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ITC outlines recent investment in deal flow report

Will Gardenswartz works on his computer. Photo by Roland Lane.

Will Gardenswartz works at the Ketchum Innovation Center. Gardenswartz, CEO of the Hailey-based tech startup Winuru, said he would use the Idaho Technology Council’s deal flow report to look for investors around Idaho. Photo by Roland Lane.

Idaho companies did a good job of securing capital last year, increasing investment from $3.47 billion to $16.29 billion between 2014 and 2015.

The Albertsons acquisition of Safeway accounted for $8.5 billion of the transactions analyzed in the Idaho Technology Council’s deal flow report, which was released May 12.  But even without the Albertsons deal, more money changed hands than in previous years. That’s something the ITC wants to highlight as it works to attract investors and new business.

“We want competition and cash to come into the state,” said Blake Hansen, managing partner at Alturas Capital and co-chair of the deal flow report. “We want groups outside of Idaho to say, ‘Crap, there is a lot going on in Idaho. Why wasn’t I there?’”

The deal flow report, now in its second year, highlights private placement investments and merger and acquisition activity for Idaho companies and lists more than 125 deals that occurred in 2015. Hansen and the ITC committee spent thousands of hours in 2015 hunting for information on deals. The committee searched press releases, met with lawyers who helped with transactions and called

Click the image to view the full ITC 2015 Idaho Deal Flow Report. Courtesy of ITC.

Click the image to view the full ITC 2015 Idaho Deal Flow Report. Courtesy of ITC.

investors around the state. They still believe they missed as many as 100 deals.

“There are a lot of transactions that I know of that weren’t reported, including an $80 million deal,” Hansen said.

Idaho deals, reported by industry

The report breaks deals down by industry to show what is hot in any given year. Because the overall number of deals is low, one big transaction can sway the results every year. In 2015, there were more deals involving technology companies. But large deals involving publicly traded retail stores accounted for 60 percent of the money.

A breakdown of the deals that occurred in 2015. Data Courtesy of the Idaho Technology Council.

A breakdown of the deals that occurred in 2015. Data Courtesy of the Idaho Technology Council.

“We want to highlight that there is more going on in Idaho than publicly traded companies,” Hansen said.

Companies that managed to secure capital in 2015 ranged from well-established names like CradlePoint and Norco to new startups.  The report features six companies founded in 2015 that received a total of $40 million. Eight companies founded in 2014 received  $62 million, and seven companies founded in 2013 received $29 million, Hansen said.

“Venture capitalists used to say, ‘Great idea. You should bring that to this part of the country,’” Hansen said of Idaho-grown companies. “We are trying to combat that and show that companies can find success in Idaho.”

Reporting the deals

The ITC hopes to encourage more companies to report their deals to make the report more accurate. While some business owners said more information would help them find the investors they need, others said they worried about releasing information to their competitors.

Will Gardenswartz, CEO of the Hailey-based tech startup Winuru, called transparency a double-edged sword.

The Sun Valley Idaho Band of Angels doesn’t have a shared fund it invests from so Gardenswartz had to approach individual investors to raise $400,000 by increments of $5,000 and $15,000, gardenswartz said.

“The last thing I want is to go back to ask my folks for more capital and to be told that Susie Q is bugging them for capital too,” Gardenswartz said.

The other side of the sword for Gardenswartz  is the need to find more capital himself. Winuru has had to shut down  its website and lay off employees to save money and Gardenswartz is searching for more capital. However, Gardenswartz decided to release his company’s information  for the deal flow report, and he hopes to learn about where companies similar to his went for help.

“A lot of these investors are hard to catch at their third home in the Wood River Valley,” Gardenswartz said. “I need to find investors from around the state.”

Hansen hopes that the Deal Flow Report will encourage investors from outside Idaho to invest in Idaho companies. The 2016 version of the report will list individual investment groups. The 2015 version of the report doesn’t list investors, but the Idaho Technology Council did list investors such as Sorenson Capital, Dynamis Energy, Healthfundr, Blumberg Capital and Tribeca Venture.

“A lot of companies are getting a lot of money,” Hansen said. “Kount received $80 million, CradlePoint received $48 million and TSheets received $20.5 million. That is big cash flow coming into Idaho.”

The report can help established businesses and investors along with startups, said Michael Hollenbeck, CEO of the healthcare analytics company Proskriptive.

If you are trying to grow a business of any size there is a good chance you will need a round of funding because these things cost a lot of money,” Hollenbeck said.

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A breakdown of Idaho’s business deals by category. Data courtesy of the Idaho Technology Council.

Finding the right investor

Investors often specialize in an area of interest or in companies that are at a certain stage, Hollenbeck said.

“It is really important to understand your investors,” Hollenbeck said. “Do they invest in the type of stuff I am doing? This type of transparency really helps everybody.”

Self-reporting
Idaho Technology Council members hope that by releasing the deal flow report every year, they’ll show the value of transparency, and more Idaho companies will approach them to report their deals.“The truth is we are years away from that culture, but this is a starting point,” said Blake Hansen, chairman of the ITC’s deal flow report committee. “In 20 years won’t you be happy we began collecting this information to allow for comparative calculations?”

About Benton Alexander Smith

Benton Alexander Smith is a reporter for the Idaho Business Review, covering the Idaho Legislature, new business, technology and financial services.