Tom Pernikoff had been on the Pageant’s stage before as a musician. On Wednesday, he was there as an entrepreneur.
The experience didn’t feel all that different to him. “I feel safe behind a guitar, but I also know my business and feel comfortable pitching it,” Pernikoff said after Wednesday’s Demo Day event.
It helped that he was pitching, in a sense, to family. Demo Day was a coming-out party for 11 companies sponsored by Capital Innovators, an accelerator fund that invests in technology firms and puts them through a 12-week mentoring program. The audience of nearly 500 people included potential investors, but it also included fellow entrepreneurs, mentors and supporters of technology firms in St. Louis.
When Capital Innovators launched two years ago, it would have been hard to find such a large entrepreneurial family in St. Louis.
The fund was one of the first tenants of downtown’s T-Rex incubator space, which is now home to 57 startups.
Capital Innovators itself has launched 24 businesses, which employ 350 people and have raised $37 million from other investors.
“I keep setting high goals for us, and we keep exceeding them,” said Judy Sindecuse, the fund’s chief executive.
Managing partner Hal Gentry said he knew that the accelerator model had worked in other cities, but wasn’t sure whether St. Louis had enough promising companies to make it work here. Those doubts have now been erased.
“I was concerned that the quality would drop off at some point, but that hasn’t happened,” Gentry said.
This year’s Demo Day companies included Tunespeak, Pernikoff’s online music marketing business, along with firms promising to “disrupt” fields such as legal research, catering and classified advertising.
Ed Spinaio, co-founder of Time to Cater, says he applied to Capital Innovators because he needed a $50,000 investor. He now realizes that the program gave him much more.
“The resources and mentoring alone have totally changed the way we do business in three months,” Spinaio said.
“We have been doing this for two years, but being able to have that third-party perspective on the business, telling us what we ought to do and what we were doing wrong, has really moved us forward.”
Spinaio, a former pharmaceutical sales representative, founded Time to Cater because he wanted an easy, online way to order lunches for doctors’ offices.
Pernikoff, who sings with local rock band Pernikoff Brothers, founded Tunespeak because he thought bands should have a better way to connect with loyal fans.
It’s stories like theirs that convince Sindecuse and Gentry of their model’s sustainability in St. Louis. “Because of the ecosystem we’re building here, the word is getting around that you can start a business here,” Sindecuse said. “People who have been sitting on an idea will be more likely to leave their jobs and act on that idea now.”
Still an open question is whether those startups can stay in St. Louis once they get past the idea stage and need millions of dollars to expand.
Peter Esparrago is a partner in Cultivation Capital, a year-old fund that has invested in several of the Capital Innovators graduates.
“Is there enough capital in St. Louis? I’d be lying if I would say yes,” Esparrago said. “We do have a group of new investors, but they’re all watching to see if there’s going to be a real return. If we can show them someone who is a win, it’s going to explode.”