Stories of Technology, Innovation, & Entrepreneurship in the Southeast

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June 28, 2018 | Tom Ballard

GUEST COLUMN: Knoxville native Alex Lavidge discusses impetus for latest endeavor

(EDITOR’S NOTE: Since returning to Knoxville 10 years ago from Silicon Valley {see our late 2012 article}, Alex Lavidge has served as Vice President Business Development and an investor at Variable, Inc. {named one of the “Top 10 Manufacturing Startups In The World” in 2014 by Manufacturing Global} and the Director of Accelerator Programs {including “GIGTANK”} at CO.LAB in Chattanooga up until 2016. Since then, he has been consulting with new companies with scalable potential across the U.S. on how “analyzing market behavior and psychographic data can accelerate sales performance.” Today, we asked him to share his latest endeavor, Startup Champs LLC, in his own words.)

By Alex Lavidge, Co-Founder and Chief Executive Officer, Startup Champs

After leaving CO.LAB in 2016, I asked around the entrepreneurial community here “what can we be doing better?” The general sentiment was, “We could use another fund investing in technology-enabled companies.”

So, in-between client trips across the country (including Knoxville-based companies like Smart RIA and Finworx also covered by where I learned about compliance and personalized relationship marketing strategies), for the past couple of years a groundwork started to be created for my next career focus by asking successful investors, “How do I go about jumpstarting, training, and designing a framework for a successful $10mm seed-stage fund?”

These conversations took me across the country, including to the Angel Capital Association Summit this past April in Boston where interviews were filmed with top-performing angel investors. Many reported between 18 percent to 25 percent or more internal rate of return for a short documentary film called Get Funded Faster that is expected to debut later this year.

Throughout these conversations, it became more apparent to me the challenges that come with launching and managing a fund — but also the niche opportunities.

In Hamilton County alone, it’s reported there’s going to be a $9.5 billion wealth transfer over the next decade — a fraction of the estimated $30 trillion millennials are in line to inherit across the U.S.

So, arguably the money is already here to keep funding intentional and targeted entrepreneurial pursuits that leverage the strengths already here — but what we still need to keep improving, it turns out, isn’t just more capital, but a better track record of success.

Chattanooga alone has some epic success stories ranging from when Access America Transport was acquired to up-and-coming Skuid to FreightWaves (which recently raised an oversubscribed $13M Series-A round) and Variable which is laying the groundwork for scalable growth from selling its color referencing hardware in Sherwin-Williams paint stores across the country. And the list is growing.

But I think we can do better — and we can do better by rethinking the process through which we take our entrepreneurs.

That’s why a couple months ago I cofounded Startup Champs, a design and research firm taking new brands across the country through customized processes to secure either pre-orders or sales before seeking investment capital, if necessary.

This style of conservative entrepreneurship is what a growing number of prospective investors I visited with here in the southeast want to see. “We want to fund more predictable, verifiable sales growth and pre-orders — not just more talent, technology IP, and other high-risk speculative value propositions alone,” was a sentiment conveyed often.

My Co-Founder, Dania Hernandez, a start-up veteran and accountant, moved to Chattanooga recently from Austin, TX. Having worked in New York City for over 15 years, she continues to help businesses grow these days by guiding our clients through a variety of UX and product design methodologies.

We traveled earlier this year to collaborate on technology-enabled business development frameworks from top entrepreneurial programs at business schools like Stanford University. The book Disciplined Entrepreneurship by Bill Aulet remains one of our favorites which later took us to tour MIT Sloan School of Management where he lectures. “As of 2006, the total annual revenue from MIT alumni-founded companies taken together would make them the eleventh-largest economy in the world,” he says. We continue to give away free copies here at the office daily.

Startup Champs LLC was launched at the Hamilton County Business Development Center, otherwise known as the INCubator. It’s the largest business incubator in Tennessee which, as we shared in a recent article in the Chattanooga Times Free Press, puts us in the middle of a lot of robust collaboration about how to improve success rates of new ventures already underway.

The idea was to use this as a place where we can recruit new companies looking to scale in Chattanooga as well as trusted consultants to whom we can hire for three- to six-month projects until considering hiring them full-time. At the moment, we have several $20k to $100k or more projects in the pipeline ranging from self-financed individuals wanting to validate a vision before launching to mid-sized companies, already with multiple profit and loss statements, looking to create another one internally after conducting market research and design thinking workshops.

John McCabe is a former Professor of Industrial Design and Program Coordinator for the User Experience Design, Service Design, and Design for Sustainability Programs at the Savannah College of Art and Design (SCAD) who, in-between some of these independent consulting projects, is focusing on developing a think tank for transformational learning & creative leadership called Aether Learning. We’re looking forward to him moving next door to our office this week as well as for others to join us in the weeks ahead that specialize in market research, product design, and sales.

We think through this process, we can improve the track record of new companies here not only throughout the southeast, but across the country. We have one client for instance we have been engaged with for a while, a manufacturing start-up out of Illinois producing commercial-grade scuba equipment with over $12 million in pre-orders. $1 million was needed to be raised to execute on those shipments properly. Raising the A/R financing and capital even in this scenario was surprisingly harder than all of us had expected, but we learned after they crossed the finish line how to make this process go faster in the future — especially for new manufacturing companies. Although at the moment we’re not limiting ourselves toward any one industry.

Overall, the main focus over the first year is to invest in building a stronger foundation before there’s focus on our agency growth and launching what could be thought of as an online startup accelerator. Additionally, we have a lot of ideas we want to validate the market demand for before market testing an array of software products we might develop that could help entrepreneurs get on the path to scaling faster.

At Startup Champs, at the crux of the culture, we’re fostering “success by design” both for ourselves and our clients. So, we’re moving forward at a healthy pace. It makes sense to us so that as we lay the groundwork to expand, it doesn’t come at the expense of having fun, investing in our team’s professional development, and making well-thought out decisions along the way.

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