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Friday, Oct. 26, 2001
 
2001 Small Business profiles

TraceDetect among companies making 10-minute dash for venture capital

By Tricia Duryee
Seattle Times business reporter

Wendy Wahl, the chief executive of TraceDetect, hovered over a laptop in her Fremont office, thinking of how to describe her business. She occasionally threw back her head in frustration and gasped when the words — as a former English major, she prefers active over passive voice — didn't come immediately to mind.

"We are not a dot-com," suggested Geoff Saunders, TraceDetect's vice president of sales and marketing.

"But I can't say that," she moaned.

The two worked vigorously, tweaking and polishing a 10-minute presentation they hoped would make the difference in persuading venture capitalists (VCs) to invest in their bootstrap company. They polished up the presentation, which Wahl made before approximately 200 investors at the WSA Investment Forum yesterday.

Under the forum setup, Wahl and the executives at 14 other early-stage companies in the region had exactly 10 minutes to impress the audience of investors, who have been a lot less receptive since the technology boom waned. TraceDetect is looking for about $3 million to help mass-produce instruments that analyze water or dirt for certain metals. The defining factor, Wahl said, is that the device can be used on-site, avoiding the cumbersome method of taking samples, sending them to a lab and waiting for results.

But how does Wahl — or any struggling start-up, for that matter — tell the company's story in a compelling manner before an audience much tougher today than it was only a year ago?

The answer is preparation, she said. Build the PowerPoint slides, practice the presentation and memorize what you are going to say. As it started to get dark Wednesday night, Saunders and Wahl fumbled with the wording of each of the 12 slides Wahl would click through in following day's presentation.

She wanted to emphasize that TraceDetect wasn't in an industry that had been devalued in the public markets.

"It's a niche that's not familiar to you. ... It's an antonym to the overdeveloped markets," she said aloud, scribbling notes on a printout of her presentation.

Nope. She and Saunders agreed that didn't sound right either.

Even Wahl's dog, Misha, circling the Oriental rug next to the conference table, seemed restless. Saunders hovered nearby.

Finally, Wahl favored what they had originally: "It is a niche business, but not a niche market."

Wahl, a former Microsoft employee, understands how critical it is to get more funding for the small six-employee company.

TraceDetect's business, which is based on technology developed at the University of Washington, has done as much as it can through grants and seed money. It can't crank out enough devices to meet demand from researchers, government agencies and other potential customers, and it can't afford to contract a manufacturer without funding.

"We are bootstrapping," said Wahl, who added that if the focus is too occupied with fund raising, the company's revenues might falter.

"There's little margin for error," she said.

TraceDetect has a tall hurdle to climb, however, with VCs taking a break in funding new companies to work with their current portfolio companies. That's why Saunders and Wahl knew it would be important to spend a majority of Wednesday and yesterday working on the presentation.

Despite the gloom, Wahl was surprisingly optimistic. She thinks the perception could be that TraceDetect is a refuge for many VCs who have been burned by wireless applications, dot-coms or other fledging industries.

But the evidence in her office didn't seem to agree. A whiteboard the size of a front door lists 21 venture capitalists in the region. Next to each name, Wahl updated the most recent contact she made with the company. Most of them list one of two things: Business plan was submitted, or no one has responded. Very few have requested a meeting.

But yesterday's WSA presentation changed all of that.

"We were the last presenter, which we thought people would be less interested in. But people were obviously very interested. It worked well," Saunders said.

Immediately following the event, he said, four or five investors approached him and Wahl.

Two of them even came to TraceDetect's offices for a demonstration.

"These were two investors that we had already spoken to," he said. "It was the WSA that pushed them over the top and got them to come here and see a demonstration."

Saunders said those two investors plan to go back to their companies' partners Monday, and follow up with TraceDetect.

"We were whooping it up around here," Saunders said.

Tricia Duryee can be reached at 206-464-3283 or tduryee@seattletimes.com.

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