Business Incubator Series: An Interview With Chris Heivly, Executive Director, LaunchBox Digital (Part 6)

By guest authors Irina Patterson and Candice Arnold

Irina: Would you talk more about warrants?

Chris: The concept here is that, if we think one of the companies – or two of the companies – has a lot of promise, we could put an additional $250,000 into that company and really help move them into their next round, whether it’s funding, just getting them off the ground hiring people, whatever the next step is for them.

When we do that, we take a much more active role. We get a board seat. We put in some of our people . . . some of the LaunchBox partners get very involved with the companies to help them go through this next phase. We still have, of course, our role with the other companies. We’re still active, but we’re doubling down on the handful of companies that we think show the most promise.

Irina: What is LaunchBox’s own business model?

Chris: We’re totally, 100% investor supported. That covers our costs, including the $20,000 per company [seed investments that we make]. So, 40 companies over a four-year period, sometimes more, as well as the post-accelerator dollars we can invest.

We’re funded solely by local investors and operate only in Durham right now. We take applications from all over, but about 30% come locally and about 70% come from outside the area.

I mentioned that we are developing some mini programs to run when we’re not in our formal accelerator sessions. Right now, there’s no revenue generated there. We’re bearing the cost of those as we get our program up and running here in Durham. In the future, I think there will be some opportunities to generate some revenues and augment the model. But right now, the investor element is the only funding element.

Irina: Do you see any bottlenecks in your processes? Do you think there are ways that LaunchBox can be more effective?

Chris: Yes. More applicants should mean that we have a greater pool from which to choose. Ultimately, the real success of LaunchBox is our ability to find the 10 best entrepreneurs and the 10 best ideas, all in growing markets.

And then to match them with the best local entrepreneurs so they receive the best advice and the best mentorship, which, we hope, puts them in the easiest, most efficient position to raise capital to get them to the next step.

I believe there’s always room for improvement in that process.

More applications means that we have more to choose from. A better selection process means that we pick more winners.

Better mentors aligned directly with the right companies means they’ll get better advice, they’ll make changes – pivot, if you will – and then, we hope, all this means is that if they are on the venture-backed path, that we give them the easiest way to raise that money so they can keep momentum going. That’s it. It’s simple.

Irina: Many of the entrepreneurs and mentors that you find are local, right?

Chris: Yes. Almost all of the mentors are local. And of the seven companies that we accepted, three were local and four were from outside the area. At any given moment, that could change. We’ll see what happens this year.

Irina: How do you screen applicants?

Chris: Last year, we had a three-step process. There are six LaunchBox Partners, so the first thing we did was divide up the applications. We had, at least, two pairs of eyes read through all of the applications.

We then came together and boiled that down to a short list. On that short list we all looked at different companies and did telephone screenings . . . and spent about an hour with [each] company.

We then brought that short list down to a shorter list. We then had each company present to us. They had to present to the entire LaunchBox partnership team.

Of the seven companies, four of the seven presented in person and three of them presented over the phone. I think, in the future, we’re going to make sure that we do face-to-face with all the companies. That would be a desire of ours. I think, that would be an improvement, to make sure that we’re sitting at the same table and trying get to know that entrepreneur better.

The other little wrinkle is we had an early deadline and a general deadline. So, we actually did this twice. It’s like college. After we made some early offers, we then took the rest of the applications, and all of the old applications got put into the general deadline [group] and were re-evaluated. So, everyone got evaluated pretty thoroughly. We really like our screening process. It’s more art than science, as you know.

This segment is part 6 in the series : Business Incubator Series: An Interview With Chris Heivly, Executive Director, LaunchBox Digital
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