March 12, 2019
Eric Steele was new to Evansville when he landed there in July 2017 to become Elevate Ventures’ Entrepreneur-in-Residence. Nevertheless, he hit the ground running, ready to leverage what he had learned working in places like Austin and New York City to help guide the launch of the entrepreneurial ecosystem in Southwest Indiana.
Within his first week on the job, Steele was able to make connections with many local leaders. He attributes the fast progress to the tight-knit nature and openness of the Evansville community. Less than two years on the job, he has advised more than 75 companies, meeting with innovative founders and entrepreneurs to discuss how to build a business model, define who their customers are, and reach their market.
Tell me about your experience as an entrepreneur.
Right after graduating from Indiana University, I started a telecommunications company dealing with wireless Internet. I spent several years building that out, raising money from angel investors and ultimately selling that company to a publicly traded company. Then I moved to New York, where I started what was essentially a network for individuals with rare medical disorders. It spanned both social media as well as the life sciences. I built that up for several years and exited it as well.
From there I moved into a more corporate job where I negotiated acquisition deals and did financial work for larger organizations, an experience that allowed me to view entrepreneurship from an scalability and acquisition standpoint. I continued on the corporate track at a larger growing ecommerce company that had about 500 employees.
Just prior to joining Elevate, I was working as the chief financial officer for a startup that I helped grow to revenues over $20 million.
The people you advise often have no business experience. In what area of starting a business do your entrepreneurs experience the most ‘aha moments’ with you?
A lot of entrepreneurs build a solution to a problem they personally experience. But, what many don’t figure out early on, is if other people are experiencing the same problem. And so, a lot of those ‘aha moments’ come when entrepreneurs talk with potential customers to figure out if they are interested in the product, and if they’re solving the right problem, in the right way, and in a manner that is cost effective.
In your role as an EIR, what are key areas you consistently work on with entrepreneurs?
The first is in validation. If you get too attached to your solution prior to validating it with the active market, it can be dangerous. You can start with simple customer surveys or interviews. Develop an MVP [minimum viable product] as early as possible to test out the market, versus spending months or years building something in a black box and then launching it to the world, only to realize that customer demand isn’t there.
The second area I work with entrepreneurs on is helping them think through a fundraising strategy. You don’t necessarily want to cash the first check that somebody is willing to write. Doing can create problems when you need to raise money from future investors down the road. Your business story should be made up of milestones indicating where you’re going with the dollars you raise. Helping entrepreneurs create a fundraising strategy that encompasses these meaningful milestones is also beneficial from a dilution standpoint, so entrepreneurs don’t raise too much money too early and ultimately dilute themselves unnecessarily.
How do you leverage your experience working with many entrepreneurs to guide each of your individual entrepreneurs?
“The benefit of having seen so many pitches is that it becomes apparent what’s lacking and what could be elaborated upon.”
As an EIR, we see and hear more than a hundred pitches a year. By seeing that quantity of pitches, we are apt at picking out what pieces of a story or a business are missing. In some cases, they just might not be articulated, and that’s easily corrected by bringing the answers to light.
The second possibility is they just haven’t thought about a particular component of their business. For example, thinking through market size, competitors or go-to-market strategies should definitely be done prior to pitching to raise money. The benefit of having seen so many pitches is that it becomes apparent what’s lacking and what could be elaborated upon.
What is the most common piece of advice you tell a brand-new entrepreneur?
Prove out traction as early as possible. When we look at a pitch, we have a hundred questions — “Have you found a solution to a problem? Is there a business model? Have you priced it right? Have you found a way to sell it? Are people willing to pay for it?” All those questions, to some extent, are answered by just having a little bit of traction. You can focus on any one of those questions, but if you can say, “I sold 10 of these,” “I have a pilot,” or “I interviewed 200 people and they’re willing to pay X for this product,” you’re proving traction in some form or fashion. This can go very far when talking to investors and potential customers.
What are your favorite business-related media?
Venture Deals by Brad Feld can be used as a reference book for walking the reader through the fundraising process. Also, from Feld, Startup Communities talks about building communities of entrepreneurs who support one another, which aligns well with what Elevate is doing across Indiana.
As an EIR who sees a lot of deals and pitches, it’s important to stay on top of trends in different industries. I subscribe to dozens of email newsletters, ranging from machine learning and big data to autonomous vehicles. When evaluating companies, I need to be able to know where a particular industry is heading and quickly identify major trends that may affect the business environment.
Which 1-2 resources do you consistently direct entrepreneurs to take advantage of and why?
The first one in the region is Tech on Tap, which has evolved to become a valuable platform for entrepreneurial events in the Southwest Indiana area. Out of Tech on Tap came a data science meetup, a weekly morning networking event and more. I recommend people go to Tech on Tap just to get involved with the community and make connections. It is a great opportunity to meet potential employees, learn about resources, and meet collaborators or investors.
Not every person I talk to is a good fit for Elevate, and I often refer people to the ISBDC, the Indiana Small Business Development Center. They do a great job for entrepreneurs interested in building a more traditional brick-and-mortar or lifestyle business. Should Elevate not be a good option, the ISBDC offers everything from funding opportunities to advisory services.