By guest authors Irina Patterson and Candice Arnold
This is the forty-fourth interview in our series on financing for entrepreneurs. I am talking to Jim Jaffe, the CEO of the National Association of Seed and Venture Fund (NASVF).
Philadelphia, Pennsylvania–based NASVF is a global non-profit with over 600 individual members in 43 states and four countries that connects investors, economic development organizations, public and private funds, and tech transfer professionals. Its core mission is to advance formation of innovation capital programs and by doing so facilitate early stage entrepreneurship and job creation.
Irina: Hi, Jim. Why don’t you briefly start with your background and how you arrived at this point.
Jim: For many years I managed large public companies with many employees all over the world.
About 15 years ago, I got very interested in what was taking place in Central and Eastern Europe. And, as a result, I moved overseas, first to Macedonia. I ended up living overseas for nine years, in Macedonia, then Ukraine, Croatia, and the Philippines. All of these jobs were involved with helping small businesses, lending money to them, training, consulting, equity investing, and so on.
I came back to the United States in 2005 and managed a small, what is known as, a bottom line equity fund in Philadelphia. These are funds that have money that are raised from limited partners, but in parallel they have have a social mission: job creation and investing in disadvantaged areas. I did that for about three years and then took over as the CEO of NASVF about two years ago.
Irina: Does this fund that you managed still exist?
Jim: Yes it does. It’s called Murex, and it’s here in the Philadelphia area, and I’m still on the board of directors.
Irina: Give us a brief overview of NASVF.
Jim: Our mission is advancing innovation capital. Our members range in size and complexity. Some are equity funds, people who raise money from private sources and invest in early stage companies.
Another category of members is state and regional economic development agencies that operate like seed funds, except that their money comes from a public source. Like in Pennsylvania where I live, there’s the Ben Franklin Technology Partners, and Maryland has them and so on. But as I said, they’re very similar to seed funds.
Roughly two-thirds of our members are involved with capital, either in private or in the public. One-third of our members are involved with technology or organizations that develop technology and try to find funding sources. These are places like university research organizations, federal laboratories, business incubators, and so on.
Irina: What do you do day to day?
Jim: I am the CEO. I run the organization. We have a big annual conference, which was just completed in Baltimore, in October, which takes an enormous amount of work. I spend a lot of time chatting with our members. We have committees that involve members in what we’re doing. I do a lot of public speaking about what is going on in the seed and venture communities.
Irina: How is NASVF funded?
Jim: Through a combination of membership dues, sponsors at our annual conference, and attendees at the annual conference.
Irina: What do you offer to your members?
Jim: The benefits are that we try to be the catalyst between technology and money, so we offer best practices. If you take a look at our website, you can read about the conference that we just had. We had national speakers. We have panels on many different topics that are interesting to our members, but what we try to do is to bring together all the loose ends that are in this community of capital that’s trying to find and technology and technology that’s trying to find capital.
Irina: What do you see as the key issues with the seed capital?
Jim: The single biggest issue . . . are you familiar with the phrase “the valley of death?” Let me describe it to you, and then I’ll tell you what the issue is.
If somebody is starting up a small business, a technology-based business, it’s quite usual for them to get money from their friends and family to prove something can actually work. Roughly speaking – and these are not exact numbers – people usually get, say, $100,000 from their friends and family to do something.
The next big challenge is where do you get money to really get a business going or technology into the marketplace, and this is called “the valley of death.”