It’s only been a couple months since 3Points became an official partner of Hyde Park Angels, but it’s already been a fantastic experience. Between attending HPA events and meeting the smart people behind both HPA and their portfolio companies, we feel more connected to the burgeoning Chicago tech scene than ever. Our Drew Mauck has even appeared on their website, offering PR advice to startups.
Last month, we were grateful for the opportunity to speak with Alida Miranda-Wolff, HPA’s Director of Platform, for our own blog. Today, we’re excited to bring you our conversation with HPA Managing Director Pete Wilkins. Read on to hear Pete’s insights on how PR can benefit startups, what early stage investors are looking for in companies and leaders, and more.
What is your role at HPA?
What really first got me involved as an angel investor was the opportunity to help build a strong tech ecosystem in Chicago. And the way that I see it now, as opposed to when I started ten years ago, is that not only can we build a stronger ecosystem, but we can invest in some of the best companies in the country, which will be a benefit for investors, companies, and the community.
My overall responsibilities at HPA are to ensure the organization is best-equipped to support our portfolio companies and the entrepreneurs who run them, and to work with entrepreneurs who are looking for investments. I try to find and make matches between our financial capital and human capital.
Do you have any examples of portfolio companies, or other startups, who use/used PR very effectively?
All venture capital firms are in the process of trying to uncover great opportunities. It helps to look at companies disrupting large markets and innovating large concepts. What PR does is provide context as to how these startups are disrupting industries, which then generates interest.
The one unique thing about effective PR is that it provides context from a macro perspective. It can give some proof of how much traction companies have, by using sources to validate claims or statistics.
What do you look for in potential portfolio companies? How can entrepreneurs make a successful pitch?
Ultimately, if you are pitching an investor, you have to identify and talk about the problem you’re solving or the opportunity you’re creating for consumers or businesses. You have to show that there’s a strong need for a solution there, and that consumers or businesses will be compelled to take advantage of the solution you intend to create.
If a business has a problem and the CEO is waking up at night thinking, “I have to solve this,” that’s where there is opportunity. If you can demonstrate that your product or solution can accurately provide a solution to that problem, it becomes really clear how your business will be successful. The key is identifying where the value is created for a consumer or business that will compel them to change their behavior.
The next element when you’re doing that is to think about the market size. Can you say, “There are so many people with a similar problem that the market size of this problem is enormous”? If you’re able to show that it works on a small scale, you can certainly project how it will work on a large scale.
And then the next element is to show that the team that has developed the solution has credibility. If you’re a serial entrepreneur, show that you’ve had previous success. If you’re a new entrepreneur, show how you’ve been able to work with advisors and help validate that this is a problem. So the credibility of the team and the leadership that they’re oriented around becomes really important — you want to demonstrate that.
In terms of structuring a pitch, is there anything specific you look for?
The one thing that I would tell people is that what we’re evaluating is less about every word you’re saying, and more about your logic. For example, your financial model will never be 100% accurate — I know that. But the logic of how you’re thinking about getting to your financial goal is something that we’re evaluating. You could spend 15 days figuring out the perfect 10-year model, but it doesn’t mean anything if your baseline logic is incorrect. So really what venture capitalists are doing is trying to test your logic of how your business will work, knowing that there’s going to be a lot of evolution in the way that you are able to deliver, market, and help grow.
What trends are you noticing in Chicago tech?
The trend that is starting to emerge is that we’re being able to parlay our success both through traditional and startup businesses to grow out industries. If you look at what’s going on in the logistics industry, we have a bunch of established players, but we also have new startups that are able to harness the same talent and infrastructure to grow. If you look at artificial intelligence and IoT, we’re able to harvest companies that are traditional players (like Gogo, Caterpillar, etc.) and emerging companies like Uptake and Catalytic. We’re seeing industries like farming and B2B Marketplaces grow, and we’re able to see how Grubhub and Groupon have created new marketplaces, so I think the biggest trend is that we are moving in the evolution of our ecosystem from being immature to mature, and, as a result, we are seeing a variety of different industries flourish.
If you look at our ecosystem performing, we’re #1 in return-on-investment capital across the country. When you look at the number of companies that have reached unicorn status over the last few years, we’re second only to San Francisco, tied with New York City, and well ahead of Boston, Austin, and the Pacific Northwest. Not only is the Chicago ecosystem maturing, but the businesses and the size that they’re achieving, and the return that they’re providing to the entrepreneurs and the investors, are among the top of the class.