SPORTS BUSINESS: Firms Get 15 Minutes to Impress Potential Investors

By Brad Graves, San Diego Business Journal, Monday, August 9, 2010

There was a day when he stood up to pressure on a basketball court. Today,
Bill Walton is a coach, talking executives through another type of
pressure: Standing before potential investors and making a 15-minute pitch
about why one of them should fund their young business enterprises.

Those 15 minutes are as precious and fleeting as the seconds in a pivotal
game. “You have to be able to tell your story,” said Walton, a superstar
for UCLA in the early 1970s and the Portland Trail Blazers, among other pro
teams, in the ’70s and ’80s.

You also have to be ready for the next 15 minutes, when investors pick the
proposal apart and pepper you with questions.

Walton now works for San Diego’s nonprofit business accelerator, Connect.
He’s point man for its San Diego Sport Innovators organization. SDSI will
bring promising companies together with potential investors during the SDSI
Capital Forum, scheduled for Aug. 12 at the Ultimate Skybox at DiamondView
Tower next to Petco Park, on the eve of the always exuberant ASR action
sports gear trade show at the San Diego Convention Center. (Nielsen
Expositions produces the trade show.)

During the invitation-only capital forum, representatives of seven very
young and promising sports companies will make 15-minute presentations to
an audience of potential investors. Both parties will have the chance to
meet in private and, if all goes well, work out financing deals. The day
concludes with a networking event from 3:30 to 5:30 p.m. at the old Candy
Factory building and a San Diego Padres baseball game at Petco Park.

Years of experience on the court and in sports broadcasting have taught
Walton the importance of preparation, and the importance of seizing the
moment when the real game begins.

“You find out who can play,” Walton said, “who’s got a game, who’s in
shape, who really wants it.”

Help From an Angel

Rich Martin, chief executive of Prunolo Inc., says he hopes to line up
$100,000 to $500,000 in angel funding during the capital forum. Prunolo is
working to build a “smart watch,” a device worn on the wrist to display
data from cell phones. The trick is to avoid styling that looks as though
the device wearer is “under house arrest,” Martin said dryly, borrowing a
term from Craig Collins, the company’s vice president of sales and
marketing.

Prunolo needs a half-million dollars to get the device, called the
Grapevine, through its prototype phase, Martin says. But it’s a difficult
market, he says, one where a ripple goes through stocks and investors pull
back.

Not Like the Others

Also presenting will be Mike Brower of Cleatskins. Cleatskins makes a
patented product that attaches to the bottoms of athletic shoes to protect
floors, or the shoes themselves. They are not necessarily for shoes with
cleats — or athletic shoe wearers, Brower says. “Our primary competition is
someone bringing an extra pair of shoes,” said Brower.

With $4 million of founders’ money in the enterprise, Cleatskins is beyond
the product development stage, Brower says. It’s looking for $1.4 million
to go toward sales and marketing, plus $600,000 for general purposes. The
business projects $230,000 in revenue this year and $1.5 million in 2011 —
and $17 million by 2014. Cleatskins’ owners say they want to eventually
exit the business by selling to a major footwear brand.

Brower led the initial public offering for Spy Optic, which today is a
subsidiary of Carlsbad-based Orange 21 Inc.

The Attagirl! Web site that Kathy Taylor envisions will mix brand-name
retail with social networking. Taylor hopes to create a friendly,
female-only environment. She sees a place where a person can post questions
a little too personal for other places on the Web, such as “I’m running a
half marathon. Can anyone recommend a good sports bra?” Attagirl will also
be a place to derive motivation and celebrate achievements.

“I’m as ready as I can be,” said Taylor, looking ahead to her time before
the investors. Like other event participants, Taylor has been refining her
business plan through Connect’s Springboard business development program.
Taylor is a former chief marketing officer for Road Runner Sports Inc.

Mixed Message

Pascal Pakter not only has to make a business case during his precious 15
minutes, he will have to set aside part of his time to challenge attitudes
about the sport at the center of his business. That’s mixed martial arts.

Pakter is founder and president of Do or Die, which intends to make apparel
for the sport. “It’s the modern version of pankration,” Pakter said,
referring to the ancient Greek contests that combined boxing and wrestling
moves. The ancient Romans did it too.

Special apparel for mixed martial arts is only a start. Pakter says he
wants to follow the path of Nike and Reebok International Ltd., which
started with individual sports then diversified. Do or Die wants to branch
out to serve multiple sports.

Pakter says he decided to start his own business after 20 years of sourcing
clothing for makers such as Converse Inc., Hurley, Nike and O’Neill.

The other businesses participating in the capital forum are online
marketing firm Clarinova, snowboard gear maker Celtek, and an e-commerce
Web site for action sports brands, Seshday.