Friday, August 14, 2009

What's happening elsewhere in the midwest - Indiana HALO Investors Step Into Early Stage Funding Gap


INDIANAPOLIS – In the past nine months, traditional high-risk venture capital investments tanked right along with the global economy. As chronicled earlier in this column, their burn rates have cooled off and their exit runways have been extended.

Despite the fiscal carnage in 2008’s fourth quarter and the first quarter of 2009, though, all was not lost in the Hoosier state particularly for high-tech early stage companies.

Shortly after selling off a high-performing venture, successful Midwest entrepreneurs often bolt for one of the U.S. coasts. They settle cozily into a wealthy lifestyle of doling out consulting tips or dipping into a speculative investment or two.

This isn’t so in Indiana where 20 battle-tested entrepreneurial champions stayed put after building up successful companies or punching out a track record of “intrapreneurial” success inside a Fortune 500 juggernaut. These Hoosier-based VC veterans broke the mold by reinvesting their hard-earned dough and mentor capital back into other Indiana entrepreneurs just starting out in the same state that spawned their earlier success.

TechPoint, which is Indiana’s advocacy group for technology growth, started up the formation of an Indiana-based angel investor group. Following TechPoint’s lead, a little more than a year ago these entrepreneurs banded together in a more formal way to create the HALO Capital Group, which can supply much-needed seed cash for early stage companies.

Since then, HALO investors have either individually or collectively in smaller groups put together funding deals to create a robust portfolio that is managed by TechPoint.

HALO has played a role in serving up funds for companies like EndGenitor Technologies (a company developing novel methods for stimulating and promoting blood vessel formation and growth) and Oxygen Education (a Web-based technical training company in the advanced manufacturing sector).

In a recessionary time when almost any kind of available capital is nearly non-existent, the HALO investors couldn’t come into view at a better time.

“Great ideas often require both patient capital and a guiding hand in the form of expert guidance to reach their commercialization potential,” said James Jay. Jay is the CEO of TechPoint and a managing director of the HALO Group. “This is especially true during an economic downturn like what we’ve seen over the past year.”

Jay says inexperienced entrepreneurs often face dangerous challenges in navigating fiscal pathways even in the best of times. If a HALO member individually invests or pairs up with other HALO investors, the result is an infusion of cash along with a steady hand of strategic expertise from the investors.

The HALO group includes David Becker (an Indiana serial entrepreneur who presently serves as chairman and CEO of the First Internet Bank of Indiana) and Mark Hill (a former partner with Baker Hill, which is now owned by Experian). In addition, Hill is now the managing partner of Collina Ventures.

Many of the HALO investors already have funds of their own – as in the case of Hill’s Collina Ventures – or have made angel investments in the past.

HALO primarily looks for cutting-edge, technology-oriented companies. That said, HALO also checks out biotech and life sciences start-ups with promise. While a HALO seed investment might typically range from $250,000 to $800,000, larger deals are indeed possible. The HALO group can draw up a syndicate of more traditional VCs and sweeten up a HALO-vetted deal to the tune of $3 to $4 million.

Such was the case earlier this summer when HALO investors joined in with the Blue Chip Venture Company and Spring Mill Venture Partners to pony up a $3.5 million round of funding for WebLink International, which is a software-as-service (SaaS) company based in Indiana.

VC watchers were not surprised to see Don Aquilano (a longtime successful Hoosier entrepreneur and a managing director of Blue Chip) step in as the new chairman. He was joined on the board by David Mann of Spring Mill and Scott Webber (another longtime Indiana tech entrepreneur) of the HALO Group.

“The executive and visionary horsepower of these investors brings considerable added value to the financial investment in WebLink,” Jay said.

During a time of fiscal drought, one might expect entrepreneurs to be lined up outside the TechPoint office in the downtown Indianapolis Chase Tower while clamoring for more details. However, to earn a check from a HALO investor, an early stage entrepreneur would be wise to first scope out the requirements for a HALO review online.

A business plan must first be submitted and then be considered for a formal presentation in one of HALO’s bimonthly gatherings. If you’re well-prepared and have a great idea, be ready to put in some sweat equity and appearance time because the HALO investors don’t want to hear from your CFO or designated driver.

Do you have all of your financial ducks in a row with your business plan? If you’re a college student (undergraduate or graduate) with a great idea and you’re interested in hunting up some HALO cash, consider the fact that collegiate-level HALO applicants are going to be on stage at the upcoming Innovation Summit in Indianapolis on Sept. 29, 2009.

If you want to advance your entrepreneurial career in a hurry and get in this game in a very high-profile way, get your business plan submitted no later than Aug. 31, 2009. With a little luck, a great idea and a well-developed business plan, perhaps you too could be visited by a HALO angel before the Indiana winter sets in


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