in the third of a series of mock venture capital pitches held at business schools across the state. This final Live Fire! event was held at the University of Richmond’s Robins School of Business.

Moderator Letitia Green, managing director of the Virginia Active Angel Network, said that the key to attracting an investor is all in the presentation.

“You have to entertain them, this is what I call A-D-D money,” said Green. “You only have a few minutes to get their attention.”

The event was not a competition, nor were any checks promised. Instead, participating companies polished up their pitching skills, while future entrepreneurs and students watched the venture-capital-raising process firsthand.

The group of panelists provided sometimes brutally honest feedback to the diverse lineup of companies, which included a Virginia-based Scotch distillery and a North Carolina-based cold storage provider for biotech firms that wants to expand to the Richmond area.

Panelists Valerie Gaydos, Robert Franklin and Richard Crawford all were representatives of various investment groups that pool money together. (You can read extensive bios of the panelists here.)

They have their own language, too, and the organizers provided a glossary of technical terms for the uninitiated.

“They start talking about burn rates, dry powder and exploding warrants, and you might think you were at a terrorist convention,” joked Mark Green, chairman of the Charlottesville Venture Group, which helped organize the event.

The five presenting companies represented a wide rage of industries and were in various stages of growth.

Roanoke-based Coaches Console sells an online service to professional coaches that provides training and web-based back office software. Founder and chief executive Melinda Cohan said the company has grown revenue by 70 percent each year for the past three years but needs $450,000 to fund expansion of its concept to other market segments in order to keep growing.

ADial Pharmaceuticals, a company from Charlottesville, is developing a drug to treat alcohol abuse. The drug, developed by a University of Virginia researcher, lets users drink when they start taking it. It allows dependents to gradually ease of their alcohol consumption instead of quitting cold turkey. The company has two drug candidates that have cleared the second phase of trials.

Chief financial officer Jack Riccardi said the company needs $1.5 million to fund he completion of patents and other legal fees. That will put the company in a better position to sell the drug to a larger pharmaceutical company that will take it through the third phase of trials. The Food and Drug Administration typically requires two successful phase three trials before approving a drug.

Raleigh-based Kryosphere offers secure offsite storage for biological samples, as well as mobile delivery of samples in temperature-controlled vehicles. The company, which was founded in 2007, plans to break even in the second quarter of next year. The company is seeking investors to fund the addition of new locations that are positioned to serve the growing biotech industry in the South East.

The Virginia Distillery is a company from Nelson County that bought a Scottish whiskey distillery and plan to move production here to the states. The group is seeking about $1.6 million to fund the construction of a lakefront distillery 30 miles south of Charlottesville. The whiskey company planned to get a commercial mortgage, but when lending dried up in October it decided to search for outside investors. As an added bonus to investors, president Joe Hungate said they would receive their own personal barrel of whiskey.

The company said it can produce the whiskey cheaper in the states than in Scotland. It imported the current supply of Eades Whisky and is selling it in the meantime, but the company doesn’t really start making money until its Virginia-made whiskey hits the shelf. Each barrel costs about $500 to produce but generate $25,000 in retail sales. The distillery plans to produce 2,000 barrels.

The final group to present was a North Carolina-based nanotechnology company called Blue Nano. The company has patented a number of manufacturing-related components and processes that extend battery life, make fuel cells more efficient and increase the power of solar panels. David Himebough said the company is seeking $1 million to grow its sales force.

Al Harris covers startups for BizSense. Please send news tips to Al@richmondbizsense.com.