David M. Barbash is a partner and co-chairman of the corporate department at Posternak Blankstein & Lund LLP of Boston. His practice includes representing early stage companies, public and private companies in mergers and acquisitions, public and private financings, loan transaction, and licensing and strategic alliances. Some startups he has assisted are located in Rhode Island.
PBN: Massachusetts is second nationally in venture capitalist funding for clean tech companies. What has triggered such a high ranking?
BARBASH:I think Massachusetts has attained this fantastic position due to the many colleges and universities that call it home. These colleges churn out incredible entrepreneurs each year, who in turn build companies centered on the research they initially began in the classroom. In addition, the Massachusetts Clean Energy Center and other state agencies have supported growth of the clean energy sector during the past few years, resulting in substantial investment in and support of clean-tech companies and projects throughout the Commonwealth.
PBN: You help startup companies at various stages of development. What problems do you see the most?
BARBASH: I have had the opportunity during the past 20 years of practice to work with a number of early stage companies, some of which have had great success, while others, unfortunately, have not been able to turn a viable idea into a sustainable company. One of the biggest problems I’ve seen during my time at Posternak, Blankstein & Lund is startups with a subpar management team.
I firmly believe that people invest in people. Therefore, a young company will likely not attract investors if its founders are not able to clearly and succinctly demonstrate how they are going to execute their business plan. Beginning with the initial pitch meeting, an investor, whether an angel or a VC, needs to have confidence that the management team has the knowledge, dedication and “business savvy” to build and grow the company in order to reach a successful exit through an IPO or acquisition. Successful entrepreneurs are the ones who couple sound business ideas and concepts with a strong management team.
PBN: How do you advise these companies to better their chances?
BARBASH: Before a client goes before investors to pitch a new business idea, I always advise them to “look into the mirror” and make sure that they have the right team in place to gain the confidence of the investor. A professional, well-prepared and easy to follow presentation in the initial pitch meeting can lead to follow up discussions and possibly an investment down the road. If an entrepreneur does not have the communication skills or experience to make this type of presentation, I advise them to partner with one or more individuals who possess such skills and expertise and who have led successful companies in the past.
Founders need to not only look in the mirror for their company, but for themselves as well. The best entrepreneurs are those who understand their strengths and weaknesses and that they may be better positioned to be chief information officer or chief technology officer rather than CEO of the company. By understanding their limits and reaching out to people who complement their skill sets, founders increase the chances of their dream turning into a viable, successful company.
PBN: What are some of the more notable companies you have assisted? Are any based in Rhode Island or Bristol County, Mass.?
BARBASH: Although my firm is based in Boston, I represent clients throughout New England and across the country. A few years ago, for example, I had the pleasure of working with a small Rhode Island-based technology company. Initially, I helped the founders with licensing and related intellectual property matters, and later counseled them through the successful sale of the company to a large, public firm. (He declined specifically name companies without their permission.)
PBN: What trends do you see in the future? Will more funds become available?
BARBASH: Every day new ideas are developed in the classrooms, labs and garages across New England, and those ideas will lead to new, exciting companies. As the country continues to climb out from the economic difficulties of the past few years, the investment community will continue to seek to invest in viable, well-managed companies in fields such as high-tech or sustainable energy. With these two factors in mind, I certainly see investors continuing to put their funds behind stimulating and sustainable New England startups.
PBN is now accepting applications for its newest award program and event for RI & Bristol County to celebrate the Manufacturing Renaissance that is evolving regionally and across the country. The deadline for applications is March 20th.
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