Welcome back to investor’s corner, this week we’re going to talk with Brian Ellerman, angel investor and the founding director of Arizona FORGE.
As both a technology scout and angel investor, Brian brings a very impartial and diplomatic view to help entrepreneurs navigate early-stage investments.
Brian Ellerman is the Founding Director of FORGE . To see his full bio, scroll to the end of this article.
Lessons about the art of valuations:
- Listen to and take into consideration expert investor perspectives: Active angels are seeing 100 or more presentations a month, and as a result, they know what valuations are normal, expected, and reasonable.
- Ensure you are able to explain your valuation: Being able to back up the value of the company with evidence will be extremely important, especially if you are outside the realm of normal, expected, or reasonable valuations.
- There needs to be room for growth: As Brian said, smart investors know not to eat the whole apple. If an investor takes half of the company, what’s left for the entrepreneur? “The best investors have a very open dialog with founders about a fair valuation and reasonable sized portion”. Ensure that as you’re putting together your valuation and offer you leave room for growth.
Brian Ellerman’s Bio
Finding Opportunities and Resources to Grow Entrepreneurs (FORGE)
• Inspire and cultivate entrepreneurial thinking (FORGE’d at UA)
• Advance the entrepreneurial ecosystem (FORGE at Roy Place)
• Drive scale-up/launch acceleration (FORGE Ahead)
Angel investor (https://angel.co/brian-ellerman?public_profile=1) in 100+ and advisor for dozens of startups globally. Member of international Together. Health Steering Committee. Serve on various advisory boards, and founded the Tucson STEM Community.
Studied biology, chemistry, and mathematics at Wabash College, earned a BS cum laude in clinical pathology at Marist College, an MS in Management Information Systems from the University of Arizona’s Eller College of Management, Master of Legal Studies (ongoing) at University of Arizona’s Rogers College of Law, and studies toward a PhD in Organization and Management with a Specialization in Leadership at Capella University. Native Arizonan.
- Books and Papers:
EARLY-STAGE FUNDING: OPTIONS, SOURCES, AND CONSEQUENCES: A community-based white paper for aspiring and first-time founders
Startup Community (book) by Brad Feld
Hedge: A Greater Safety Net For The Entrepreneurial Age by Nicolas Colin
List Item #3
University of Arizona
UArizona Center for Innovation
Desert Angels / Joann MacMaster
CIC – Danny Knee
CIC – Carie Davis
Startup Tucson – Liz Pocock
WeFunder – Johnny Price
John Deerie – Center for American Entrepreneurship
UA VC – Fletcher McCusker
Connect with Brian Ellerman here:
It is always exciting to see entrepreneurs with big vision, and this week we’re learning from LegalBreeze as they work to level the playing field for access to legal services. They are taking on transformation of a complex and dynamic industry which is ripe for change.
Mark Dean is the Chief Strategy Officer at Legal Breeze. His full bio is at the end of the article.
Troy Hoch is one of the founders of Legal Breeze. His full bio is also at the end of this article.
The key lessons covered in this episode are:
- Your go-to market plan will be wrong: If you operate with this belief, then it’s critical to build a learning engine to find a beach-head and ultimately a G2M strategy that works. Legalbreeze has built a learning engine that allows them to review customer data and insights from experiments they run every 72 hours. They aspire to get this down to a 24 hour cycle which will allow them to learn three times faster.
- Changing consumer behavior is really difficult: Use the learning engine you’re building to measure whether behavior change is occurring with your beach-head customers as well as engage with them personally to understand why or why not. If the evidence (data + insights) from customers suggests that customers are not changing behavior then pivot to a different customer segment based on the same evidence.
- Explore broadly: Utilize curve-ball Experiments to help find alternative customer segments. A great example of this is Legalbreeze skipping digital marketing temporarily, and handing out fliers in person to better understand customers. These guerilla marketing and face-to-face methods are amazon tools to learn lots from customers really quickly.
Mark Dean has built a successful career leading and developing high-performance sales-service teams with several Fortune-1000 technology and financial services organizations. Mark currently is involved in leading the strategic and Go-to-Market Sales and Marketing strategy for a new legal technology startup called LegalBreeze, Inc.
LegalBreeze’s vision is to change the way lawyers and consumers connect to solve legal matters by empowering everyone with information. LegalBreeze’s platform is designed to be the one-stop-shop for lawyers to grow and manage their law practice of the future while simplifying the task of hiring a lawyer for consumers and small businesses.
He also had the pleasure of learning through his roles leading various sales, service, and customer enterprise functions at LinkedIn, Go-Daddy, Intuit, First Data, and Household Credit Services.
As a former college basketball player at Old Dominion University, Mark credits his successful track record of building and leading successful teams to his experience competing at the highest level in college sports. He believes “business is a team sport!”.
Mark holds a BS Degree in Finance from Old Dominion University in Virginia and an MBA from Troy State University in Alabama.
He also is focused on giving back to further causes he cares about and has served on several non-profit boards. He is currently a member of the Old Dominion University’s Strome School of Business Advisory Council and a member of the Tucson Conquistadores.
Troy M. Hoch is a real estate attorney and partner with Quarles & Brady LLP and has been in private law practice since 2002. He concentrates his practice in the areas of commercial construction transactions, commercial lending, real estate lending, general real estate and business transactions, and Indian law. Troy received a BA degree in business administration from the University of San Diego and a JD degree from Gonzaga University School of Law. Upon graduating from law school, Troy was in-house counsel for a heavy highway construction contractor for five years. In 2001, he formed Ironbuy.com, an online auction company and ASP focused on the heavy equipment industry. Troy, along with his wife, Jen, founded LegalBreeze, Inc. in late 2017, and, with the considerable help of original stakeholders, Mark Dean, Larry Stiffman, Tom Norton, Adam Lazarus, Edward and Miriam Salido and Ted Bernstein, LegalBreeze was launched in Southern Arizona on May 28, 2020.
Connect with Mark Dean here:
Dr. Fox is an active early-stage investor and has assisted numerous businesses by providing capital and guidance. He has also founded several successful businesses and has served at the executive and board level for multiple companies. He is a former adjunct instructor at the Eller College of Business of the University of Arizona and holds a Ph.D. in Educational Psychology.
Marty was extremely gracious with his time and insights, and here are some of his most important suggestions for entrepreneurs:
- Don’t take money from someone you don’t have a strong relationship with. To support that, here are three tactics for deepening relationships:
- Practice empathy – Similar to how you take the time to deeply understand your customers, you should also take the time to deeply understand your investors. Why are they investing? What’s important to them? What outcomes are they after? Do you have the right chemistry to work together for the next decade?
- Give consistently, receive occasionally – When we are consistently giving of ourselves it ensures we’re surrounded by a support network that truly cares and wants to see us be successful. Think about times when others have behaved in this way: How did YOU feel?
“Successful people are always looking for opportunities to help others. Unsuccessful people are always asking, ‘What’s in it for me?‘” – Brian Tracy, Author
- Show and prove you think of others – Simply remembering some small detail or important date can deepen those personal connections between two people. Perhaps an unexpected call or text from you “Hey, I was able to apply that suggestion you made to me last week and will let you know how it goes. Thank you!”. Shifting our lens from being constantly focused inward to being frequently focused outward will do wonders for deepening our relationships.
- Avoid over-diversification – My recommendation for entrepreneurs is that they get uncomfortably narrow about your first early adopter customer segment. The more specific you can get, the faster you can move. To hear a great entrepreneur working through getting specific, check out the Mentor Me Live episode with Aaron Gopp from Patter.
See you next week!
Welcome to Mentor Me Live. I’m grateful to have the opportunity to help Tucson entrepreneur and filmmaker, Jeff Brack. Not only has Jeff directed, written, and produced short and feature films, but he’s also helped launch a highly successful premium dine-in movie Theater Chain, RoadHouse Cinemas in Tucson, Scottsdale, and Colorado Springs.
We’re going to work together to figure out how Jeff can acquire funding for a new feature film, “The Last Road Trip”, which he’ll be filming in Tucson.
The key lessons for entrepreneurs here are:
- Leverage your customer empathy skills to develop relationships with friends, colleagues, co-founders, prospective investors, and more. Empathy really is a foundational skill that can transform all aspects of your life. For some pointers, check out this recent Forbes article.
- Maintain an abundance mindset: You are only limited by your imagination, creativity and willpower to get out and engage with others. Even if you perceive that there are not a lot of film investors in Tucson, why not go out and try to prove that perception wrong. In doing so, you’ll find where they do exist and overcome your financing challenge in the process.
Maintaining an abundance mindset and connecting deeply with others will take you further than you ever believed possible. If you’d like to hear an angel investor’s perspective on the topic, check out the recent episode I recorded with Tucson entrepreneur and angel investor Dr. Marty Fox.
Good luck and see you next week!
Connect with Jeff Brack here:
We have an extremely exciting show today with CEO of the Desert Angels, Joann MacMaster. Joann has served as a startup founder, mentor, investor, and educator. She’s passionate about regional ecosystem development and recently received the Larry Hecker and Sherry Hoskinson Lasting Community Builder Award and this year the 2020 Women of Influence Entrepreneur of the Year Award.
The key lessons for entrepreneurs here are:
- Diversity in entrepreneurship is critical because the people and cultures of customer-bases are very different, so the problem-solvers must also be very different in order to understand the challenges people face around the world.
- Diversity goes far beyond gender and skin color. There is diversity of backgrounds, skillsets, thought, age, geographic location, experiences, etc. So don’t just think that diversity and inclusion means women and people of color. It’s much deeper than that.
- It is unfair to bucket all minority groups into the same category. Women in tech have unique needs and interests different from women of color. Is there overlap? Sure. But to bucket all women into the same category for programs and resources misses the mark. The same goes for all other under-represented groups. Get specific about who is under-represented and develop a strategy to engage them.
- As a founder, be sure not to think about Desert Angels as a single entity – many different individual investors and affiliates. Go engage, and learn about the members individually to move your startup forward more rapidly.
Good luck and see you next week!
Connect with Joann MacMaster here:
Shoutouts and Mentions:
This Mentor Me Live episode features Eric Bockman, founder of Auction Roo. He has an early-stage idea to transform how auction houses distribute merchandise to customers. Auction Roo does not currently have any paying customers, and Eric is looking for support in finding a business-minded co-founder and narrowing focus to get his first paying customer.
The key lessons for entrepreneurs here are:
- Self-awareness — Eric has a very strong awareness of his own strengths and weaknesses. As a result, is will shorten the amount of time it takes him to find a suitable co-founder. After you clearly understand yourself, the next step is to move toward ensuring you have a strong founding team. Entrepreneurship is a team-sport, please don’t try to ride this ride alone.
- Don’t worry about scalability of your idea until you have satisfied customers. In Auction Roo’s case, they don’t yet have any satisfied customers. As a result, their next milestone is to acquire one satisfied customer. It likely looks like one auction buyer that has successfully had a small number of deliveries using Auction Roo; a returning customer is likely to be satisfied. At this early stage, it’s too risky to send an email blast out to 14k auction buyers. This is risky to both Auction Roo and the auction house. Shrinking the size of the initial experiments down to 10-20 customers is probably more appropriate and will help the team move more rapidly.