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Close-Up: Mike Krenn

Krenn assists emerging businesses through Venture Pipeline Group

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Mike Krenn works at one of the nation's largest law firms -- 3,100 attorneys in 58 offices -- yet he's not a lawyer.

Photo: J. Kat Woronowicz Mike Krenn stands tall in one of DLA Piper Rudnick Gray Cary's conference rooms.

Krenn is creator and managing director of DLA Piper Rudnick Gray Cary's business unit Venture Pipeline Group, which helps emerging growth companies in the technology and communication industries raise capital.

"This is the only law firm that I know of in the world that's got anything like it," Krenn said.

Although a previous job working for Cooley Godward LLC made him swear to never again work for a law firm, that job put him in touch with numerous high-tech startups that needed help raising $1 million to $2 million. It was this interaction and his interest in the revolutionary ideas that were emerging from the telecom and technology sectors that gave him the idea for Venture Pipeline.

"All these companies come in (to DLA Piper) and inevitably need to raise startup capital. I can sort of babysit them and work them through the early stage steps," he said, adding this includes helping them with their business plan and putting them in contact with venture capitalists and associations. "The nice part of this is it's a national program, but it is led out of San Diego."

Besides creating Venture Pipeline Group, he helped found the Tech Coast Angels, whose members have invested more than $65 million in more than 100 companies and have helped attract more than $650 million of additional capital, mostly from venture capital firms. He is also on the board of CommNexus San Diego, formerly the San Diego Telecom Council, San Diego Venture Group and Biocom's Venture Capital Committee.

Representing one of the nation's largest firms, one might think Venture Pipeline's staff is large, however it is equivalent in size to the management team of some startups. Besides Krenn, there are three other members of the Venture Pipeline team, two in Northern California and one in Austin, Texas.

"We (himself and one other member) built the whole foundation, databases and dug in. It's cool in that we've been so successful that they let us run our own show," Krenn said, adding that despite the size of Venture Pipeline it has become a big unit within the firm. With the ability to run the show, Krenn typically spends half his time speaking with venture capitalists and the other half with clients dissecting their business plans, which include information regarding the company's market size, market strategy, management team, product description and intellectual property.

"All these entrepreneurs have so much energy, and are so passionate about their companies. It's nice to feed off that energy," he said.

The interaction with the startup companies usually involves sitting down with the CEO or founder and proceeding to tear up their executive summary as if Krenn was a venture capitalist.

"They (startups) all think they want to go down the venture path, oftentimes we'll council them and tell them either 'you're too early' or 'you've got a business that's probably not ultimately venture backable,'" he said. "We deliver some harsh feedback sometimes."

But this feedback is grounded in knowledge, as he reviews around 600 business plans a year.

"Typically the entrepreneurs are really appreciative. When you're going out to raise venture money, if a company says 'no' it's real hard to get back in the door ... they all maintain deal logs," he said, adding the Venture Pipeline process means better access to potential funding sources for local entrepreneurs who are already immersed in a good telecom and tech market.

An example of this is San Diego-based Veoh, who through Venture's connections received a $2.25 million Series A investment from Shelter Capital.

While it is common for law firms to connect their startup clients to venture capitalists, the Venture Pipeline process is different in that it is Krenn's responsibility instead of the attorneys' to connect clients to potential funding sources, according to Dmitry Shapiro, CEO of Veoh.

"In the technology world, he's a superstar celebrity," Shapiro said.

Many of the entrepreneurs whose business plans are reviewed are rejected by Venture Pipeline and thus aren't shopped to venture capitalists. Going further, of the plans that are shopped about one out of four receives funding. In the past two years Venture Pipeline has shopped 93 startups, with 23 raising capital.

"A lot of venture capitalists are looking for a reason to say no," Krenn said.

He suggests that what typically turns off venture capitalists are companies that, in their business plan, don't come off as having strong enough intellectual property or haven't properly identified the competition in their specific market. In the end he said the key to receiving funding is story telling, having the right people at the right stage and timing.

With an enjoyment for telecom, tech and aiding startups it appears that more of the same is in the pipeline regarding his future with Venture Pipeline.

"This is a cool gig, we're actually making a difference," Krenn said.

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