Shark Tank – Chicago-Style

I’ve attended two Shark Tank-like pitch events here in Chicago hosted by the Small Business Advocacy Council. Electric. That’s the word that comes to mind to describe the event’s charge
d atmosphere. It starts when the networking begins. Picture a group of people hanging out in a hip venue surrounded by an intense anticipation that something really big is about to begin. Big – as in, you get to see firsthand thousands of dollars and people’s dreams parlayed into deals.

As many of you know, 3Points champions the work of the SBAC. I personally have visited Springfield and Washington, D.C., advocating for small business in Illinois and connecting many people with SBAC resources.

How it works

One of those resources is SBAC’s pitch sessions. The quarterly events are led by the group’s Startup and Technology Community. Since the Great Recession of 2008, funding continues to elude many small businesses, stifling the single largest growth opportunity in our economy. SBAC went looking for a solution.

After meeting with angel investors and other funders, the group discovered that everybody was trying to find each other. Taking a creative approach to solving a complex problem, the pitch sessions came about in 2013, connecting the dots between capital and entrepreneurship.

The interesting part: There’s not just one winner who walks away with a big funding prize. I’ve seen people in the audience end up funding other presenters right before my eyes. You’ve got the right people in the room – innovative entrepreneurs hungry to launch their ideas and those with the means to make it happen. Like The Voice, the popular talent show matching coaches with hopeful stars, the audience (they’ve had as many as 400 attend) plays a significant role. They use a Twitter handle to vote, along with a panel of judges made up of VC company standouts and former founders of successful IPOs. Each of the three presenting companies gets five minutes to pitch and 10 minutes for Q&A.

Prior to a pitch session, SBAC invites entrepreneurs from places like 1871, The Garage at Northwestern University and other startup incubators around Chicago. A pitch committee chooses a final three.

Then, the prep work begins. Candidates work with a speech coach and others to get them ready. What began as simply putting people up on stage has evolved into a streamlined grooming of presenters, a full-blown planning committee, pedigree judges and celebrity keynoters that have included Mark Lawrence, co-founder and CEO of SpotHero, and Senator Napolean Harris.

Show me the money

SBAC lines up sponsors so the winner not only gets funding, but also enviable perks like office supplies, access to legal advice and even 10 hours of free IT support from, you guessed it, 3Points. Companies typically ask for early-stage, pre-venture funding between $250,000 and $2 million.

In total, there have been about 20 events with 60 to 80 companies pitching. Not all the money comes from judges. One presenter got $350,000 from an audience member. An executive from a burger restaurant that won in 2015 spoke at SBAC’s work center this past spring. His company snared $1.7 million in funding after the pitch event.

Beyond the pitch session

The SBAC pitch sessions make an even more compelling story when you connect them with the group’s advocacy efforts. In January last year, SBAC rallied to pass the Illinois Intrastate Equity Crowdfunding Bill (HB 3429). Having regulations that support Illinois’ start-up community creates even greater opportunity.

According to Mike Cavanaugh, SBAC co-founder and co-CEO, the testimonials from pitch session participants prove the worth of these events. Here’s a note from past winner Regroup Therapy: “Winning the SBAC pitch competition was a critical moment in closing our series seed round of investing. SBAC understands what it takes to build a business from nothing and we value their support and mission.”

I’ve seen some pretty impressive deal-making go on at these events where business cards are traded and organizations are funded just by having the right people in the room. People working together to move real businesses upstream – now that’s Shark Tank, Chicago-style.

Steve Banke is founder and CEO of 3Points, LLC. Stay tuned for future articles on small business topics in both the 3Points newsletter and blog posts. If you want to know more about the SBAC, email Steve or call him at (708) 491-0300.

Mike Cavanaugh, co-founder and co-CEO of the SBAC, contributed information to this blog post. He can be reached at mike@sbacil.org.