Archive for the 'raising capital' Category

Green Mountain Digital announced $3.8 million in Series B funding led by Monster Worldwide (NYSE: MWW), the Vermont Seed Capital Fund and angel investors.

The funding will primarily support the scaling of recently launched Yonder, a free photo/video sharing app focused on outdoor recreation, as well as continued investment in the company’s nature-oriented NatureShare platform.

Yonder helps users discover great outdoor experiences. Uploaded experiences are geo-located, tagged with activities like hiking or kayaking, and in many cases linked to outdoor destinations from the Yonder database. Users can browse experiences by location, popularity, and activity type. Yonder is literally documenting North America’s engagement with the great outdoors.

“Our mobile first approach and deep focus on the outdoors has led us to Yonder,” said David Roberts, CEO of Green Mountain Digital. “Through Yonder, users can record and share their experiences via photos and videos, thereby inspiring others to engage in the best that the outdoors has to offer.”

“Green Mountain Digital is successfully capitalizing on the great opportunity today’s social and mobile app marketplace represents and this is a sound and strategic investment for Monster,” said Monster Worldwide Chairman, President and CEO Sal Iannuzzi. “Beyond the solid financials, we continuously look to explore the latest technological developments for our business and I expect Monster and Green Mountain Digital will be able to learn much together as the mobile and social revolution accelerates.”

Green Mountain Digital is North America’s leading app publisher of authoritative nature and wildlife field guides under the Audubon brand. The company’s app portfolio collectively represents over 1.2 million downloads. In late 2012, the company formally launched a nature photo-sharing platform, NatureShare, which passed its 1 millionth user login after just eight months in July.

Yonder is currently available in the iTunes Store, with an Android version anticipated in the near future.

About Green Mountain Digital: 

Green Mountain Digital was founded in 2009 in Woodstock, VT.  In addition to Yonder and NatureShare social platforms, the company has designed and published more than 30 mobile apps for iOS, Android, Kindle Fire, Nook, and other mobile operating systems, including Audubon Birds of North America, Orvis Fly Fishing: The Ultimate Guide, GardenMinder and Sailing World: Knots and Splices. - See more at: www.greenmountaindigital.com

About Vermont Seed Capital Fund: 

Launched in 2010 with funding from the State of Vermont, the Vermont Seed Capital Fund is a $5M for-profit, permanently revolving, early-stage risk capital fund affiliated with the non-profit Vermont Center for Emerging Technologies (VCET).

By Thomas Moffitt, President, and Ben Johnson, CFO, Commonwealth Dairy, Brattleboro

The typical narrative of a bootstrapping entrepreneur goes something like this: A couple of folks with a good idea for a new web-based application start creating prototypes in a spare bedroom, maxing out credit cards and friends and family support until their venture gets big enough to require the trappings of a real business, like an office, marketing materials and sales team.  Some initial success generates customers, that attracts VC funding or a partner company with cash, allowing for future growth.

That model has indisputably worked for some of the biggest business successes in recent history, particularly those in the social media, online commerce or creative economy spaces.  Unfortunately, if you are trying to be a business innovator in one of the oldest sectors — manufacturing — a lot more bricks and mortar are involved.  And that requires a heck of a lot more up front investment.

When we realized that the yogurt industry was ripe for some new thinking — a focus on private label products, Greek yogurt, environmental sustainability and industry leading standards for safety and product quality  — innovation needed to be paired with a whole lot of STUFF.  A factory.  Processing equipment.  Milk!  And that’s before we hired a single employee.

Both dads with families, going deep into personal debt wasn’t an option.  But we also didn’t want to give up our idea to a partner company who could provide us with financial resources without any skin in the game.  So we found a different way to do it.  A lot of the lessons we learned apply to other companies that require more than a computer and a good idea.

1.  Sell people on your vision

The number of experts one needs to start a business can be overwhelming:  lawyers, business advisors, accountants and (in our case) people who had actually made yogurt before.  One meeting with all of those experts in the downtown Boston law firm we were working with would have cost us thousands of dollars.  Except that we had sold them on our vision, our potential for success and THEIR potential for future business with our company.  At the outset, their counsel was free and we used it wisely.

2.  Locate in an area hungry for economic development 

Our original hope had been to do business in Massachusetts (hence the name “Commonwealth” Dairy) — it was close to our homes, had the right logistics and market access and the western part of the state wanted business and had a strong dairy history.  Surprisingly, the statewide economic development folks were less than enthusiastic in supporting our venture- the opportunity didn’t fit with what they were after at the time - BioTech.  The situation couldn’t have been more different in Vermont — they knew our proposed business meant another buyer for their milk, more jobs and an addition to their already strong reputation for great agricultural products.  Their support helped us identify a site (a brownfield, which was eligible for financial support when we developed it as a result), build relationships with farmers, and find the right employees.

3.  Take advantage of tax credit programs 

Most importantly, our relationship with the state assured that we maximized our ability to leverage tax credit programs.  The availability of New Market Tax Credits drove our decision to locate in Brattleboro.  We also got Community Development Block grants from both the federal and state government for investing in jobs.  Vermont specific programs that encourage capital investment and job creation along with Department of Labor grants were also part of the mix.

4.  Get creative 

We always knew we wanted to operate a green business.  We leveraged that for financial support too, getting incentives from Efficiency Vermont for equipment that would be more efficient — allowing us to lower our energy costs as well.

This “package” of investments and support allowed us to approach and convince our eventual partner Ehrmann AG, a large family-owned and operated German company with a long history in yogurt production, to put dollars on the table.  They just weren’t our dollars.  This initial experience also encouraged us to continue to look for ways to benefit from the credits and investment opportunities available for growing businesses — something that has helped us as we expanded in Vermont and to the West Coast.

Leading Cyber Security Venture Capitalists back Vermont Cyber Security Company’s innovations in testing wireless devices and networks in remote offices

Penetration testing innovator, Pwnie Express, closed on its $5.1 million Series A financing led by .406 Ventures and joined by Fairhaven Capital and the Vermont Seed Capital Fund. The new capital will broaden Pwnie’s technology and product base, as well as expand sales and marketing capabilities.

Founded in 2009 by Dave Porcello, Pwnie Express has offices in Vermont and will soon open a Boston office. Winner of SC Magazine’s Industry Innovator and Cyber Defense Magazine’s Best in Class Pentest Award, Pwnie Express initially entered the market with its patent pending pentesting dropbox - the Pwn Plug. In 2012, Pwnie Express received DARPA funding to create the Power Pwn, a pentesting device in the form factor of a power strip. In Q1 2013, the company introduced the Pwn Pad, a pentester’s tablet that has received critical acclaim and is in high demand. In May, Pwnie Express released Citadel PX, a scalable, enterprise class offering which provides the ability to easily and cost effectively conduct security assessments across multiple branch offices in a distributed enterprise.

Rick Grinnell, Managing Director of Fairhaven Capital said, “Pwnie Express is uniquely positioned with its innovative product suite to solve an enterprise security gap, creating a new high growth market segment.”

Maria Cirino, co-founder of .406 Ventures, said, “Pwnie Express has solved the problem of assessing the increased security risk from wireless and BYO devices, especially in remote and branch offices. Their specialized tools and highly differentiated approach to automating remote location penetration testing enables enterprise customers to do more testing for less money which maps well to today’s economic and IT security challenges.” Cirino and Grinnell will both join the Pwnie Express Board of Directors.

About Pwnie Express:
Pwnie Express, established in 2009, is based in Berlin, Vermont with offices in Boston. Recognized by SC Magazine as the 2012 Industry Innovator, and serving over a thousand customers, Pwnie Express is the leading provider of penetration testing products for the distributed enterprise.

About .406 Ventures:
Established in 2006, .406 Ventures— whose name refers to the batting average of Boston Red Sox legend Ted Williams during the 1941 baseball season — focuses exclusively on early stage, enterprise IT companies, with a particular focus on highly differentiated companies in the IT security, health care IT and Web infrastructure spaces.

About Fairhaven Capital
Fairhaven Capital is a venture capital firm dedicated to a thesis-based approach to investing in North American technology companies. This approach focuses investment efforts on markets where emerging companies and technologies can create significant value.

About Vermont Seed Capital Fund:
Launched in 2010 with funding from the State of Vermont, the Vermont Seed Capital Fund is a $5M for-profit, permanently revolving, early-stage risk capital fund affiliated with the non-profit Vermont Center for Emerging Technologies (VCET).

VT EPSCoR is pleased to provide a funding opportunity with awards of up to $5,000 to Vermont based businesses.

Use of Facilities for Private Sector provides the opportunity to compete for up to $5,000
- Rolling Deadline - you may submit a proposal at any time
- To see full submission guidelines, please visit:
http://www.uvm.edu/~epscor/redir/use

Questions?
Please email epscor@uvm.edu
Or, phone(802) 656-7931
Visit us on the web at www.uvm.edu/EPSCoR

Vermont Seed Capital Fund, LP leads funding to Vermont energy solutions company

Waitsfield, Vt. - Northern Reliability, Inc., an industry leader in providing ultra-reliable stand-alone power solutions for customers worldwide, announced today that it has closed new venture capital funding from Vermont angel investors and the Vermont Seed Capital Fund, LP.

“The Vermont Seed Capital Fund’s investment in Northern Reliability demonstrates the company’s potential as a major player in energy solutions and its potential to create good jobs in the Mad River Valley. The Vermont Seed Capital Fund is helping to solve a critical gap in financing for Vermont companies that might otherwise be forced to leave Vermont to grow,” said U.S. Senator Patrick Leahy (D-Vermont).

Northern Reliability builds, installs and services energy systems that utilize solar technology to power a range of applications, from safety lighting on utility transmission towers to radio networks needing to span remote mountain tops to island communities reducing reliance on diesel generators.

“The demand for stand-alone power systems is growing. Our team is committed to solving the energy security needs for our various customers in the telecom, utility and government industries,” said Northern Reliability CEO Jeff Mack. “This first outside equity investment allows us to meet growing customer demands around the globe while creating local opportunities for well-paying jobs in the engineering, technology, sales and marketing fields in Vermont.”

Northern Reliability plans to utilize these funds to deliver energy security to disaster prone areas with its solar powered systems. When utility power goes down and diesel fuel is scarce, Northern Reliability’s power systems with battery storage generate and store electrical power for continuous use in order to run emergency lighting, security systems, key-card entry systems, elevators, refrigeration and various other critical loads.

A 2013 Pike Research Report on off-grid power stations predicts 38 percent compound annual growth for this sector in which Northern Reliability specializes.

The Vermont Seed Capital Fund, LP is a $5 million, revolving early stage capital fund managed by the non-profit Vermont Center for Emerging Technologies (VCET).

After experiencing 2012 revenue growth of over 200 percent, the company has 11 full-time staff, 11 part-time staff and contractors employed at the company today.

FY12 Vermont Seed Capital Fund Report - Public Stakeholders

Please find below, the Fiscal Year 2012 report of the Vermont Seed Capital Fund, LP.   A subsidiary of the Vermont Center for Emerging Technologies (VCET) is the Fund Manager.   Investing activities began in May 2010 shortly after the first capital contribution arrived, and as of November 2012, 11 companies from around Vermont have been initially supported by this early stage risk capital.  During the initial 10-year fund time horizon, a total of 17 companies are anticipated to receive initial funding support during the fund’s first revolve.  The Fund completed its 3rd consecutive annual financial and process Audit without issue as conducted by an independent CPA firm.

VCET invested $1M in capital alongside a total of $4.04M of one time capital from the State of Vermont via the Vermont Economic Development Authority (VEDA)  to form this permanent, revolving high risk pool of capital.

We are available to discuss further or to answer questions.  Thank you for your continued support of entrepreneurs in Vermont.

Download here: http://goo.gl/S91Uk

Are angel investors in the game to profit?

Recently, a back-and-forth on TechCrunch between Andy Rachleff and Robert Wiltbank has attracted a lot of attention from techies and crunchies alike. Rachleff argues that angel investing is not a profitable activity but rather an exciting way for retired entrepreneurs and executives to stay involved and excited. Rachleff describes his own investing:

I make those few angel investments because I want to help my best students achieve their goals, and because I like being involved in startups. That’s the ultimate lesson from the fish stories in Silicon Valley. True fishermen cast their lines not because they want the fish, but because they like fishing. It’s fine to be an angel investor – just don’t do it for the money.

To Rachleff, this does not mean that Angels should get out of the game. Rather, angels should use this insight to choose angel investments appropriately. On the other hand, Wiltbank provides data that he believes show a consistent 2.5x return for angel investors. While the sample size and representativeness may be disputable, Wiltbank’s findings are valuable, and his message is a good one:

The best estimate of overall angel investor returns from this data is 2.5 times their investment, though in any one investment the odds of a positive return are less than 50 percent. This is absolutely competitive with venture capital returns.

Just like angel investors, VCs want their money back — times 50 if they can get it. The idea that angels are suckers while VCs have cornered the market on building great companies is simply not supported by the data.   Now let’s get back to the business of selling more product and less stock!

Both articles are very enjoyable, read them here:

http://techcrunch.com/2012/09/30/why-angel-investors-dont-make-money-and-advice-for-people-who-are-going-to-become-angels-anyway/

http://techcrunch.com/2012/10/13/angel-investors-make-2-5x-returns-overall/

In a recent NYT article, Ami Kassar discussed the pros and cons of various methods of startup financing. Unbeknownst to many, the popular show, “Shark Tank” demands of participants, either a 2% royalty payment on operating profit or a 5% equity stake in the company.

This might seem like a small token to appear on the hit show — getting the chance to pitch to Mark Cuban. However, 5% equity is no laughing matter and 2% royalties could even harm the chances of an aspiring startup. The question remains, what is the alternative? With debt financing, an entrepreneur retains equity . Furthermore, while equity can last a lifetime, debt financing is finite. However, using cash flows to pay back debtors rather than investing in growth can be devastating for a young startup. Mark Cuban describes this,

“I would tell every entrepreneur what I tell them right now, debt is a nightmare. Banks are not forgiving, and the last thing you want to do is build your business with a priority placed on having to pay back the bank before you invest further in your business. Equity is far better and sweat equity is the best.”

Of course, every company and every investor is different. Much of what you pay for with a Shark Tank investment are the amazing connections that the Sharks can make — these can truly make the difference for a startup. However, before taking any type of financing — debt or equity — a startup should carefully examine the relationship they are creating. If the risk of swimming in the Shark Tank doesn’t come with the reward you need to make it big, consider staying in the shallow end for a bit longer.

Full NYT article here.

The tech media have focused plenty of discussion in recent weeks on Facebook’s underperforming IPO. What does the aftermath mean for budding entrepreneurs trying to navigate today’s venture capital landscape?

Paul Graham heeds caution for those seeking funding at recent valuation levels, suggesting on his blog that entrepreneurs should “lower their expectations.” Here are some highlights from his post:

“What I do worry about is (a) it may be harder to raise money at all, regardless of price and (b) that companies that previously raised money at high valuations will now face “down rounds,” which can be damaging.”

Graham seems most concerned for those who just raised funding at a high valuation.

“If you raised money in an equity round at a high valuation, you may find that if you need money you can only get it at a lower one. Which is bad, because “down rounds” not only dilute you horribly, but make you seem and perhaps even feel like damaged goods.”

So how should early-stage businesses adjust their action plan?

“The best solution is not to need money. The less you need investor money, (a) the more investors like you, in all markets, and (b) the less you’re harmed by bad markets.”

Graham justifies his forecast by relating the poor performance of Facebook’s IPO to the exceedingly high expectations of investors pre-IPO. But Peter Cohan takes a different angle, concluding that founders have little reason to worry. Despite its failure to meet the hype, Facebook’s IPO still pumped an enormous amount of fresh capital into Silicon Valley investors’ pockets. So there are plenty of fresh opportunities.

“…venture-capital firms that invested early made billions in profit. Top-dog Accel Partners took in an estimated $1.8 billion that day.”

Cohan sees the ripple effects of the IPO most immediately impacting the thinking of other big businesses who had been preparing for an IPO of their own:

“Facebook’s busted IPO is at worst a cautionary tale for other companies that would aspire to an IPO. And the lesson is to set the offering price low enough so that investors in the IPO can make money after the first day of trading.”

For the Graham and Cohan’s full articles, see:

http://news.ycombinator.com/item?id=4067297

http://www.entrepreneur.com/blog/223687

Mashable recently posted an article with 7 quick tips to raising a killer round:

1. Be Hungry
The deal isn’t closed until the money hits the bank, so stay hungry.

2. Adjust Your Mindset
Think of investors as partners for life, who will continue to back you in subsequent ventures.

3. Have Integrity
When you pitch an investor, make sure you are honest but firm.

4. Maintain Confidence
Don’t disclose information without permission.

5. Have a Big Vision
Nothing turns off investors more than entrepreneurs who think small.

6. Target a Big Market
Show investors that the market you are targeting has the potential to be worth billions of dollars.

7. Know How to Frame the Product
Investors don’t invest in features, they invest in real businesses.

Link: http://mashable.com/2012/05/19/startup-investor-tips/