In this episode, I talk with Jacob Schpok, executive director of university initiatives for Elevate Ventures. University initiatives is branded under the name Elevate Nexus, rolling out new programs and investment vehicles to grow entrepreneurship and start-up activity across the state, through engaging higher education institutions. Elevate Nexus is broken into a couple of different components: identifying best practices across the state with higher education institutions, figuring out where these institutions currently are with supporting entrepreneurs, and then cross-pollinating these ideas.
Topics in the episode
How elevate engages with universities
How much of Elevate’s investment dollars are directed to the university initiatives
Details of the seven pitch competitions Elevate is launching across the state
Qualifications of pre-seed and seed level investment opportunities
Expectations of a pitch at the competition
Problems of pitch competitions, and how Elevate Nexus is addressing those
Importance of having data that your roadmap is based on primary or secondary research
Newsletter for more information
Mike Kelly: Welcome to the Startup Competitors podcast. Today we have Jacob Schpok who is the executive director of University Initiatives for Elevate Ventures. Jacob, welcome.
Jacob Schpok: Thank you Mike. Thanks for having me on.
Mike Kelly: Why don't we start with what are University Initiatives for Elevate Ventures?
Jacob Schpok: Yeah. So University Initiatives at this point is really branded under that name Elevate Nexus. We're rolling out new programs and new investment vehicles where we're looking to grow entrepreneurship and startup activity across the state through engaging higher education institutions.
Mike Kelly: Can you make that a little bit more tangible? What does that look like?
Jacob Schpok: Absolutely. Absolutely. It's really broken into a couple of different components. One is identifying best practices across the state with our higher education institutions. Figuring out where these institutions currently are in supporting entrepreneurs, and then cross pollinating these ideas. When it gets even further in terms of making this more tangible, we're investing in these higher education institution's entrepreneurship engagement activities. So if there's a university, for example, looking to create new entrepreneurship programming that would be a candidate for grant dollars from us, as well as those that already have programming but they're looking to iterate on it.
Jacob Schpok: When it comes to serving the entrepreneurs we're right now collecting a baseline on where are there current opportunities for us to better support entrepreneurs and those that have the earliest business ideas get to a first iteration of a pitch deck, put together online and in person trainings to help them reach those steps. And then provide preseed and seed dollars so that they can further derisk their business model, and hopefully get to a point where it will attract additional outside investors.
Jacob Schpok: Furthermore Elevate Ventures would be interested in seeing these further derisked so that we can use our other funds as well to plant a larger stake in these businesses.
Mike Kelly: So I heard best practices, sharing identification and sharing investing in the university programming itself. And then potentially investing preseed, seed dollars into some to the startups that might be coming out of those universities.
Jacob Schpok: That's right.
Mike Kelly: Right on.
Jacob Schpok: That's exactly right.
Mike Kelly: Has Elevate been doing some of this work in the past? How is this different or similar to maybe some of the historical ways Elevate has engaged with universities?
Jacob Schpok: Yeah. I would say that we have been working with universities. In particular we've had a fantastic relationship with Purdue University, and we really see the lessons learned from that relationship with Purdue to serve as a pilot that's ultimately have us roll out this larger initiative. If we look at universities as a whole, or higher education as a whole, in the state of Indiana over a billion dollars is being spent on R&D every year. Obviously they're the home for researchers that are creating and discovering new innovations all the time. And they have this supply of talent that's either looking to join startups or start their own. So they're a natural partner for us to be able to surface new startups.
Jacob Schpok: This approach, though, that we're taking now, this more intentional approach is really based on those findings from Purdue and finding ways to grow it beyond just the greater Lafayette region.
Mike Kelly: Do you have a feel for how much of Elevate's funding or dollars go towards these types of initiatives versus that I would think of typically as a traditional Elevate investment, something that would go in front of and run through that process that she talked about when she was on the podcast. How big is this relative to the overall Elevate mission and business.
Jacob Schpok: So there's two ways we can look at it. If we look at dollars invested, right now Elevate, our core investments they'll range from 100K to two million in a single round. That's really our focus area. So as you expect, that means we're looking at businesses that are pretty far along in a prerevenue business model standpoint, or they're early revenue. Maybe they have their sales and marketing model down at that point. So what we might traditionally call a seed round, a round A, maybe sometimes to round B, that's generally where we invest.
Jacob Schpok: This new initiative under Elevate Nexus, we're launching seven pitch competitions across the state where we'll be investing in increments down to as low as 20,000 and up to 100,000. So these investments will be, to the extent where if we have a strong team coming in with nothing more than a pitch deck, and maybe qualitative data at that point. Maybe they have talked a little bit to their customers, have a little discovery. But honestly they don't have an MVP yet. They're still a candidate for investment from us.
Jacob Schpok: We're really dividing up the pitch competitions into two different kinds of investments. The preseed and the seed. In those preseed investments, we're looking for tenacious entrepreneurs that can prove that they have grit and they truly understand the business model that they want to execute on. Of, course I should also mention, they have identified a total address market that would fit our expectations. Right now we're calling that half a billion, so 500 million as a total address market size. So it has to be innovative in nature. If you bring that forward to the Elevate Nexus program, you'll find support and opportunity to get in front of an investment group.
Mike Kelly: You said, two ways. I think that was one way.
Jacob Schpok: Yes. Thank you. The other would be the seed. Those that have a minimum viable product. Maybe they have early revenue. It could be clunky on how they're obtaining that revenue of course. Or if they're in the life science space, they're in preclinical trials. That's sufficient for us to make the larger investments which starts at 80K.
Mike Kelly: Okay. Got it. Maybe you don't know this, maybe you do. Talk to me about how you and your team will execute those seven pitch competitions. What does that look like? What do the mechanics look like? If I'm a founder who's pitching on stage, what expectations should I have for how I'm being judged or graded to know that I'm executing the best way that I can?
Jacob Schpok: Yeah. Great question. So as I'm sure you'd imagine, the expectation is we'll have a lot of interest from entrepreneurs to participate. So we have a very regimented 10 slide pitch deck expectation. No more, no less than 10 slides. Every slide has to be intentional. One has to be about the problem. One the solution. One the total market. Etc. we're going to factor in how much time they have on stage based on how many pitch decks we end up getting meet our standards. So it could be as high as 10 minutes on stage. Maybe as low as five minutes on stage to be honest.
Jacob Schpok: We're having a panel of judges that will evaluate each of these pitches based on the merits of the team, the market size, how well they can show evidence that they understand the problem that they're addressing and they're the right ones to solve it. At the end of the process then, it really will be the judges making a decision on which ones we're investing in.
Jacob Schpok: We're dividing the state up into three regions. Each region will have two regional pitch competitions a year. So that's our first six. Six will be these regional pitch competitions. They're slated for October and February of each year, starting with this October's, this being our first one. And winners of the regional pitch competitions will be invited to present at the statewide pitch competition. The statewide pitch competition is for larger dollar amounts.
Mike Kelly: So I could win twice.
Jacob Schpok: You could win twice.
Mike Kelly: I mean I will.
Jacob Schpok: That's right.
Mike Kelly: I will.
Jacob Schpok: I know you will.
Mike Kelly: Win twice.
Jacob Schpok: In that vein, theoretically you could walk through this whole process. You could come in with an idea. Win preseed dollars at your regional pitch competition. Show a little bit of traction and win state for preseed. Then some back, win state, now that you have an MVP or early sales. Win seed dollars at the region, and then win seed dollars at the state. Since there are four different opportunities, yeah, we're really excited to see what comes through.
Mike Kelly: And then, in theory, if I did all that I would be very well positioned to get a follow on investment from Elevate in a series A or whatever.
Jacob Schpok: Absolutely. Absolutely. Really the expectation when it comes to these investments is we're helping these entrepreneurs derisk their venture to the point where other angels or institutional investors are going to come in and help take this business to it's next level.
Mike Kelly: I didn't read you the disclaimer before we started. I'm just going to ask questions for me and you're allowed to say pass, or I don't want to answer that. This is an edited podcast. Our listeners will never know. We can edit it out, so don't ever feel like you need to answer something that is going to put you in a difficult situation.
Mike Kelly: However, I'm going to ask this question. So there are tons of pretty well documented arguments on the internet for people who have problems, various problems with pitch competitions and their efficacy at actually screening for the right talent and/or ideas. Particularly as the time allotted for the pitch gets shorter and shorter, right?, it's just hard to get nuance into a pitch. So I'd love if you can, or are willing to talk a little bit about your thoughts on maybe what are some of those systemic problems with pitch competitions? And how are you guys hoping to address those with what you're putting together?
Jacob Schpok: Great question. I'll speak anecdotally of the pitch competitions I've seen. I've been floating in this entrepreneurship, startup space, 15 years now or so. So I've seen this insurgence of pitch competitions, right? A lot of them serving the same market of the earliest entrepreneurs, right? These are the ones that may not be able to get 90 minutes with an investor one on one to really talk through what they're working on. A lot of the time what we see are entrepreneurs that take the stage and they spend the majority of the time talking about their solution. Maybe not even addressing the problem that they're solving at all. And then immediately jumping into how much they need in order to further the solution and bring new feature sets, for example, to the solution that they've developed.
Jacob Schpok: What we're really pushing for with this pitch competition, with the regimented approach that we're taking, is it forces the entrepreneur to speak on the business model, to speak on sales and marketing, the other components that really matter to validate that you have something here that the market actually wants to buy. That's table six, being able to create a product that people actually want to buy. Where we see the differentiator is, have you figured out, or do you have a good assessment on how to get it in front of the audience that wants to buy this? And do it in a meaningful, compelling way where they can seamlessly create the transaction? That component is so often missed in these pitch competitions where they just want to continue to talk about the new innovation that they're bringing to the market, and how they have this gut impression that this is a problem that a wide audience is also feeling without showing evidence otherwise.
Jacob Schpok: I'll also add another one of the slides that will be absolutely critical is the competition slide. The competition slide, the obvious reason why investors want the competition slide is to see who else is out there selling this. But it's also extremely valuable in just understanding how the entrepreneurs are positioning themselves in the market, and where are they gleaning best practices or where are they gleaning market insight on how their customers are already making purchases. Where are they taking money away from, and what are the current channels that are in place for those competitors in order to sell to the same market that they're going after. Those are just some of the examples of pieces that we believe will make this pitch competition, even if the time will be short, it will allow for the entrepreneurs to be able to speak the language that investors care about. Moreso than further validating that their solution is patentable or one that's fresh in the market. While that is important, it's obviously not the only thing that matters.
Mike Kelly: This one will be kind of hard to answer I think. Because I think it's different between life science startups and software startups, which I know Elevate serves both of those. So maybe we'll keep this to SaaS companies for now, but if you can think of some ways to comment on this on life sciences that also would be interested in it. But specific competition, what does it tell you when a founder or a founding team comes to you and says, there really is not competition for this product?
Jacob Schpok: It tells me that they haven't yet surfaced the budget that they're pulling money out of from their customer.
Mike Kelly: Can you elaborate on that a little bit?
Jacob Schpok: Yeah. So if we just go from a very black and white perspective here. If they're selling to the marketing department, let's say that marketing department budgets for 2020 are going to be set in October. Okay? That marketing VP or CMO is going to figure out how to spend that money in 2020, and if you enter into the conversation in February of 2020, that VP or C-level executive has to figure out where they're pulling money away from. That's your competition. The money is always coming from somewhere. It's being taken away from some other pocket. That's what we look for.
Jacob Schpok: So even if it's a new innovation ... One that I love saying is B to B sells where it's a solution that saves the company money. So the expectation is we're going to save this company money, so the budget for this is going to come directly from the cost savings that we're going to help them realize. Okay. Well, that's all well and good. When are you going to charge them though? Are you charging them today? Or are you going to charge them after they start saving money? And the answer is always, well, we're going to start charging them today, right? Well, we're right back to where we started.
Jacob Schpok: So when it comes to life science, it is a little bit different. For the life science.
Mike Kelly: By the way, before you jump to life science. That was a phenomenal answer. That was really good.
Jacob Schpok: Thanks, Mike.
Jacob Schpok: With life science, it is a little bit trickier, right? I mean if you have a cancer curing drug it's a little bit different than if you have a SaaS solution that helps optimize performance. What we look for in regard of drugs and any pharmaceutical solutions that need to go through the FDA process, what we really look for in terms of customers is are there strategics that would be interested in buying this company, or this intellectual property, further down the road? Are you hitting an actual problem in the pharmaceutical space that there are strategic partners that want to buy? As you might suspect, more often than not the answer is yes, right? And then things fall apart when you start going through FDA and drug trials don't work out or whatever the case is.
Jacob Schpok: If it's more of a medical device, one where may you need 5-10K, so it's less expensive. It might not be where you need a strategic to get to market. Then a lot of the time it's more about figuring out whether this can align with the Medicare/Medicaid system or any type of insurance provider, for them to create a reimbursement strategy. So we're looking to see whether or not the pain point is big enough for those large insurers to say, yes, we're willing to cover part of the cost of this crutch being sold to our clients, for example.
Jacob Schpok: So it is a little bit trickier, candidly, for healthcare, life science businesses. It is trickier for them to prove that they can bring a business all the way to a point of revenue generation. A lot of the time what we look for is that they're figured out who the strategics will be that they'll sell along the way. But it is, in particular with medical devices, it is possible. Cook Medical is a prime example.
Mike Kelly: It is a startup competitors podcast, after all. So I want to stick on competition just a little bit longer. The other, I guess, two patterns that we would see sometimes in our research would be a clear dominant player in the market, right. There's a 300 pound gorilla. I'm building a Facebook killer. I'm going to replace What's App. I'm going to replace Quick Books. Right? So just think of a dominant player in the market who has 50% or more of the market share, and that shows up as one of the competitors. Right? I'm building Amazon for, insert thing here, or Uber for, insert thing here. So clearly not all of those are wrong all of the time. My guess is most of them are wrong most of the time. But it's not always the case, right? So I guess when you see that as a pattern, what are your instincts there? What are you looking for to try to determine whether or not this thing is real or it just stands no chance whatsoever?
Jacob Schpok: Yeah. I can't remember who told me this, so I can't take credit for it. But somebody once said, "Investors are going to be the biggest cynic until they invest, then they'll be your biggest cheerleader." So when I hear, We will be the Uber for blank or the Amazon for blank, immediately it's dismissed largely.
Mike Kelly: Amazon is going to be the Amazon of anything.
Jacob Schpok: That's exactly right. Or to your point of social media, a recurring theme in this space that we see are businesses that are trying to create a niche of professional networking for thing like, for startup, right? It's like, okay what you're talking about is a feature under LinkedIn. Right? I can create a LinkedIn group and do exactly everything that you're talking about doing. So it is tough. It is tough. And really the pain point needs to be crystal clear. I need to know before you even begin to talk about how you're going to be the blank of blank, right? I need to know crystal clear what that pain point is, and then take it one step further for me, help me understand the implication of that pain.
Jacob Schpok: So let's use this example of the networking for startups. Let's say that LinkedIn for some reason has inferior solution for connecting startups. Well, the problem is that they don't have a good solution. Okay. Right? Why do I care? Give me the implication of that being a problem. Well, for this just off the cuff, let's say that the problem of that is 75% of opportunities to create strategic partners between startups and raising additional capital isn't being realized because there isn't this solution.
Jacob Schpok: If you can convince me that that's an actual problem, and it's being overlooked. Yeah. Now I'll listen. I'll give you the credit. I'll give the entrepreneur the credit that they have figured out a problem that's currently not being addressed by one of the large players. Although if I see that large player in the competition slide, right?, I expect also to hear about how they're going to be the strategic that will buy them once the startup becomes loud enough and grabs enough market share in this niche for them to be a lucrative acquisition for your LinkedIn, or your Amazon or whatever.
Jacob Schpok: But really it starts with the problem slide, again. I don't want to know about the wedge that you're creating by creating a feature that I would expect SalesForce would create this feature. LinkedIn would create this feature. I don't want to hear about that. I want to hear about the problem that's being missed moreso than anything else. Because if you can convince me that there really is a problem that this larger organization isn't addressing, then I'm going to sign up. I'm going to listen. Then if I end up being an advocate of this, and it's one that I believe would warrant future investments, at that point it becomes a conversation on how quick can we scale this to make it attractive to have an acquisition instead of just having caught the attention of one of these larger players here, Amazon if you will. And for them to just build it internally and wipe you out.
Mike Kelly: Got it. Maybe the last pattern. Let's say you look at the landscape. There's eight competitors in the space but they're all at the same stage. Nobody has broken out into clear market dominance. I think right now you would still see this in things like blockchain technologies or really any emerging, you know BR, AR, like any sort of emerging market tends to have this, right? There's no clear dominant winner yet. If a startup candidate shows that kind of a landscape for competition, what's your advice there? Or maybe better, what are you looking for as an investor there to see whether or not this is a real opportunity?
Jacob Schpok: Yeah. I'll speak directly to, you know the bike share programs, or the scooter programs, right?
Mike Kelly: Yeah.
Jacob Schpok: It seems like it happened awfully quick where they didn't exist and now they've just saturated metropolitan markets. During that time a lot of acquisitions took place. Uber picked who they're going to go with, right? The first thing that we look at is, are there any major acquisitions taking place? Did we miss the window for this business to get acquired? It's a very real thing where these startups will have strategics behind them funding their success and it's not yet rebranded under the name of that strategic partner. Right?
Jacob Schpok: So the first question is, is there money still left on the table for us to have a round C or a round D, or to have an exit and be able to keep up with the speed of this market trend. Let's say that's not the case. Let's say that this is a developing space and the larger dollar amount investment institutions or the strategics are still watching to see who comes out. At that point, then, it's really about understanding your differentiator relative to what your customers want, and giving me evidence that you can scale this model. Those are the two pieces.
Jacob Schpok: More often than not there is a business that is scaling faster than the startup that's walking into our office. Generally because where we sit is earlier, right? It's prerevenue, early revenue. There might be someone out there that's already at 10 million in ARR for example. Convince us that you have the scalable business model that can overthrow the pace that this competitor is currently realizing. That can easily be argued by showing the strength of the team. That includes the advisors, the board. It can be the strategic relationship that you develop. Maybe instead of going directly to consumers you have business partners that are going to serve to help communicate your message to a wider audience. So it's buried in your marketing sales and your business model process.
Jacob Schpok: That's really what we want to see, is how well have you figured out the unit economics of this model, and convince us that you know your unit economics. That, or it's just more efficient than what your competitors are looking at. That's going to get us excited. Is if you can prove those pieces.
Jacob Schpok: I would say furthermore, if it's still a developing market in terms of understanding that everyone's launching a feature but the real play is the platform. Having these folks on your platform. Having the users where you can sell the data and everything else. Then we're talking more about what your road map looks like. Get us excited about what version two and version three is going to look like. And, again, to get us excited it's more than just us being excited from our gut saying that we think you're on the right course. It's you providing us with evidence that that's actually want your customers want. That you've interviewed a hundred of your users and they're asking for this feature. And, by the way, none of our competitors are offering these features. So we know that we're going to be able to capitalize even a larger portion of the market because of this.
Jacob Schpok: Those are the big ones that really get us excited. I'll just share. Now I'm getting all fired up here. I'll share, a lot of it is about eliminating assumptions, right? It's paint me the picture, and then prove to me that your model and that road map that we just talked about, or your margin in sales strategy, that it's based on some sort of primary or secondary research. Primary would be great, right?, like you've talked to customers or you're actually executing on this. But if you don't have it, at least tell me that you've talked to somebody else who's in the space. And having that evidence is the differentiator for a lot of these early companies being able to receive capital. It's providing that data to defend the assumptions that may be throughout the whole pitch up.
Mike Kelly: Thank you. Moved away from competition, but I loved that sidebar. So at one of these seven pitch competitions, what's your feeling for other investors who may be in the room who might want a conversation with these entrepreneurs after they're done with the pitch competition?
Jacob Schpok: That's great. Bring it on. I love it.
Mike Kelly: Okay. So you do think it will be attended by other angels and/or firms who might have interest?
Jacob Schpok: I hope so. Again since we're looking at these companies that are going to be so early, I don't suspect we'll see much in ways of institutional investment firms. Generally just the model of these venture capital firms, it's too expensive to go through the process for a $20,000 investment for example. But we do hope that we have a number of angels in the rooms. Not to mention, we're at the early days of really talking to each of the higher education institutions since we officially launched this week. But what we're already finding out is within these universities and colleges entrepreneurship outreach programs, or within their student entrepreneurship classes, there are angels that are teaching or guest lecturing, or being involved in some capacity. And we fully expect them to be in these rooms as well, and get associated about businesses that may be associated directly with their university, maybe not, right? Maybe they made their money off of a medical device, right? And now they're seeing some medical devices coming out of other schools and they want to get behind that. It's, again, that cross pollination is a big piece of this.
Jacob Schpok: That's really more the kind of investors that we're expecting to see there. But as this thing continues to grow and mature, it would be great if the seed investors that maybe do these 20 to 100K investments on a routine basis, to be able to see what we're doing. I'll just make one more note. I mentioned that the regional competitions feed into a statewide one. The statewide competition is going to be connected to a daylong conference about higher education entrepreneurship and best practice sharing. So we will be inviting investors to listen to those pitches to start the conversations with the entrepreneurs that are already realizing some traction. So even if these investors aren't necessarily investing at that day, or that particular round, getting the conversation started as you know, Mike, and as I'm sure your listeners know, having that conversation started well before you need the money is always a good idea.
Mike Kelly: It is the best way to do it.
Jacob Schpok: That's right.
Mike Kelly: All right. And you've just brought us back to best practices by mentioning the day long conference. Make that tangible for me a little bit. So give me an example of a best practice that you feel maybe is not broadly adopted yet and through this process you're hoping to get broader adoption. Or even make that practice better.
Jacob Schpok: Yeah. Yeah. I'll give you a couple here. So the first one, from the highest level. Where we're seeing the highest level of success in entrepreneurship engagement with higher education institutions is when the trustees are bought in that they need to support entrepreneurship, and it's not just a class on entrepreneurship. It is baking entrepreneurship or more broader innovation into the college or the university at the highest absolute levels.
Jacob Schpok: So one thing that we're already beginning to mull over is how do we get in front of these trustees? Who, by large, is these trustees are leaders in their community, chances are, and this is so far panning out. I don't want to make a blanket statement though. But chances are these are entrepreneurs. These are individuals that have created businesses and jobs and now they're looked at in their communities as leaders that warrant a seat as a trustee for these higher education institutions.
Jacob Schpok: So that's the first. Obviously we want a president that's engaged in entrepreneurship as well. But the reality is that if the president leaves and the trustees are not bought into the vision of entrepreneurship and that president's switched out with somebody else, right?, we might very well be back at ground zero. So that's the first lesson learned that we're really eager to dig in deeper on and see how do we, from the cultural level of the trustees, continue to build this sense of urgency around supporting entrepreneurs.
Jacob Schpok: When it comes to the school actually supporting entrepreneurs, then what we're seeing is success with those that consider entrepreneurship a program that's broader than just the business college. Get it out of just a single track. Here's the major for entrepreneurship. If you want to know about entrepreneurship become an undergraduate in entrepreneurship. Instead opening it up so that those in STEM or any other liberal arts can attend entrepreneurship classes or even secure a certification, or a certificate in entrepreneurship. That's been a huge win which allows for technical experts then to partner with maybe business experts, right? So we love seeing the partnership. Someone understands tech. Someone understands sales. We have a winning combination.
Jacob Schpok: So that's another one that's been a huge win. And then the third is when the higher education institutions are engaging in activity that bring in the community as well. There's couple of different approaches. If they have a, let's call it a systematized process of taking students and faculty from just an idea to building their first iteration of a pitch deck or getting an MVP together, opening that up so that anyone in the community who fits the mold, right?, like they've got an innovative idea, they can attend this and go through it. That's realized huge dividends in the communities. The obvious one is just good will, right?, and knocking down any silos between the school and the community. But also it just improves the economy of those communities, and that consequently helps attract more professors, more academics, especially when there's trailing spouses that come in along. They know that there's opportunities for them to launch their own business and have that support as well.
Jacob Schpok: But let's say that these higher education institutions, they don't have a systematized process. Even hosting things like startup weekend, where it gets the community involved. I've had the pleasure of being able to attend maybe about five or six of these across the state where it's a university hosted startup weekend where the community is allowed to get involved. The diversity of the teams having students and the community together tackling different problems or developing new businesses, by large have been more compelling and more investible than things that we've seen where it's just a student led initiative. Since there is more opinions and there's more perspective that's coming towards the creation of the model. So that's just from the highest level of things that we're already seeing where there is opportunities for some of these higher education institutions to build things out that frankly doesn't cost any money or costs very little money which are creating impact already.
Mike Kelly: Are there any other states doing this? Is there a blueprint you were able to look at in another state and say, man, that seems like that's really working over there, we should be doing that in Indiana? Or are you leading that way at least from your knowledge? You can't possibly know what's going on in all 50 states I would imagine but I'd be interested in where you guys look for inspiration.
Jacob Schpok: Yeah. So while I haven't identified a program like Elevate Nexus in other states, the model that we're using is not unique. If we really break it down to its most fundamental steps we're going through just a market validation step right now. We're on a listening tour. We're truly asking our customers, the higher education institutions, what are you currently doing? Where is your pain? While we're talking about bringing solutions in terms of best practice sharing and capital, we're being very intentional not to say, "Here's what best practices look like. Here's what you can do with your capital." Right? We're leaving it open so that we can hear from them where the pain points are so then we can build our model or refine our model to really meet our customers where they are.
Jacob Schpok: That's also true with what we're working with with our entrepreneurs. It's, again, we're looking obviously for certain milestones to be hit for those seed dollars. And even for the preseed, right? We want a solid pitch deck. We want them to know that the entrepreneurs thinking through what's going on. But beyond hitting those fundamental tablestakes we're not saying that a manufacturing business that realized a new process, right? They have a provisional patent on it and they think that they can take this to a five billion dollar market cap, right? We're welcoming them in warmly just as much as we're welcoming in a marketing tech play that say that they have a half million dollar opportunity, or a life science play.
Jacob Schpok: It's intentionally broad right now as we collect this feedback. So while I can't point to one other state that's executing in the same way we are by focusing on higher ed and the entrepreneurs that are surrounded by these institutions, we're following very traditional startup practices. Got it?
Mike Kelly: You've been working for universities for a while now?
Jacob Schpok: Correct.
Mike Kelly: In your role as an entrepreneur in residence?
Jacob Schpok: Yes.
Mike Kelly: I would be interested. One of the things that occurs to me when I listen to you talk about the Nexus program is the opportunity for selection bias. I'll refine that for a second. One of the things that occurs to me when you think of where start ups come from. In a lot of cases the pain that gets identified is the pain of the founders. Right? Like I've experienced this pain. There's got to be a better way to do this. I've look everywhere. I can't find it. I'm going to go invent the better way to do this. Right? Which to me would imply if you're working with a bunch of university programs, college students, you're probably not going to find deeply nuanced B to B solutions that would come out of a CMO who's worked in an industry for 20 years, right? Or somebody who's worked in financial services for 20 years, or something like that.
Mike Kelly: My suspicion is you would tend to find things that more go after solving a consumer experience, a college student's experience. Again, maybe with the exception of life sciences, I'm assuming that's probably not true. But I'd be interested in your thoughts on that because my gut reaction when I think of seven pitch competitions specifically focused on who I'm assuming, or maybe that's wrong, are younger entrepreneurs in college. You're going to see a lot of things that go after a very specific market rather than seeing a broad swath of what you would see at more like an open competition where people could be coming from anywhere. Is any of that that I just said true?
Jacob Schpok: Well, you're definitely surfacing a point that I need to be better about communicating. Is that the higher education institutions, we're looking at them to serve as that nexus for entrepreneurship, right?, hence the name. And we're hopeful that the pitches that we receive, while we want student pitches absolutely, we hope to have pitches as well from faculty as well as those in the community. So there could be community entrepreneur out there. I know this for a fact that we have these smaller institutions across the state where they have 3D printers, right?, and Joe entrepreneur does not have a 3D printer and doesn't have the budget to buy one. Right? So they're already partnering with the higher education institution from more of an asset based perspective. This would be a pitch competition for that entrepreneur as well.
Jacob Schpok: So it is beyond just students. But you're actually right when it comes to the students. This is something we see time and time again. Is we have eager, tenacious young people that want to be entrepreneurs, and they immediately go to what they know, which we all do, right?
Mike Kelly: I'm not faulting that.
Jacob Schpok: Yep. And what they know is coffee shops and the pain point that they're feeling in Facebook. Right?, to go back to the example. It's a real issues. So we see partly it's on us to make sure that when they come through our process, which one step of what we're going to offer, it's a preaccelerator or boot camp would be another word for it, where every quarter we're having those that want to enroll and have a business idea will walk through the steps to get to a first iteration of a pitch deck. So it's much more than just the function of putting text on a slide, but really understanding what an investor is looking for in each of those slides and understanding how big your market truly is, not just that you put on there you have identified a market size, for example.
Jacob Schpok: So it is on us partly to get them thinking, in some cases larger or broader than maybe the focus area they have, but even taking a step just before there in just ideation. It is really, it's a tag team approach. It's on us, but it's also on these higher education institutions to help these students think bigger than they're thinking right now, if what they're thinking about is within their purview of what are problems that I'm passively seeing in my day to day life, right? Getting the skills to dig a little bit deeper and evaluate where there is greater market potential based on the flags that they're picking up on on where there is pain. And furthermore where there is money to solve those pain points.
Jacob Schpok: There isn't an easy answer on it. It's one of those things where there's tons of ideas, right?, so you need that entrepreneur to be passionate about the idea that they're working on. But simultaneously it has to be one that investors would be passionate on investing in. It'll be interesting to see what the next year looks like in these pitch competitions, to see what comes forward. But I can tell you just from time at Purdue, one of the businesses that's getting a lot of traction, they've won a number of pitch competitions already and the team is fired up about it, it is an innovative air plane food cart.
Jacob Schpok: So we've all seen those giant clunky food carts that take up the whole aisle. They've found a way to iterate on it and make it half the size, you can pass back and forth, and function much better than the existing one. And they've been tenacious enough to get in front of Southwest airlines and a number of other airlines. They've been on these planes. They've talked to senior level executives at these airlines to talk about the problem and the pain that they're feeling. Not to mention these carts weigh a ton. So this is an example of this one student group.
Mike Kelly: Are you creating a situation where Southwest is just going to put one more row of seats on a plane and you've screwed us all by making the aisle that much smaller?
Jacob Schpok: That's not me. I was just excited about these students. Then we can always say we used to have more legroom but these Purdue students found a solution.
Mike Kelly: Keep talking.
Jacob Schpok: No you're fine. It's those kind of ideas, to your point, right? It's not a B to C solution. That's a B to B solution. And their first slide. I'm going to butcher this but it's going to be around, I was on a plane and I saw this, and it bothered a lot of people. And it started getting me thinking down that direction.
Mike Kelly: That is a great counter example to what I was thinking might be an opportunity for selection bias, and that's beautiful. So that's good.
Mike Kelly: All right. If people want to learn more about Elevate Nexus, where can they do that?
Jacob Schpok: elevatenexus.com will redirect them to our landing page on Elevate Ventures website. From there we have all of our programs, really just short little descriptors of each one. And then at the bottom there's a e-newsletter that they can sign up for. Every month we're going to shoot out important dates, when pitch competitions are coming up for example. As well sharing best practices on what's going on at these higher education institutions. And lastly, we'll also be highlighting any other pitch competitions or programs that startup entrepreneurs around Indiana might be interested in.
Jacob Schpok: It's incredible at these early days how many other opportunities have surfaced where startups could be accessing additional dollars. Even from like the DOE for example, they have their own competition. We just found out about it. So that's one that we can now send out to our audience and say, "Look. Here's another opportunity to win some dollars." So that's really where we're pushing folks. And then we also have a page that spells out more of the guidelines for the pitch competition and that pitch deck format.
Mike Kelly: Awesome. And if anybody wants to get in touch with you directly how do they do that?
Jacob Schpok: Yeah. So js, for Jacob Schpok, @elevateventures.com will go right to me.
Mike Kelly: Perfect. Jacob, thank you so much.
Jacob Schpok: Thanks, Mike.