By Jordan Weissmann
Washington Post Staff Writer
Monday, August 11, 2008
Awake on an hour of sleep, the 20-year-old stood in a parchment-colored suit before dozens of investors, trying to convince them that his six-month-old Web company was worth their money.
"Who has a story about how they got here this morning?" asked David Adewumi, a rising junior at Penn State. The hands of about half the people in the room went up, and Adewumi started pitching Heekya.com, a Web site where users post personal stories with photos, video and text, then connect with each other like on Facebook and MySpace.
Heekya was one of nine start-up Web companies unveiled last week at an event in Reston organized by new local technology group LaunchBox Digital. The organization is trying to cultivate the scene for the area's technology start-ups by connecting them with experienced entrepreneurs and venture capitalists who can provide coaching on how to build a business.
"There was a lot more early-stage talent and ideas than there were vehicles to get them going," said co-founder Julius Genachowski, a former top executive with Barry Diller's IAC/InterActiveCorp. "We said there's really an opportunity to create a destination for cutting-edge talent and ideas in this region."
The event drew about 65 investors from Washington, New York and Boston, including high-profile firms such as Columbia Capital of Alexandria, to scout the companies LaunchBox had selected from 250 applicants.
The companies had spent the past three months pulling late nights writing and re-writing programming code and refining their products with the LaunchBox founders, whom they met with every two weeks at the company's Chinatown offices.
Don Rainey, a managing partner with local firm Grotech Ventures who attended the event, said LaunchBox could make companies less risky to invest in by providing advice early on. But the companies still face big hurdles, he added.
"Will the technology work, and will the market emerge? That's the quintessential question," Rainey said. "Is it going to work, and is it going to matter? "
LaunchBox gave each company $15,000 to $30,000 in exchange for 4 to 8 percent equity. The program had several sponsors, including The Washington Post Co., which said it retains a "nominal" stake in the LaunchBox portfolio. The founders, including Sean Greene of Rock Creek Ventures and former AOL executive John McKinley, also fronted money for the program.
In the late 1990s, incubators sprang up around the country, offering start-ups office space and material support, but not much in the way of guidance. LaunchBox is modeled after programs developed later, most prominently Y Combinator, a venture out of Silicon Valley and Cambridge, Mass., that has incubated 102 companies in three years.
Y Combinator is still trying to gauge its own success rate, co-founder Paul Graham said.
"It's hard to tell even after three years, because it can take five years or so to tell if a start-up is going to succeed for sure," he said.
Many LaunchBox ventures focus on gaming or social networking, or combine the two. They include MyGameMug, a social network where gamers can find partners to play with online, and Koofers.com, a one-stop study site where college students can post notes, old tests and teacher reviews from their classes.
The entrepreneurs varied widely in age and experience. For three years before coming to LaunchBox, Michael Powers had run Mpowerplayer, which licenses a program that lets people preview mobile phone games on their computer.
"What this gave to me was an ability to step back and see my company in a new way," he said. The counseling at LaunchBox showed him new markets he could tap into, such as social networking sites, he said.
Then there is the Heekya team. Adewumi and his friend Kawsi Nti came up with the idea at home in Pennsylvania on Christmas. Back at school they cobbled together a rough version of the site and started reading up on venture capital. They discovered LaunchBox via a blog.
The seed money helped them get by over the summer as they worked 16-hour stretches banging out their product. They rebuilt their site and refined their marketing pitch with help from Greene, McKinley and Genachowski. At times they went days without leaving their apartment.
The mentoring kept them focused, Adewumi said.
"You can have all these big, hairy, audacious goals, but you need someone to break it down for you and say, 'What can we do in these 12 weeks?' " he said.
After a few hours of being grilled by investors, Adewumi was getting ready to fly to California, where he would pitch Heekya again to another round of investors. He said the process of wooing investors was nerve-racking, like trying to find a wife, but on a deadline.
"If you can't get funding, it's kind of hard to run a business," he said.
View all comments that have been posted about this article.