Evolution of an Entrepreneur: FarSounder CEO at Springboard 2002

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By Andrea L. Stape

To win financing, small-business CEO Cheryl Zimmerman perfects her pitch



CAMBRIDGE, Mass. -- Cheryl Zimmerman sits on the couch with a nervous laugh. Less than 30 minutes until showtime and she looks relaxed. Already at least 100 people wait in the Massachusetts Institute of Technology auditorium.

Her calm is deceiving. The stakes are high.

If she goes in front of the crowd and flubs it, she keeps working without a paycheck.

If she nails it, her Narragansett-based company's bank account stands a good chance of getting the cash in needs to succeed.

But in a basement hallway behind the auditorium, Zimmerman jokes.

"The green room. It sounds very much like Johnny Carson. They should have painted it green," says the 49-year-old chief executive officer of FarSounder Inc., looking at the white cinder block walls.

Not everyone appreciates Zimmerman's humor. Asking investors for money is serious business. One of the women going on stage after Zimmerman looks nauseated and flees into the hallway to stare at the wall.

Welcome to the make-or-break world of venture capital.

Zimmerman is one of 20 women pitching their companies to a room full of investors at the "Springboard: New England 2002" venture-capital forum at MIT on this rainy November day.

The goal: convince the investors to fork over some dough.

As if making a 10-minute presentation in front of 300 people isn't nerve-wracking enough, these women are looking for money in the worst venture-capital market in five years. The dot-com disaster of the late 1990s left investors with nasty hangovers and a reluctance to open their wallets.

The pressure to succeed is tangible. These enterpreneurs spent weeks shuffling business demands to get ready for the Springboard forum. And if they crack, the entrepreneurs not only let themselves down, but all the coaches who volunteered hundreds of hours to get them ready.

But unlike the other 19 hopefuls, Zimmerman carries the weight of a state on her shoulders. This is the third year for the New England venture-capital forum, and Zimmerman is the first woman from a Rhode Island-based company to make it to the finals.

Her ability to wow the crowd -- and hook a venture investor -- could set a positive precedent not only for women entrepreneurs, but for anyone working to build a high-tech company in the Ocean State. Historically, Rhode Island start-ups have lagged the nation, and their New England neighbors, in attracting money from investors.

Five weeks of preparation. One 10-minute presentation. A chance to put FarSounder on the road to technology superstardom.

No problem, right?

"I would be nervous if my husband were here," says Zimmerman, looking calm as she stands up to straighten her black pinstriped suit.

Twenty minutes until showtime.

Zimmerman had no idea how intense the five-week Springboard process was when she e-mailed in her application at 1 a.m. early one September morning.

By the time Zimmerman found out in October that she made it into the finals, her schedule was booked solid.

"There aren't enough hours in the day to get everything done," said the former engineering consultant, who has a master degree in mechanical engineering from TUFTS.

Last year, Zimmerman started investing her own money FarSounder, becoming a partial owner and board member. This April, Zimmerman began working for the sonar-technology company, developed by University of Rhode Island professor James Miller and her son Matt, on an almost daily basis. The company's technology allows ship operators to see, in 3D, what is in front of them below the surface.

Initially, Zimmerman came in to support a venture capitalist the company hired as chief executive officer. But she took over the top job in May when he left over irreconcilable differences with the two cofounders. Now as CEO, Zimmerman is responsible for drumming up investors and wooing customers.

So, with her schedule bursting, Rhode Island's representative arrived at Babson College, in Wellesley, Mass., on a rainy Wednesday in October for Springboard's kickoff.

Smack in the midst of a start-up CEO's juggling act, she couldn't have been more surprised.

Springboard Enterprises, which sponsors regional Springboard venture forums, has created a highly regulated, extremely intense five-week coaching process geared toward giving women entrepreneurs the skills they need to get a foothold in a traditionally male-dominated industry. Companies with women CEOs received just 3.8 percent of all venture capital invested in the United States last year, according to VentureOne Corp., a market-research firm.

Since 2000, the nonprofit Springboard has held nine venture forums across the country. Women who have gone through the Springboard process, spit -polishing their presentation skills and company pitches, have attracted more than $1 billion in investments. Presenters at the first two New England forums raised $130 million.

Springboard turns investors' heads.

"You cannot overstate the importance of something like Springboard," said Erik Pages, spokesman for the National Commission on Entrepreneurship, a Washington, D.C.-based policy think tank. "The problem is that women aren't in the networks of the venture capitalists. Springboard catapults them into that world."

Getting into a Springboard forum isn't easy, Women entrepreneurs go through several levels of scrutiny before they are chosen for the forum. This year, 120 applicants were whittled down to just 20 presenters.

At the Babson kickoff -- otherwise known as Springboard Bootcamp -- Springboard personnel laid down the law. Don't skip a networking event, coaching session or preparation day. The 10-minute presentation is only a small part of the process, said Amy Millman, president of Springboard. The relationships developed along the way - with business leaders and venture capitalists - are just as important for opening the door to capital, she stressed.

The point was made crystal clear when Zimmerman met her coaches. She found out it was mandatory to go over her presentation with them -- a lawyer, two consultants and a venture capitalist -- twice before the dry run scheduled for two weeks before the final presentation.

Unaware of the time commitment when she agreed to participate, Springboard presented a scheduling dilemma for the bustling CEO.

"Any questions that come up . . . e-mail me 24 hours a day and I'll get back to you," said Ralph Protsik, a managing director of the Boston Search Group and one of Zimmerman's coaches. The pressure was on. Thirty-seven days until showtime.

Zimmerman showed up at Testa, Hurwitz & Thibeault, a law firm in Boston, three weeks later to do a dry run of her presentation. A panel of independent investors and consultants could yank her out of Springboard if they didn't like what they saw.

She had only met with her coaches once. A Florida trade show and presentations for other investor conferences had monopolized her time. She also came down with strep throat, forcing her to stay in bed in her Framingham, Mass., home and miss an hour of free coaching with McKinsey Consulting. That time is worth about $10,000.

I had to put Springboard at a lower priority," Zimmerman said.

"I felt as if I was someone in high school in the middle of studying for advanced-placement classes, trying to apply for college and suddenly getting the lead in the class play. What is your priority?"

It's a tough question.

Although Zimmerman said she put Springboard near the bottom of her list, she had already attracted the interest of Alain Hanover, a venture capitalist with Navigator Technology Ventures in Cambridge, and one of her coaches.

Navigator was first introduced to FarSounder last year, but it was too young for Navigator to consider making an investment. Now, with FarSounder's core product in production, and one client under its belt, Hanover's chance spot on Zimmerman's coaching team couldn't have been better timed.

Juggling her schedule to make it to the dry run paid off. Zimmerman proved she could cut her 20 minute presentation down to just 10 minutes. Plus, it allowed Hanover -- and a number of other venture capitalists -- to see Zimmerman's grasp of the sonar company's technology market potential.

"It was a very good learning experience [for both of us]. I consider [the coaching] part of my due diligence process," said Hanover in a recent interview. "In the process, I had her answer the key questions I wanted to hear as an investor."

Zimmerman got to stay in Springboard.

Sixteen days until showtime.

As Zimmerman ran through her presentation for the second time that day, she seemed stressed. Springboard was expecting to see the Powerpoint slides that would accompany her presentation by the end of the day. But with the coaches still helping her work out the kinks, Zimmerman asked for an extension.

Now she might not make the new, next morning deadline. One week remained until the final presentation.

Seated around a conference table at a coach's law office, Zimmerman's team slowly picked apart the slides and the presentation word by word.

As the suggestions flew, one coach asked Zimmerman if she had enough time to make all the changes.

"I could stay up all night, because I don't have any early morning meetings," Zimmerman said.

Four weeks into the Springboard process, and Zimmerman had finally been able to put all the distractions aside and focus on the forum. It's good news for Rhode Island.

Venture capitalists have traditionally overlooked the Ocean State. . Rhode Island attracted $177 million between the beginning of 1999 and March 2002, according to the Washington, D.C.-based National Venture Capital Association. In comparison, Connecticut had $163.9 million in just the first quarter of last year.

If Zimmerman gets an investment out of the Springboard process it could validate the state's economic-development efforts over the past five years. The state's Slater Technology Fund, which is focused on helping new technology companies grow, invested more than $100,000 in FarSounder.

"I think the fact that a URI company has gone that far has a lot of significance," said Jerry Schaufeld, executive director of the Slater Fund.

Cynthia Reed, owner of LTR Holdings, a strategic consuting company and investment firm in Providence agrees, "I think it makes a very important statement. I think when you are competing in that kind of arena it's a statement about performance and how good your story really is."

And Zimmerman has an interesting story to tell. A product of Providence's East Side, she was the first woman in her division of General Electric in 1975. In May, in the midst of one of the worse economies in recent memory, she left the engineering consulting firm she started with her husband to help FarSounder.

"I probably picked the most risky time to join a start-up," Zimmerman said. "But, I've put money into the firm. I'll do what I have to do, because I believe in it."

Eight days until showtime.

At 10 a.m. Zimmerman doesn't go on for another four hours, but already the Springboard process is paying off.

Hanover, the investor with Navigator Technology, seems hooked. And all those arduous networking events worked. Zimmerman met a number of investors who are coming to MIT this afternoon to specifically hear her presentation.

Not a bad showing in the worst market for venture capital in five years -- and she hasn't stepped on stage yet.

Venture capitalists invested $4.5 billion in the third quarter of 2002, down 26 percent from the second quarter of the year. The last time less than $5 billion was invested in a quarter was the beginning of 1998, according to the National Venture Capital Association.

Despite those dismal numbers, Zimmerman took the advice of her coaches and upped her investment expectations to $2 million from $750,000.

"We've talked about this with our board and our advisers -- it's always a dilemma. You don't want to run out of money right when your company is growing," she says.

It doesn't seem to be a deterrent. People with little yellow dots on their name tags -- yellow marks the moneyed set -- come to the FarSounder booth all morning.

The day flies as she networks and now there's just ten minutes to showtime. In the hallway outside the "green room," Zimmerman leans against a wall smiling calmly, straightening the jacket of her black pinstriped business suit and pressing the heels of her polished black boots together.

"This is my first big one," she says.

Protsik -- a coach -- bursts through a door, hand wrapped in a huge bandage and folds Zimmerman in a bear hug. Despite tendon surgery the day before, he isn't about to miss her big moment.

In the middle of a sentence, Zimmerman gets the word that it's time to go on.

The jokes are over. Her voice shakes as she starts the presentation, the wireless mouse she's using to change the slides dies, she stumbles over a word. But as the finish line approaches, her confidence returns. Suddenly, Zimmerman's leaving the auditorium to a round of applause.

Back to the basement hallway. Her presentation was 15 seconds under the 10-minute limit.

"Now I can enjoy the afternoon," Zimmerman says, laughing with relief. " I would have let down the coaches if I hadn't done well."

Five weeks of preparation. One 10-minute presentation. Twelve solid leads.

"Navigator is interested in potentially investing in FarSounder -- it fits in with our portfolio," says Hanover, impressed as much with Zimmerman as the company's unique technology. "I think the interaction with her in Springboard helped build the relationship with Cheryl and myself."

Zimmerman's foot is in the door. But she knows there are no guarantees.

After nine hours at MIT, as Springboard participants and organizers tip back their glasses of wine at a reception downstairs, Zimmerman and her chief technologist sit head-to-head with a potential investor.

Other than the three of them, the hallway is empty.

Showtime.