Performancing Metrics

A Series of Small Things

Random Thoughts on Building Venture-Backed Companies in the Midwest

The failure of a great idea

3.29.14 by Dov

This morning, I was looking for a better way to manage the mass of photos we’ve accumulated (ideas in the comments, please).  I came across Everpix, which I hadn’t heard of, but which was described as the best choice for the average user (beating out behemoths such as Flickr, Google+, DropBox, etc.).  But alas, I discovered it was out of business.

My first reaction was disappointment – though mostly because it meant I had to keep looking for a solution to my photo problem.  But then I discovered that they had left behind an entire autopsy of their business.  Essentially every important piece of data (internal metrics, pitches to VCs, board packages, the terms of each of their rounds of investment, etc.) has been saved and archived at github.

There is a wonderful depth of information here, capturing the failure of a business.  Every entrepreneur should go through the site and read the information.  One piece that struck me as incredibly sobering was how little VC interest there was in a company in a hot space, which was demonstrating real traction.  They had $40,000 of monthly recurring revenue for their final three months (though were still losing cash) and 50,000 users (7,000 of whom were paying $5/month each), and had hundreds of millions of photos uploaded.

RIP, Everpix.  So long, but thanks for all the facts.

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It’s better than raking leaves

10.25.13 by Dov

Cincinnati has a rich history with Startup Weekend – dating back to our early attempts (led by Elizabeth Edwards and others) to roll our own way back in 2008 and 2009.  We’re now all grown up and have official Startup Weekend events going on multiple times a year around the region.

For those who haven’t attended – it’s a pretty amazing thing.  It’s like 6 months of starting a company compressed into two-and-a-half days.  Bring your best idea(s), try to convince a team to join you, build a prototype (or enough screenshots to convince investors you have one), do some market research, and pitch for investment (well, prizes, anyway).  I strongly encourage anyone with an idea for a new company (software companies are typical, but there’s no reason it couldn’t be just about anything) to sign up.

And if you don’t have any great ideas, that’s OK, too!  Come to see if any of the ideas you hear pitched tickle your fancy and then lend your efforts to help get your favorite team across the goal line.

If you want to experience it for yourself, Cincinnati’s next one is coming up the weekend of November 15… It’s going to be in Covington – in UpTech’s new space, so it will also be a great opportunity to get a sneak peak at the new digs before the grand opening!

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It’s about time someone solved this problem

10.17.13 by Dov

You know how WiFi networks suck?  I mean, they’re better than having to plug in, of course.  Except when you can’t connect.  Or your device says you’re connected, but you can’t actually do anything.  Or you’re connected and then you get kicked off.  It’s enough to make you want to bring your own network with you.

Satellite in a backpack

More reliable than Starbucks’ network.


Well, help is on the way.  We’re happy to announce our most recent investment – 7signal solutions – where we co-led a Series B financing with Mutual Capital Partners and participation from prior investors in the company, including the North Coast Angel Fund.  They’ve developed an amazing platform to help enterprises better optimize and manage their WiFi networks to provide higher bandwidth, more reliable connections to users.  Starting with colleges (those crazy kids always get the coolest stuff first) and hospitals (which you’ll appreciate when you’re in one and are hooked up to a bunch of devices all trying to use the WiFi network), 7signal is growing rapidly and expanding into retail, hotels, airports, business places, and more.

So, look for it near you!  And next time you lose a connection on a WiFi network just as you were about to read that post about what your college roommate ate for breakfast, go ask why they aren’t using 7signal.

 

By the way, they’re also hiring (sales, marketing, and finance roles).

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We’re growing!

9.23.13 by Dov

So, we’ve had a busy summer, what with one new investment and two more to be announced in the next couple weeks.  So, I’m going to use that as an excuse for why it’s taken me this long to announce some amazing new additions to the Allos team.

Julie Whitehead and Chloe Morrical joined us early this summer, as our CFO and associate, respectively.  The advantage of waiting three months to write this post is that I can now say with absolute certainly how awesome they both are (back in June, I would have just been guessing).  They’re both awesome.

You can read their bios (you clicked on the links above, right?), but Julie comes to us with experience at big companies and small, including as a CFO of a venture-backed company, ultimately acquired by VISA.  And Chloe joins us as an Orr Fellow, fresh out of Purdue.  They’re already knee-deep (maybe even waist-deep) in increasing our bandwidth to guide prospective investments more efficiently through our process, as well as supporting our growing list of partner companies.

Shoot them an email to say hi!

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We’re breathing easier at Allos

9.12.13 by Dov

Well – we’ve done it again. We went and made another investment.  Technically, we made it in June, but some additional investors came into the round later, so we’re just announcing it now.

In any case, we’re excited to announce that we’ve recently completed an investment in Pittsburgh-based Alung.  Alung makes an amazing respiratory dialysis system (the Hemolung) initially targeting chronic obstructive pulmonary disease (COPD) patients, a large and growing market worldwide.  The Hemolung  is a minimally-invasive device that pumps blood at a low flow rate from the body, removes carbon dioxide, adds oxygen, and replaces the blood back into the body, thus lessening the load on the patient’s lungs.  This offers patients and clinicians an attractive alternative to treatment with highly invasive intubation and mechanical ventilation (which sucks).  And the CEO of ALung, Pete Decomo, was the CEO of successful Blue Chip IV and Gazelle portfolio company Renal Solutions.  So we know him well and are thrilled to have the opportunity to back him again, as we believe he is the perfect leader for the company.

While we’re primarily focused on software and business service companies, we’ve always said we’d look at exceptional medical device companies and that we expected to make at least one such investment in our second fund. Now that we’ve found it, I must say that it feels pretty cool to back a company making such a difference in people’s lives – the regular updates we get on successful patients and notes from doctors, combined with the opportunity for a great financial return, have us all feeling a little giddy.

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The other 500 in Indy

8.20.13 by Dov

While it may be less exciting than the race, the Inc 500 results are in, and Indianapolis-based (and Allos portfolio company) BidPal comes in a #75 overall, #1 in Indiana, and #8 in “business products and services”.  Congratulations to the entire BidPal team!

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Innovation Showcase – call for company pitches

5.9.13 by Dov

This year’s Innovation Showcase in Indy is coming up.  Allos will be well represented (I can’t wait) – and you should be, too.  Here’s a press release with the details…

The Innovation Showcase: Call for Company Pitches


Here’s what you need to know. The Innovation Showcase is July 11th, 2013. Applications are open now for companies who want to exhibit and pitch. The top presenting companies are competing for over 60K in cash and prizes. It’s free (but competitive) to exhibit and pitch. Companies sign up to exhibit and pitch  here.

Now for more details.

This is a call to companies seeking to exhibit and pitch at the 2013 Innovation Showcase.

Entering its fifth year, The Innovation Showcase has grown into Indy’s premier event connecting fundable companies (of all stages) with top local and regional investors all while creating an undeniable energy fueled by Indy’s incredible entrepreneurial ecosystem.

This year’s event has grown even larger and will be held at the Dallara IndyCar Factory in the shadows of the famed Indianapolis Motor Speedway.

And this year we’re upping the stakes for our exhibiting startups. Each entrepreneur will have the opportunity to pitch to our investor panel for a chance to win more than $60,000 in cash and tangible services including:

5K in legal services from  Barnes & Thornburg
5K in web development from  Fox.io
5K in PR services from  Blast Media
5K in Venture Coaching from  DeveloperTown
5K in accounting services from  Lehman’s Terms
5K in branding services from  The Momentum Group
5K in video production from  Neal Moore New Media
5K in web marketing services from  DK New Media
5K in office space offered by  Launch Fishers
5K in presentation skills training (for multiple companies) from  Scientifically Speaking
5K+ in  Formstack software (Max plans for three companies for a year)
5K in COLD HARD CASH!

Best of all, the top presenters from the pitch competition will gain access to the most well-known angel investors in the area. At least two presenters will go straight in that evening to make private pitches to  HALO and  Elevate Ventures. They (and maybe other presenters) will also gain access to guaranteed pitches to  Stepstone Angels, Purdue’s  P3 Alliance, IU’s  Innovate Indiana FundGravity Ventures,  Allos Ventures and  xCap Angels.

The deadline for company submissions is fast approaching. So if you think you have what it takes to mix it up with the region’s top entrepreneurial companies — we encourage you to apply now for one of the spots in the showcase. The process for companies to exhibit and pitch starts here: http://theinnovationshowcase.com/#exhibitors

Looking forward to seeing you there

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The Father of Allos

2.15.13 by John McIlwraith

A few weeks ago, my partners and I celebrated the successful final closing of Allos II.  Reflecting on this milestone brought to mind the important support we have received over the years from our investors and other friends.  We have been blessed in many ways.

One of Allos Ventures’ most important friends is no longer with us, but his life story and role in the formation of Allos is worth sharing and celebrating.  Larry Wechter, a successful Indianapolis entrepreneur and wonderful husband and father, passed away in September 2012 after a courageous battle with cancer.  Among his many accomplishments, Larry was a successful restaurateur, the president of a publicly traded company, and the founder and managing director of Monument Capital Partners.

One of Larry’s many passions was connecting people.  Few know that in 1999, after a round of golf during which we got to know each other reasonably well, Larry introduced me to a group he was working with to form the VC fund that became Gazelle TechVentures.  I worked with Larry and the group on the structure of the new fund and was asked to join the Gazelle board.  In that role, I came to know Don Aquilano.  Don joined Gazelle in early 2000 as its second managing director, and we worked closely together over the next 10 years before deciding to form Allos in July 2009.

Soon after Don joined Gazelle, he met Larry, and they and their families quickly became good friends.  Over the years, Don and I met with Larry a number of times, shared best practices and lessons learned, and even discussed the possibility of combining forces.  He shared our passion for building companies and possessed the high integrity, work ethic and loyalty that one looks for in a partner.  Sadly, we never found the right opportunity for a co-investment or other close collaboration.  But we shared many glasses of wine and life stories over the years.  Larry’s passion for life and people was always abundantly apparent during our times together.

At the service celebrating Larry’s life, his partner at Monument Joe Schaffer and others reflected on Larry’s full life, the compassion he had for others, and the unconditional trust he brought to his partnership with Joe and the CEOs with whom he worked.  Listening to their stories made me think about the great partnership we have at Allos and the rewarding relationships we have with the management teams of our portfolio companies.  In our business, trust is everything.

Thanks Larry.   There would be no Allos without you.

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Serve your country (in a techy way)

2.5.13 by Dov

A new round of applications is open for the Presidential Innovation Fellows program.  Would love to see someone from our region in the next class!

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Does size matter?

1.15.13 by Dov

According to a recent National Venture Capital Association report, the venture industry is continuing to bifurcate into smaller, focused funds (either by industry, geography, or something else) and massive funds that invest across a wide spectrum of deal types.

On one hand, the reduction in the number of overall venture firms nationally is probably a reflection of the poor returns the industry has had over the past decade plus.  If a relatively small portion of venture firms are actually good at their job, then of course investors should want to give their capital to those firms, driving them to be larger.  Newer firms then enter the industry with small funds (because that’s all they can raise), but grow over time if their performance enables them to raise larger funds in the future.

As for Allos, we remain unconvinced that bigger is better.  Those massive funds must out of necessity invest across a whole swath of industries, geographies, and deal stages in order to put so much capital to work.  It seems to me that there are two basic ways they can do that.  Become complete generalists or effectively act internally as a collection of smaller firms.  In either case, I wonder if their performance can possibly continue to keep pace with the returns that presumably drove investors to give them so much capital in the first place.  If they have become generalists, they lose the expertise they presumably had in their earlier models.  If the become siloed, then it’s as if their investors were diversifying across a number of small funds.  Perhaps their internal teams really can be the best in each of those areas.  But it seems more likely that some of those silos will probably not be “up to par” and thus the firm overall would be better off dropping them from the strategy.

Would we like to have a $1 billion fund?  Of course.  Am I just a bit jealous of those management fees?  Sure – maybe more than just a bit.  But we also remain convinced that those smaller, $30-100 million funds will continue to outperform (oh, and here’s more).

 

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