Capital Connect conference emphasizes Series A funding

The recent Capital Connect conference was all about the A. Series A funding, that is.

In addition to the Idaho Technology Council formally announcing its “50 to the A initiative” and Boise investment company StageDotO talking about its investments in four Idaho startups, an additional Idaho startup announced it had received its first-round funding.

Deal Flow Report

The conference, sponsored by the ITC and held virtually this year, was postponed from its original May 21 scheduled date due to COVID-19.

A major component of the conference is the release of the annual Deal Flow report, which tracks the amount of outside investment in Idaho companies. This year, it amounted to a record-setting more than $4 billion, thanks in part to a $1.5 billion acquisition by Micron of Intel’s share in the IM Flash Technologies joint venture.

But much of the emphasis during the abbreviated conference, despite being marred by technical issues, was on the ITC’s “50 to the A” program, which was formally announced after having been telegraphed in January and teased in February.

The name of the program refers to the ITC’s goal of getting 50 Idaho startups to a Series A investment funding round. That would typically amount to $5 million to $15 million per company, ITC president and CEO Jay Larsen had said in January, noting that companies that make it to Series A funding are more likely to be successful in the future.

As a demonstration, one of the companies presenting at the conference, Tackle.io was able to announce that it had indeed received first-round funding.

“It’s exciting that in the middle of COVID, a little Idaho company is out raising capital and announcing Series A today,” said Blake Hansen, managing partner of Alturas Capital, sponsor of the Deal Flow report.

Tackle.io, a software company that is dedicated to helping software providers accelerate revenue through cloud marketplaces, announced $7.25 million in Series A funding, led by Bessemer Venture Partners.

StageDotO

Getting 50 companies to Series A funding is more challenging than it used to be, said keynote speaker Mike Self, general partner with StageDotO Ventures.

“The venture environment has changed over the past 25 years,” Self said.

While it used to be from ideation to $200 million, now it’s from ideation to $5 billion or even more, he said. “Companies are staying private longer,” he said. “There’s a big difference between $5 billion and a pre-Series A that’s growing.”

COVID-19 has also had an effect on the investment market, Self said, noting that venture capitalists are less likely to write one $50 million check to save one company when five $10 million checks could help five companies grow.

Another effect of COVID-19 on the entrepreneurial market is an acceleration of the diaspora from traditional technology hubs such as San Francisco and Seattle to smaller regions, such as Boise.

“Boise and Idaho are attractive for the next 20 years,” Self said. “Other hubs are cost-prohibitive,” let alone the quality of life issues, he said. “Entrepreneurs are reaching out to us from the major tech hubs. We want to start having conversations about starting companies in Idaho or having exposure to Idaho.”

Initiatives such as 50 to the A are important to rally around because of the influence they can have on the state, he said.

In addition to investing $1 million with PlexTrac Inc. last year, the company has also invested in three other Idaho startups, Self said. Among them was Crave Delivery, a food delivery company that actually had its creation accelerated by COVID-19, said Shannon Bloemker, director of strategy.

But investment hasn’t stopped completely, Self said, which was also the conclusion of a recent survey of angel investors. “There is always capital for great businesses,” he said. “Capital goes where it gets treated best.”