VC Spotlight Interview: Ken Okrepkie, Ben Franklin Technology Partners of Northeast Pennsylvania
Ken Okrepkie currently serves as a Regional Manager overseeing investment activity in the eight counties that make up the Pocono Northeast for Ben Franklin Technology Partners of Northeastern Pennsylvania. He links early-stage technology firms and established manufacturers with funding, people, technology and university resources to help them prosper. In the past year, Ben Franklin Technology Partners of Northeastern PA helped companies develop 69 new products and processes while creating and retaining 745 jobs, bringing the total jobs created and retained since 1983 to more than 36,000.
Ken is an adjunct professor at The University of Scranton where he teaches a course on creativity and innovation. He serves on the Board of Directors for the region's five business incubators located in Carbondale, East Stroudsburg, Hazleton, Scranton and Wilkes-Barre, PA.
Additionally, Ken also sits on the CAN DO, SLIBCO and Junior Achievement Boards of Directors. He has a bachelor's degree in marketing and a master's degree in human resources from the University of Scranton. Ken lives in Scott Township, PA with his wife, Dr. Kim Pavlick, and their two daughters, Emily and Grace.
How did you first get interested and involved in venture capital?
I worked for an early-stage company 12 years ago and made numerous presentations to venture capital firms and angel investors. At the time, I thought one day I'd like to be on the other side of the table. Fortunately that opportunity presented itself to me a few years later in my career.
What do you currently do on a day-to-day basis?
I balance my time between addressing the needs of our portfolio clients and assessing the challenges and opportunities associated with companies seeking capital. The needs of portfolio companies are usually very company-specific. While I may help one firm focus on raising follow-on funding, in another case I may work with a company to develop a plan to secure their first round of customers.
I spend a lot of time meeting with entrepreneurs to review their venture profiles, pitch decks, and market opportunities to get a clear understanding of their needs. I work to determine if they would be a good fit to a Ben Franklin investment, and if they aren't, I'll suggest alternative resources for them to pursue.
Almost every entrepreneur who calls me focuses on their need for seed funding. They often say, "If I only had $100K, $500K, or $1M, then my company would be set." But in reality, they need something more specific than capital, like software development, access to customers, or an expert to help them with cash flow management. Each of these services, of course, costs money, but entrepreneurs tend to want to eat the whole elephant all at once. I help them to break down the task and set priorities, so that they can gain traction in their respective marketplace, generate revenue, and accelerate their growth. Entrepreneurs are in a race against insolvency, so it is important for them to generate revenue as soon as is feasible.
There's no shortage of people for me to talk with on any given day. Ben Franklin Technology Partners is one of the most active early-stage capital investors in the country. Although we can only invest in companies located in northeastern Pennsylvania, the deal flow has been fairly consistent with success stories including TMG Healthcare, OraSure Technologies, and Strong Industries.
It seems as if "failure" is becoming more accepted in the VC world. Can you share an experience in which you invested in a venture that did not succeed. Why were you optimistic about it at first and what happened?
In my experience, companies primarily fail because of poor execution by the management teams. It is less frequently a poor product, service, or technology. At Ben Franklin, we focus on the strength of the management team as much as the company's market offering.
Is there a common myth that you hear from entrepreneurs that you would love to dispel?
Myth: Venture capital investors only want to take over your company.
Reality: The vast majority of investors don't want to take over your company. Instead, they want to bring you resources to help you accelerate the growth of your firm. The real challenge for entrepreneurs comes when the investor and the entrepreneur don't agree on the best path to move the company forward. I think the relationship between investor and entrepreneur should be taken seriously, and companies should identify investors who bring more than just money to the table. Entrepreneurs should be looking for strategic investors who bring industry experience or technical expertise, and/or contacts to support crucial areas like financial management, distribution strategies, and/or sales.
What are the key qualities you look for in an investment opportunity?
The number one success factor is a strong, experienced management team with industry and sales expertise. Entrepreneurs who bring decades of experience to the venture most likely have the relationships that will drive early sales. Importantly, the early adopters are known entities and will offer honest feedback and initial endorsement, which can be more important than initial revenue. In addition, entrepreneurs need to be able to accept constructive criticism from qualified sources, and be flexible enough to shift course if the original plan isn't working.
Can entrepreneurs who don't have experience be successful?
Yes, but they tend to struggle more than their counterparts. Honestly, there isn't a magic formula to entrepreneurial success because markets change and new technologies are constantly being developed. Even something like the weather can have significant impact on a company. I have a firm in my portfolio that sells products to the oil industry, Galaxy Brushes. In January, they sell product to Canadian Oil companies because the eighteen wheelers are able to deliver products to remote sites by driving across frozen lakes. During the winter of 2012, the lakes never froze. Who would've thought that lakes in northern Canada wouldn't freeze in January?
What are some of the first steps you commonly take after adding a new venture to your portfolio?
Our investments are made to support specific projects with tangible goals and timelines. My first step is to meet with the company to determine how I can best support their efforts as they begin to execute on our agreed-upon strategy. Ben Franklin Technology Partners supports its clients with a network of established resources that we have developed over our 30 years in operation. This network of consultants, university partners, and technical resources, called the Ben Franklin Solutions Network, provides assistance in areas crucial to clients. In addition to our years of in-house experience, this group is among our most valuable tools, and I use it bring additional resources into our client firms.
What are 3 things entrepreneurs should never say to a VC or Angel Investor?
1. We have no competition. It means you either don't understand your market or you're too arrogant to believe that someone could replicate your product offering.
2. My financials are very conservative. There appear to be two rules of thumb with early stage companies. First, the revenues will almost always be less than projected, and second, the time to cash flow positive will be longer than expected. Don't plan for things to go as expected. These probabilities mean that entrepreneurs nearly always need more cash on hand than they originally anticipated.
3. The market is $1B, if we only capture 1% of the market look how profitable my company will be. Why are you assuming you'll get 1% of the market? Instead of this conjecture, tell me where you will be getting your first customer, and then the next 10.