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Tag: stagedoto

Galena Capital offers investment bank option to Idaho startups

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Galena Capital is helping raise money for StageDotO Ventures, housed in Boise in a historic home. Photo courtesy of State Historic Preservation Office

A new local investment bank is aiming to “repeat an Austin or a Boulder or a Salt Lake” in Boise.

Galena Capital, which started in Boise in April, is yet another type of the capital companies that seem to have been flocking to Boise in recent months.

Bill Benjamin, managing partner of Galena Capital Partners, and his partner Jerry Sturgill decided that the niche they would fill would be investment banking, and went so far as to register with the Financial Industry Regulatory Authority, a government-authorized not-for-profit organization that oversees U.S. broker-dealers. Organizations that sell securities and do mergers and acquisitions are supposed to be FINRA members, Benjamin said.

That required 10 months of working through the federal regulation process, including more than 1,000 pages of documentation about compliance, supervisory procedures, money laundering and interviews. The company was made a member in February.

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Bill Benjamin

“Jerry and I said, ‘Let’s be the first and only FINRA-registered investment bank in Idaho,’” Benjamin said.

Different investments

Consequently, the sort of investments that Galena Capital makes are a little different from those of other capital management companies in Idaho. The company has four specialties: Raising capital – not seed funding, mergers and acquisitions, strategic advice and restructuring, Benjamin told attendees at a panel on regional and industry advantages in Idaho during Boise Startup Week.

Galena Capital is currently engaged with three companies to raise money, Benjamin said. One is Melt Organic, a Boise plant-based B Corporation food company that currently has three butter products and is planning to expand into plant-based cheeses, pepperoni and snack packs, he said. The company hired a new CEO in April 2018, hired a new leadership team and has had four record sales quarters in a row since then, he said.

The second is StageDotO Ventures, for which Galena Capital is a placement agent, Benjamin said. StageDotO, also based in Boise, is raising $50 million to invest in Boise startups and has made its first $1 million investment with PlexTrac Inc., an Eagle-based security company.

“PlexTrac could be a really big company,” Benjamin said. “They could be the de facto standard that helps a lot of companies be more efficient in cybersecurity.”

The third is an energy company out of Oregon, which develops software that helps small- to medium sized businesses establish automation around saving energy by monitoring energy useage. Benjamin also couldn’t name this firm.

Galena Capital is talking with a number of other companies about mergers and acquisitions, Benjamin added.

“The sweet spot for us is $5 million to $75 million in sales,” though they’ll consider bigger deals. But they’re interested in private placements, not public offerings, he said.

Boise: the next Austin?

Why Boise? After a lifetime of living in Minneapolis and commuting on a weekly basis to full-time jobs in California and the New York metropolitan area, Benjamin was looking for a place to call home, and Boise had advantages.

“It seems like a fast-growing city,” he said.

The region is also well-stocked with Baby Boomers whose wealth is in their business and are coming to a point of wanting to retire.

“People want to liberate that wealth,” Benjamin said.

In addition, there’s been an influx of knowledge workers to the state, as well as an increasing number of engineers and computer scientists graduating from the region’s universities, along with other components of a startup ecosystem. “There’s Trailhead, Boise State Venture College and mentors all over the place,” he said. “That’s helping drive healthy growth and innovation.”

Benjamin said he felt that while walking around Trailmix, the food production arm of Boise Startup Week. “Not only are they creating innovative products, but they’re really good people,” he said. “That’s the fun of this job: People with a huge passion about something meaningful in the life of consumers. We want to help you grow and get you the capital you need to get to this next level.”

More startup funding opportunities coming to Idaho

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Idaho entrepreneurs should have more funding options in coming months, according to this Boise Startup Week panel. Photo by Sharon Fisher

Idaho entrepreneurs should have more funding opportunities as new organizations are drawn to the region’s business success.

Pioneer Square Labs (PSL) – a Seattle-based startup studio and venture capital fund – was looking at Idaho companies as well as presenting at Boise Startup Week, said T.A. McCann, managing director, during his panel session, “Labs, Studios, & Funds: What it Means to Accelerate a Startup,”

McCann said he doesn’t have any Idaho investments yet.

PSL has both an investment arm and an incubator arm and considers Boise part of the northwest region, he said.

When considering an investment, the company looks primarily for a fit with the founder and the firm, as well as personally, McCann said. PSL invests primarily in software with investments of $500,000 to $2 million, he said.

Different members of his organization have different specialties, but he is particularly interested in quantified health applications, McCann said. For example, he recently invested $2 million in Sentinel Healthcare, a Seattle-based remote patient monitoring product. He invested in the product because he is interested in that field and the business owner – a “doctorpreneur” – understands the customer even though he might be unfamiliar with some functional aspects of running a business, he said.

McCann said he likes it when an entrepreneur has either “domain expertise” in their technical area or “functional expertise” in running a business, but didn’t necessarily expect them to have both. He is particularly interested in startups that already have a good idea of their ideal customer profile and market, their entry point to that market, whom their first few customers will be and why that company is a good solution for that market.

McCann also spent some time during his panel session talking about the concept of a “lead score” or assigning values to each potential lead for the business to ensure the company is focusing on the most likely prospects.

Other panel members included Mike Self, managing partner of StageDotO Ventures, and Molly Otter, investment partner of Sage Growth Capital, each of which have announced investments in Idaho in recent months. Sage Growth has just made its first investment in Idaho, an ice cream company Otter didn’t name.

The other participant on the panel, Sarah Dolen, works in investments and operations for “Area 120,” a Google-owned organization that invests in employee projects. Google famously allocates 20% of employees’ time for their own projects for the company. Dolen has not yet invested in any Idaho companies, she said.

Other funding opportunities

In other potential funding opportunities, Women Entrepreneurs Realizing Opportunities for Capital (WeRoc), which will be held Oct. 24 in Sandy, Utah, at the Miller Business Resource Center, may hold future sessions in Boise, said Jolene Anderson, chapter president of the Boise/ID Keiretsu Forum, who is involved with the event. She and others are pushing for that, she said.

The event, now in its third year, is funded by Venturecapital.org, a Utah based nonprofit organization that assists, coaches and mentors entrepreneurs who are interested in raising investment capital. The event is intended to target women entrepreneurs looking to overcome the hurdles of raising equity for their companies and influencers and investors who focus on investing in women-led companies.

The organization is thinking of alternating years between Utah and Idaho, said John, Williamson, director of Idaho operations with Venturecapital.org and executive in residence for the College of Business and Economics at Boise State University.

This year, of seven organizations presenting, two are from Idaho, according to a press release: Chillow, a roommate-selecting application, and Free to Feed, which helps mothers detect allergens in breast milk.

Williamson said venturecapital.org is also considering holding an Idaho version of its Investors Choice event – an annual funding event in Utah that typically draws a large Idaho contingent.

Company kicks off $50 million Boise startup fund with $1 million investment

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This majestic 1905 neoclassical building will house the StageDotO investment fund and some of its startups. Photo courtesy of State Historic Preservation Office

A Seattle-based investment company is not only creating a $50 million fund to invest in Boise technology startups but is moving its headquarters to Boise as well.

“We’ve been watching the Boise region for a while,” said Mike Self, general partner with StageDotO Ventures. “It’s like Austin 25 years ago. We don’t think there’s a better region to be investing in than Boise.”

The company made a presentation at the Capital Connect Conference in May announcing its intention to move into an office at 110 Main this summer.

StageDotO’s goal is to bolster Boise’s existing technology and entrepreneur ecosystem, Self said.

“Someone has to come and plant the flag,” he said. “We wanted to invest in local entrepreneurs. The timing was right.”

Currently, there isn’t a venture fund in Boise, so StageDotO plans to fill that gap, Self said. The company has spent the past year or so visiting once a month and decided three months ago to set up the fund.

“This is a 20 to 25-year play,” he said. “We wanted to show the community we were serious.”

The Boise office opened about a month ago, and someone has been there every day since. The company expects to invest in about 10 startups, and the early stage companies will also be housed in the 110 Main building.

“We’ll be elbow-to-elbow with all those companies,” he said.

StageDotO will typically get a seat on the board of companies in which it invests, he said.

About half of the fund will be devoted to seed money to get startups going and multiple funding rounds based on milestones, with the other half toward participating in first-round Series A funding for growth capital, Self said.

“The odds of getting a positive liquidity event are really good,” he said. “We look for companies that have the potential to be billion-dollar companies.”

A typical successful company would receive a total of $5 million over multiple rounds of investment, he said.

PlexTrac Inc., an Eagle-based security company, is starting out with a $1 million investment.

“I was introduced to them a couple of months ago, and they were intrigued by what we were doing,” said Dan DeCloss, founder and CEO. “We didn’t have to do much pitching. Effectively, it fell into our laps.”

PlexTrac is building a software platform that helps companies track the results from security assessments such as penetration testing and the progress the companies are making toward fixing those vulnerabilities, DeCloss said.

“It produces a series of findings that the company needs to go fix,” he said. “Our system helps track all of those results and provides accurate metrics on their progress.”

The product bridges the gap between the security consulting firms and the enterprises, he said.

So far, PlexTrac has three full-time employees and a few contractors, but, with the StageDotO investment, is in the process of hiring two more developers and a sales executive, DeCloss said.

In addition to investing in companies already in Boise, StageDotO may bring companies from outside the region to Boise because it is a lower-cost area, Self said.

Companies in which StageDotO invests could have a variety of exit strategies.

“We want to have as many exits on that freeway as possible,” Self said. “Will they be an acquirer? An acquiree? Do they have aspirations to go public?”

But companies actually don’t have to go public these days to raise capital, he said, citing the case of Qualtrics, a Salt Lake City-based software company that was acquired by the German software company SAP for $8 billion.

Right now, PlexTrac is focused on growth, DeCloss said.

“Our goal is to grow revenue as fast as we can,” he said. “Eventually, if there’s an opportunity to exit in an acquisition or an initial public offering, that’s what we’re looking for.”