Have you seen the 1990’s comedy with Bill Murray called Groundhog Day? In the movie, his character Phil is caught in a time loop. Everyday, he wakes up to the same day, in the same hotel bed, to the same song on the clock. The only things that change are who he meets and the trouble he gets himself into.
I sometimes feel a little like Phil in Groundhog Day – I’m constantly having the same conversation with startup founders about cap tables. There’s a general lack of understanding about how to structure a cap table for investors. And our conversations typically center on dilutions, valuations, and the potential loss of control of company ownership. I always stress how critical it is to have a detailed understanding of who owns what at each stage of the business. Investors like VisionTech Angels look at that.
Investors also have questions about cap tables and how it changes with each funding round and the addition of new investors. Angel investors are particularly sensitive to changing cap tables because as early investors, we shoulder much of the risk of a startup.
In talking with Jason Schpok at Elevate Ventures, we agreed it would be a tremendous benefit to startup founders and investors to host a webinar on cap tables. So on Wednesday, July 20th, we did just that, presenting “Creating a Cap Table with an Investor’s Perspective in Mind.” Forty people joined the hour-long presentation and discussion and gave it high marks when surveyed after the event.
The content in the webinar is timeless – plus I’m sure I’ll have a few more of those Groundhog Day conversations on cap tables – so we’re posting the webinar here so more founders and investors can listen and learn at their pleasure. If you have additional questions, please reach out to me here.
Welcome back from the long Memorial Day weekend celebrating our nation’s heroes; enjoying time with family and friends; perhaps taking in the greatest spectacle in racing, the Indianapolis 500; or, if you’re like me, catching 2022’s first bona fide blockbuster movie, Top Gun: Maverick, which grossed a a record $156 million over the four-day holiday. I am sure Tom Cruise, the producer, and director are ecstatic about the ROI after a two-year delay on the film.
Here’s my review of Top Gun: Maverick: “WOW.” What a wonderful sequel to a film I watched many times in my youth. “I have the need for speed” and so many other phrases are still in my lexicon.
As I was watching the film, I couldn’t help but compare the nearly impossible mission (another Tom Cruise tribute – pun intended) to the mission of starting a company and what that means to investors. In Top Gun: Maverick, pilots had to be precise, adaptable, and a little lucky as part of a team led by a visionary capable of seeing how to succeed. How is that different from a startup?
Today’s environment requires the same precision of startup teams. You have to stay focused on the core business, recognize what you’re good at, hire talent where you have gaps, and don’t get too thin on efforts. At the same time, you must be able to evaluate new opportunities as they arrive with a set of KPIs that increase the startup’s longevity or cash flow. It’s o.k. to say ‘no’ to opportunities that aren’t mutually beneficial or don’t align with your mission. Finally, startups must stay laser focused on target market personas and develop a strategy to get them as enthusiastic fans/buyers of your product.
Adaptation is the next parallel between startups and Top Gun: Maverick. Specifically, market conditions and customer sentiment are changing. What is your response? One approach might be examining the cohort of customers acquired in the last 30 to 90 days and comparing them to the prior period. Are they the same or different in the price they paid for your product or service, their decision-making process, or in your cost to acquire them as customers? Have new threats or competitors arrived on the radar, how does their offering compare to yours, how well are they funded, and do they have momentum? Examine this data carefully with as much objectivity as you can apply – are there any adjustments to your business that need to be made? This is critical; the last three years are probably not going to look like the next three years.
The last similarity is luck, and is tricky to discuss. It is likely the X factor in the success of many startups. I often ask startup founders and CEOs: Would you rather be lucky or smart? Personally, I would rather be lucky. You can prepare for smart by gathering information, critically thinking through scenarios and hiring talent where you have gaps. Luck is out of your control and somewhat randomized or odds based. However, I think you can increase your odds of being lucky. Situational awareness, being able to identify and take advantage of true opportunities, focusing on what you can control, being relentless in your preparation, and putting in the work can increase the odds in your favor.
As investors, we know startups are risky and that founders must be gutsy, resilient and laser focused. Even so, they will make mistakes. Their primary job is to make sure that those mistakes aren’t fatal. As you invest, whether with VisionTech Angels or another group, think critically about who is in the cockpit, where you put resources and welcome to the “Danger Zone.”
Ben Pidgeon
Interested in learning more about VisionTech Angels, our approach to investing and how to join our angel investing network? We welcome new members. Please contact Executive Director Ben Pidgeon or visit our website here.
Employee benefits are the second largest expense for companies. And there’s no getting around it. To attract and retain talent, you have to offer benefits. But this mandatory expense has become increasingly painful for small companies. Over the last three years, employee benefits costs have increased an average of 5% a year. Cleveland-based insurtech software company TPA Stream led by CEO Jacob Sheridan has a solution. Their claims harvesting platform gives smaller companies the ability to unlock claims data that then can be used to reduce annual benefits costs by as much as 25%. TPA Stream’s value proposition is resonating with the marketplace: their traction in 2021 was strong and 2022 looks to be more of the same. The VisionTech Screening Committee was impressed so we invited Jacob to present at our May virtual pitch events. Here’s a preview.
BP: Tell me about TPA Stream and what unmet need you saw in the market? JS: About 10 years ago, one of my co-founders, Eric Sukulac, was working for a small company as a software developer. He used his health insurance, and it became somewhat of an administrative nightmare. He had to submit claims to his company’s third-party administrator (TPA) every month, and when he got reimbursed for his medical expenses, the amount was always wrong. Realizing the system was broken, he set out solve it and brought me and Steve Fuhry, now our CTO, on to solve it.
As we dug into it, we identified a much larger issue which is the fact that small businesses (with less than 100 employees) have no access to their medical, dental, and vision claims data. As a result, these companies typically make decisions based on assumptions and end up overpaying for employee benefits. We saw an opportunity to capture and aggregate companies’ claims data and make it available to health insurance brokers and TPAs to better meet the needs of the small group market.
BP: What’s your solution and what are the benefits? JS: We launched our first product in 2014, a claims harvesting platform that unlocks hard to access claims data for employers. It’s a gamechanger as it allows companies to customize their benefits to their employee population instead of purchasing a high-cost, off-the-shelf benefits package. TPA Stream helps companies save as much as 25% a year on their benefits, savings that can be put toward something else. We have since followed up with a claims and employee enrollment integration and employer invoicing solution. Back to Eric’s original frustration, employers and employees can use the platform for more visibility into their benefits without the old manual processes.
BP: What kind of response have you gotten? JS: Across the board—insurance brokers, TPAs, employers—people are super excited by what we offer. The uptake by health insurance brokers alone has been incredible. We now support 250 carriers across the United States.
BP: How big is your addressable market? JS: There are six million small companies in the United States that represent a $18 billion addressable market.
BP: You seem to have a number of competitors. What is your competitive advantage? JS: We do have competitors, but no one has what we have, the claims harvesting capability and the data it affords. Our ability to integrate with other systems is largely unique as well. We’re building a new product for brokers that will launch in a few weeks that will give us a “triple moat” against competitors.
BP: What is your revenue model? JS: It’s a straightforward SaaS model. We sell the software platform to TPAs and brokers.
BP: What is your traction to date? JS: We’re extremely pleased with the traction to date. We now have 40,000 employers representing 1.8 million members on the platform. In 2021, we hired Greg Brady as VP of Sales and Amanda Metes as our Marketing Director, which has been great. We’re better positioned than ever and expect the next six months to be huge.
BP: How do you plan to use the funds you raise? JS: We have already built out our technology, so these funds will go to building out our team. The top priority is the sales team, followed by development and operations personnel
BP: Why should VisionTech Angels should invest in TPA Stream? JS: First and foremost is our team. We have put together an awesome group of people who are dedicated to what we’re doing and driving the next wave of growth. Second, our product gives us an unfair advantage. No other company has a claims-harvesting platform like TPA Stream. Finally, the economics. Our operating model is extremely attractive with high gross margins. It’s a compelling combination.
To learn more about TPA Stream, visit their website. VisionTech Angels’ May Pitch Events will be virtual on Thursday, May 26 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page where you’ll find the RSVP links, or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
Two angel investing group executives with whom we’ve done deals in the past suggested I take a look at CryptoStopper. What impressed them also impressed me. The CEO, Greg Edwards is an experienced entrepreneur and leader with a good track record. He’s taken three companies to liquidity events. His people are very loyal, following him from one company to the next. His current company, CryptoStopper, is on trend and has impressive traction. The VisionTech Screening Committee was also impressed with what Greg’s doing so we invited him to present at our April virtual pitch events. Here’s a preview.
BP: You’re based in Iowa. How did you hear of VisionTech Angels? GE: Raising capital, you have to look beyond your backyard. I’ve been working closely with Frontier Angels in Bozeman, Montana, and NO/LA Angels in New Orleans, securing $860,000 toward our $1.5 million raise. They suggested I speak with VisionTech Angels and made the introduction.
BP: Tell me about your company and how it came to be. What unmet need did you see? GE: I’ve been in the managed service provider (MSP) space for almost 25 years. Since 1998, I’ve owned WatchPointIT, reselling off-the-shelf security solutions. At the same time, I founded and successfully exited Axis Backup, an offsite backup company. I saw firsthand the rise of ransomware events happening in the backup space. Ransomware attacks accounted for 15% percent of all cyber attacks in the United States in 2018, and almost every business, government entity, university, healthcare system, and utility company are targets. I realized that backup was a horrible last line of defense against ransomware. CryptoStopper was created to stop the unnecessary destruction and chaos caused by ransomware.
BP: How are you solving your market’s pain point? GE: CryptoStopper solves the pain of ransomware attacks by stopping actively running ransomware that gets past traditional cybersecurity tools. CryptoStopper software tool literally shuts down active ransomware attacks in milliseconds, preventing the attack from encrypting anything beyond “bait” files. This limits costs incurred by customers due to server down time, tracing the attack, restoring backup files, and paying ransoms to recoup data. If it sounds like a nightmare, it is. Best to avoid it with CryptoStopper.
BP: How large is your addressable market? GE: Currently there are about 42,000 MSPs in the United States with a total addressable market of $252 million in annual recurring revenue. The mid-market and enterprise business represents another, larger opportunity down the road.
BP: What is your traction to date? GE: For a young company, we’ve been strong out of the gate. We already have 94 MSP partners, more than 14,000 license in use and annual recurring revenue of $300,000. March was our best month to date with 21 new MSP partners. Our goal is to have 2,000 by the end of 2024.
BP: What is your revenue model? GE: Simple and sticky: SaaS in the form of perpetual monthly recurring licenses sold to MSPs.
BP: Do you have any competitors and if yes, what is your competitive advantage? GE: There are competitors entering the space. Our advantage is ease of deployment and configurability along with being a separate point product that can’t be stopped by the ransomware attackers. Also, we’re targeting small- and mid-size organizations , a market segment that’s relatively untapped. These entities have fewer resources, less infrastructure and many remote workers, which make their needs unique. They tend to outsource their cybersecurity solutions to a third-party MSP.
BP: Do you have any IP protection? GE: We filed a provisional patent in March 2021 to protect trade secrets related to our detection algorithm; however, it has not been completed due to concerns the application may give away our competitive advantage. We have put in place Proprietary Information and Inventions Agreements with all founders, employees, and consultants. We’re also planning to keep our techniques, algorithms, and strategies as trade secrets.
BP: What raise is this? GE: This is our seed round. We have about $640,000 to raise before the round closes.
BP: How do you plan to use the funds? GE: Primarily on sales and marketing. We want to expand our lead generation as we are ready to scale.
BP: Please give three reasons why VisionTech Angels should invest in your company? GE: I have four reasons! he opportunity and growth potential for CryptoStopper as an anti-ransomware cybersecurity company is massive and perfectly timed. The leadership team taking CryptoStopper to market is experienced and has an exceptional understanding of launching a product within the MSP space. We plan to supplement our leadership team with a board of directors that will include industry experts in cybersecurity and SaaS. Next, the scalability of the business is built-in using Azure Apps. Finally, with a 98 percent retention rate of customers and the ability to add thousands of additional MSP partners with limited additional resources, CryptoStoppers growth potential is exponential.
BP: Sounds great! Thank you. GE: My pleasure.
To learn more about CryptoStopper, visit their website or listen to this podcast. VisionTech Angels’ March Pitch Events will be virtual on Thursday, April 28 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
I have known Dr. Jim Donahue since 2016 when he joined VisionTech Angels as an investor through AngelBOM, a chapter made up entirely of physicians. He is one of our more active members, often joining us for our “Breakfast with Ben” gatherings despite his busy schedule as a fertility specialist. I was a little surprised to learn that he was pivoting his career from helping human parents conceive to helping farmers and ranchers with cow reproduction with a startup called ReproHealth Technologies. Intrigued, I invited Jim to present to VisionTech’s Screening Committee. We were impressed by ReproHealth’s device and the potential to dramatically change this important part of agriculture with technology and invited him to present at our special March Virtual Pitch Events. Here’s a sneak preview.
BP: You’ve been an investor with VisionTech Angels? For six years. Did you ever see yourself pitching to the group? JD: I had no idea! It is exciting being part of such a great group of docs and investors. That said, I’ve always been an innovator. Our medical practice did the first ever blastocyst embryo transfer in 1998, the first GIFT procedure at a Catholic hospital, and most recently, the first successful pregnancy with an intravaginal embryo culture device in 2018. ReproHealth was the next step.
BP: You’re a fertility specialist for people. How did you get into the cattle reproduction business? JD: It’s kind of amazing on a number of levels. First, I’m a city boy from Miami. What do I know about cows? But here’s a little-known fact. Human in vitro fertilization (IVF) began with cattle. Dr. Bob Edwards did the first successful human IVF with the birth of Louise Brown in 1978, later winning the Nobel Prize for this breakthrough. I did my master’s degree in Human Embryology at the University of Leeds 20 years ago. Dr. Edwards trained the people who trained me. He said to me one time that since it worked in cows, he knew it would work in humans. It finally worked on the 101st attempt!
Fast forward to 2017, my medical practice team did the first human intravaginal embryo culture procedure in Indiana using an outdated FDA approved device. The patient got pregnant with twins and the embryos were of exceptional quality. We explored the market and we discovered that bovine IVF does not work well. I knew that we could create a better, more effective device that would solve a technical problem. In talking with farmers, they understand what we’re doing and want to try what is now known as the Embvita device. This led to the formation of ReproHealth Technologies.I have met a lot of farmers who seem to want to try the device. Seeing the problem, identifying a solution, and getting early market validation led to the formation of ReproHealth Technologies.
BP: What pain points did you see in the cattle business? JD: In modern agriculture where farmers are breeding for very specific traits like milk production or more heavily muscled animals, cows are often impregnated with artificial insemination, embryo transfer or IVF. While IVF has overtaken embryo transfer as the preferred method, results are disappointing due to the fact that embryos do not grow well in lab incubators. Also, the eggs are typically collected at sites far removed from the farm and shipped to regional IVF labs for insemination and embryo culture. By the time the eggs make it to the lab, they’re old and less than ideal. Typically, of the 17 or so eggs collected, only 25% are fertilized and suitable for implanting in a cow. It’s not very efficient or effective.
Our device, which is implanted in the cow vagina, is essentially a culture chamber, doing the same job as a lab incubator. It brings together the eggs and sperm in a more natural environment. This results in twice as many fertilized eggs that mature into healthy, transplantable embryos. Another advantage is the procedure is done at the farm rather than at a far-off lab. Farmers immediately see that it’s less complicated and results in more calves from their prized dairy or beef cow.
BP: What makes the Embvita device a must have among cattle producers? JD: We recently met with a major U.S. dairy producer. Although they had never seen a company like ours before, they recognized our technology has the potential to completely change how they replace their cattle. They also invited us to come back and work with them for four weeks as part of their accelerator program. Although we’re not a must have yet, it’s impressive when a potential customer that produces over 20% of dairy in the U.S. pays you $10,000 just to travel to their headquarters and work with them.
BP: The typical dairy or beef cow produces one calf a year. With the Embvita device, you can produce as many as eight embryos from one cow in a single season. In effect, you’re turning cows into super producers. JD:Amazing, isn’t it? But it’s not just about the volume of embryos.Our goal is to help farmers optimize the genetic traits that lead to dairy cows that produce more milk and beef cattle that are better meat producers. So yes, with the help of the Embvita device, cows with highly desirable traits have the potential to exponentially produce more high-quality offspring. And with cryopreservation, the farmer controls supply and demand in terms of deciding how many of the embryos are immediately implanted in surrogate mother cows and how many are held for a future date. There is huge potential in maximizing the number of offspring of these ideal mama cows.
Additionally, we feel strongly that our technology and requirements to utilize it are simple enough that it can easily be deployed in parts of the world where there is food insecurity and a need to increase their cattle herds. Our technology could help them. Helping other parts of the world is very important to us.
BP: The cattle industry is under fire by some because of their gas production. How do you counter this? JD: It’s possible that by breeding higher producing cattle with the Embvita device, we will need fewer cattle to produce the same amount of milk or meat. Fewer cows should lessen the greenhouse gas footprint of dairy farms and cattle operations, a plus for the environment .
BP: Explain your revenue model. JD: Our revenue model is pretty simple; it’s based on selling the Embvita device and culture media to veterinarians or larger operations. A typical vet may purchase 600 devices and culture media a year. The device is single use. Depending on how the farmer uses the resulting embryos – either one at a time and freezing the rest or implanting all of the embryos into surrogate cows – we expect repeat sales over the life of the cow.
BP: What is the market size? JD: There are about 40 million beef and dairy cows in the United States. Each year, some 15% (six million) are replaced using IVF, artificial insemination and embryo transfers. The artificial insemination market is much bigger than the IVF market, but the potential to optimize the number of desired trait offspring may make them switch to our device. A cow naturally produces only one offspring a year. With our device, she could produce many more per year. Capturing the current segment where human intervention is used is a significant opportunity. But looking at the market overall, it has the potential to be much bigger.
BP: What’s your competitive advantage? JD: We have three main competitive advantages. First, there is little or no transporting of the cows; we bring the lab to the farm. The cows stay at their home farm which reduces stress on the animal and eliminates transportation time and expense. Second, our Embvita device results in two times as many embryos as the competition. From 17 eggs, we typically get eight embryos while the competition gets four. Third, we have incredible expertise on our team. In addition to my background in IVF, my co-founders include a biomedical engineer at Cal-Poly and an embryologist. We also have a partner who is a veterinarian who specializes in cattle.
BP: Do you have IP protection? JD: We have filed for provisional and utility patents in United States, European Union and Brazil. We have 3D printed a prototype and have testing going on right now.
BP: What round is this and how will funds be used? JD: Up until this time, I have bootstrapped the company on my own. We’ve reached an inflection point where we need more capital to fast track our product development. We also would like to bring additional human capital onboard. So we are raising a $1 million pre-seed round.
BP: What would you say to VisionTech Angels considering an investment in ReproHealth? JD: I have been a human fertility specialist for 30 years, and now plan to focus 100 percent of my time on ReproHealth. We have a unique opportunity to change entire industries, the dairy and beef industries, through a more modern process that also has the potential to decrease livestock-related greenhouse gas emissions. I’m a city boy raised in Miami, but I’m drawn to agtech, the people and the opportunity. With that being said, investing is a personal decision, and I leave it up to each investor to make his or her own decision about investing in ReproHealth.
To learn more about ReproHealth Technologies, visit their website. VisionTech Angels’ March Pitch Events will be virtual on Thursday, March 24 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
“I was really excited to meet Ross Bundy, president of CRISPR QC, and learn what they’re doing in the hot biotech space of gene editing. There is incredible promise for treating and potentially reversing genetic diseases as well as opportunities in animal science and agriculture. Enjoy this short preview and plan to join VisionTech for Ross’ pitch on Thursday, February 24.”
Ben Pidgeon, Executive Director, VisionTech
Gene therapy, the ability to alter a gene in a living cell, is considered by some to be the greatest scientific breakthrough of the last decade. And it’s easy to understand why. If a person with an inherited disease such as sickle cell anemia , a disease without a cure, could be successfully treated with gene therapy, that would be huge. Indeed, scientists are getting very close to making this a reality
There is a sticking point: gene editing, even when using a technology platform such as CRISPR, is very difficult to master. Accuracy is critical to avoided unintended consequences. Seeing an opportunity in this hot biotech space, San Diego-based CRISPR QC has set out to become the “quality control experts” with automated CRISPR QC testing tools, analytics, and knowledge to assist researchers in improving their CRISPR assay designs.
CRISPR QC is currently raising a $2-$4 million seed round. Company President Ross Bundy will be pitching VisionTech Angels at the group’s February 24 virtual pitch events at 12 noon E.T. and 6 p.m. ET.
Although it is an early-stage startup, CRISPR QC is attracting strong industry attention. Bundy reports that leaders in the CRISPR space are approaching his company and funding projects to advance tools and technology that will support greater accuracy. NIST, the National Institute of Standards and Technology, is also pushing for the development of standards for measuring and quality assuring gene editing outcomes. Also, Dr. Kiana Aran who is the inventor of CRISPR QC’s underlying technology and who serves on the board of directors, recently received a $1.6 million grant from the National Institutes of Health to help establish quality control standards for CRISPR therapies.
Please join VisionTech for what promises to be a fascinating pitch from Ross Bundy of CRISPR QC and Peter Dunn of Your Money Line. Choose from two events both on Thursday, February 24. Our 12 noon ET event offers an abbreviated session. Our evening event at 6 p.m. ET includes pitches and an expanded discussion period. Find details and registration links here.
VIsionTech Angels virtual pitch events are open to VisionTech member investors and accredited investors interested in joining our group. To learn more, visit our website.
A colleague suggested that I meet Peter Dunn,CEO and founder of Your Money Line, as he was raising a seed round and I’m always interested in investing opportunities. Prior to meeting with him, I did a little research and discovered this was no ordinary CEO, this was Pete the Planner®, an award-winning comedian, USA Today columnist, and author of 10 books on financial wellness. It was really hard not to be intrigued. We met and after learning more about Your Money Line, a SaaS company that helps employers connect employees to confidential financial guidance to solve common money woes. The VisionTech Screening Committee was also impressed with what Peter’s doing so we invited him to present at our February virtual pitch events.
BP: What’s the story behind Your Money Line? PD: I worked as an investment advisor from 2000 to 2012 in Carmel, where I live with my family. I soon realized that most people don’t need a wealth advisor, they need a personal financial advisor to help them through a myriad of financial issues such as dealing with student loan debt, buying a home, finding money to save for retirement. In 2005, I started my media career doing television appearances on the local news. That led to a radio show and eventually an opportunity to write for USA Today and the Indianapolis Business Journal. I ultimately wrote ten books, appeared on a number of national news shows, and made various appearances on Good Morning America.
In 2017, I launched Your Money Line Powered by Pete the Planner®. Your Money Line is a fintech company that is the culmination of my experience and identifying a huge need among companies to help their people achieve financial wellness for productivity reasons, human reasons and ultimately, so people can achieve financial security to retire.
BP: You launched five years ago. What makes Your Money Line a must-have now? PD: People have had money issues as long as there’s been money. But seriously, the last two years of COVID and the uncertainties it’s caused have put extreme financial pressures on everyone. Now with inflation, people are really stressed and need help. That goes for business owners and their employers. Given our offering, now is the right time to scale our company and start helping people get on track with their finances and sanity.
BP: How does it benefit employees? PD: Employees have access to two things, the Your Money Line Call Line and the Your Money Line Dashboard. The call line is our financial concierge service. Employees with questions call into a dedicated line that connects them with one of our trained money experts. These experts provide answers and also follow up with additional resources if needed. The dashboard takes the call line a step further by providing an online hub for a wealth of money resources. This includes a personal debt tracker, a budgeting tool and video courses. To really personalize the service, people can complete a brief quiz and the dashboard provides a specific financial path based on individual needs. This really helps people understand what they need to do and how to do it to overcome the financial stresses of life.
BP: How does this benefit employers? PD: There are so many benefits. First, there’s the human factor. If you have employees who are constantly worried about money, who are faced with unexpected expenses, whose partner has lost their job—well, how well can they concentrate on work? Traditional employee benefits don’t address this kind of issue. Providing access to a service like Your Money Line is a much more empathetic, proactive approach to employees’ financial wellbeing and mental health! So we help employers solve underlying financial issues for many employees that keep them from living their best life, purchasing homes and saving for retirement.
There’s also a significant financial benefit. Employees who aren’t burdened by debt are better able to participate in company 401(k)s and prepare for retirement at age 66 or 67. Unfortunately, employees who have not saved for retirement tend to work longer, which has huge financial ramifications for employers. It’s far better to prepare employees to retire “on time.”
A final benefit and what’s truly unique is our technology which helps employers track employee engagement with the money line, dashboard, videos, and other resources. We show on average where employees stand financially and their behavioral changes through on-demand reporting and quarterly reports. So companies see exactly how and where we are making a difference, and if an employee is having difficulties, it creates an opportunity for intervention: a conversation, show of empathy, kindness. And guidance.
BP: What kind of traction do you have? PD: We currently serve employees in all 50 states, which is exciting because we know we’re making a difference for people. Our sweet spot is with legacy companies with large workforces that take a long-term approach to the needs of their employees, particularly within the realm of retirement readiness. We also have traction with school districts. You may be curious about that, but many teachers start their careers with tremendous debt due to student loans. It’s a huge financial burden. In the fall of 2021, we worked with teachers in three school districts to get their loans forgiven and succeeded in helping them increase their combined net worth by $3 million. They can now concentrate on teaching and also building retirement accounts.
BP: What’s your financial model? PD: We are a SaaS model. Customers pay an annual, per employee fee for their entire workforce. Our target customers are companies with 1,000 plus employees. They typically sign three-year contracts with us so there is built-in stickiness.
BP: How much are you raising? PD: Up until this point, I’ve bootstrapped the company. Now, however, we are ready to scale. This is a seed round and we set a goal of $2.5 million. I am happy to say we’ve oversubscribed but are keeping the round open for VisionTech Angels.
BP: What will the funds from this round be used for? PD: We are really focused on executing our go-to-market strategy. The funds from our seed round will be used to add to our sales, marketing and technology team.
BP: Why should VisionTech Angels investors write checks to Your Money Line? PD: I have four reasons. First, even at this early growth stage, we have great traction in revenue, renewal rates among existing customers are high, and we have a robust pipeline. Second, we have significant partnerships within the global financial industry. Some of the world’s largest financial companies entrust us with their clients. Third, we have the right team to scale the company. Finally, we’re providing a service that is sorely needed by many Americans.
To learn more about Your Money Line, visit their website. VisionTech Angels’ February Pitch Events will be virtual on Thursday, February 24th at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
Seattle-based React Mobile is a VisionTech Angels portfolio company with a workforce safety platform with solid traction in the hospitality industry. Our group initially invested in 2019. A lot has changed since then with new leadership and a new release of their solution. React Mobile is now raising a convertible round. Based on the company’s progress, VisionTech Angels investors have expressed $100,000 in soft interest prior to the formal pitch on Thursday, November 18. I recently sat down with CEO John Stachowiak and here’s our discussion.
BP: Tell me about yourself and other leadership changes. I hear you have an Indiana connection. JS: I do! I am a proud Indiana University graduate. I’ve been on the React Mobile board of directors since mid 2018. During the pandemic, the board agreed that we needed to upgrade the leadership team with more seasoned members. The first change was replacing the CTO in December 2020. Riley Eller had worked with me at my last company for 10 years. He is without question the most talented CTO and strategic business thinker I have ever worked with. We also replaced the CFO position. I accepted the CEO position this year. This is my fourth time as a CEO, having led companies in the United States and Europe. My experience has been with early growth startups, and I’ve taken three companies to exit with returns of 8x, 13x and 26x respectively. I believe my experience and skills match up very well as React Mobile enters its growth phase.
BP: Any changes in your product offering, technology, or business model? JS: This year we unveiled version 2.0 of our workplace safety platform. It’s designed to deliver the highest panic button reliability and beacon location accuracy on the market while being radically simpler for hotel workers to use. We’ve also simplified our SaaS pricing. Here are some of the new features:
A new responder application that enables employees to receive safety alert notifications on their mobile devices and dispatch help. Management receives analytics measuring how long it took for an employee to respond to an active alert.
Support for all third-party iBeacons such as Aruba, Cisco Meraki and CommScope/RUCKUS®. With iBeacon functionality already existing in a hotel’s WIFI access points, hoteliers will save up to 80% of workforce safety platform install costs.
A double-redundant alert pipeline to ensure that alerts are dispatched from panic buttons to responders in the fastest time possible. React Mobile 2.0 delivers 99.9% of alerts in less than a half-second.
Two-way, multi-lingual conversations in English, Spanish, Tagalog, French, and Chinese. Any language can be supported on request.
There are other important enhancements which I’ll share in my pitch.
BP: What impact did COVID have on hospitality industry and React Mobile’s business? JS: The pandemic has had a devastating effect on the hospitality industry, particularly in the early days when travel ground to a halt. Once areas of the country started to regain a sense of normalcy, the industry focused on adjusting processes and regaining their footing. Some areas around the country have rebounded significantly, which is welcome to all of us. In terms of React Mobile, 2020 and 2021 were both growth years. Our SaaS revenue grew more than 100% in 2020 over 2019 and is on track to grow 100% in 2021 over 2020. The number of installed properties grew by 133% in 2020 and in 2021, we’re up 48% to date.
BP: That’s impressive given all of the disruptions of COVID and now the labor shortage. What do you attribute that to? JS: There are a couple of factors. Employee safety continues to be the number one driver. What’s shocking to me personally is 58% of hotel workers report being assaulted on the job. And 96% of housekeepers say they’d feel safer with a panic button. Leading brands representing 23,000 hotels have signed the “Five Star Promise” committing their organizations to employee safety devices. Compliance must be met by the end of 2022. At the same time, the number of states mandating panic buttons in hotels with more than 50 rooms is increasing.
As a result, demand is strong. We’ve signed 12 Master Service Agreement with major brands that represent 23,000 properties. Of these, about 25% – 5,729 properties – are exclusive agreements. The growth potential for React Mobile is huge.
BP: Any other big wins? JS: We have a strong and growing presence in Las Vegas. Fourteen of the 30 major properties on the strip are React Mobile customers. We are currently covering 37,791 of the 93,022 rooms on the Las Vegas strip.
BP: Now that the platform is proven, are you looking at other industries? JS: Absolutely. Education is a natural one for React Mobile. Looking at elementary, middle and high schools, as well as colleges and universities, we’re looking at a total addressable market of $490 million. There is definitely recognition for the need for improved security methods. We’re also looking at health care. Hospitals represent a total addressable market of $210 billion. A key strategic investor in React Mobile is a respected technology provider in these industries and has provided clear guidance for adapting our technology stack to better serve them.
BP: How much are you raising and what will the proceeds be used for? JS: We are looking to raise up to $3 million with the same terms as our last convertible note. These funds will allow us to continue to scale the company.
BP: Why should VisionTech Angels invest another round in React Mobile? JS: Despite COVID-19, our SaaS revenue will end the year at an ARR of approximately $2.4 million with a pre-money value of about $13.5 million, a multiple of less than 6x. Our new 2.0 product release is the best in the industry and with it, we expect to grow revenue another 100% in 2022 and again in 2023. At this point, we have our workplace safety platform where it needs to be, and in addition to expanding our beachhead in the hospitality industry, we are looking at new opportunities in education and health care. Bottom line, we would like VisionTech Angels to continue to grow with us.
To learn more about React Mobile, visit their website. VisionTech Angels’ November Pitch Events will be virtual on Thursday, November 18 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
I was introduced to Adam Steege, founder, president and chief technology officer of Trio Labs, by another investor in the angel space, John Lilly. He is impressed with the company’s novel imaging technology and materials manipulation techniques that enable rapid, high-precision, additive manufacturing of micro parts needed in medical devices. Given our group’s interest in life sciences startups and expertise in the medical device industry, I invited Adam to present to VisionTech’s Screening Committee. We were also impressed by Trio Labs’ technology and traction and agreed he should present at our November Pitch Events. Here’s a sneak preview.
BP: Tell me about how Trio Labs came to be. AS: I’m a serial entrepreneur and inventor. One of my previous companies wasAgile Endo-surgery that developed articulated surgical instruments to expand the scope of minimally invasive surgery. During my six years with Agile, I really took a deep dive into medtech and more importantly, surgical trends pointing to the need for better, more cost-effective options for micro manufacturing on a millimeter scale. I recognized an opportunity to leverage metal additive manufacturing processes at the desired resolution of five microns, but do it at a high-volume manufacturing scale, something no one else was doing. Trio Labs uses its own technology to produce these miniaturized parts using ultra high-resolution 3D printing of metals. The manufacturing process is different. What’s also different is that we’re selling parts, not 3D printers.
BP: What pain points did you see in the medical device market that you are solving? AS: Medtech is demanding miniaturization for surgical instruments and hollow microneedles to meet clinical demands. Here’s an example: vascular surgeries where the surgeon needs to deploy a valve in a heart procedure and a lot of small components are required to enable this mechanism. Other technologies can’t address this size. Here’s another example: the surgeon has to pull a clot in a stroke patient in blood vessels smaller than 1mm. Small parts make this type of life-saving instrumentation possible. The reality of human anatomy versus existing technology causes a significant pain point. With our ability to create micro parts with precision and manufacture at high volume will solve a lot of industry—and patient—pain.
BP: Additive manufacturing has been around for a while. Manufacturing at scale has been the challenge. What’s your value proposition? AS: Frankly, our ability to scale manufacturing beyond prototyping is a large part of our value proposition. Couple that with the fact that we’re making high throughput micro manufacturing possible for the first time is significant. Innovators within the medical device and micro needle spaces looks at that and their eyes get big as it opens up so many doors to future innovation. In that respect, Trio Labs’ ability to produce micro components with exacting precision and in desired volumes makes us unique and a powerful partner.
BP: How large is the market? What are your priorities in terms of market segments? AS: Globally, it’s a multi-billion market. We’ve identified several segments. First, minimally invasive surgical devices which has a total addressable market of $50 billion. The next largest segment is microneedles used for pain-free drug delivery and diagnostics. This includes auto injectors, infusion systems and blood sampling devices. Globally, this represents a $20 billion market. Diabetes care is a sub-segment of the microneedle application space. It represents a $5 billion market in the U.S. alone. Diabetes is a global issue so this is the tip of the iceberg.
BP: What’s your traction like thus far? AS: We have nine customers, many of them household names, with strong interest. They have sent us design files to begin working on. Our model is to acquire customers are the R&D stage and support development. This way our micro parts are specified in the device and support volume production. With all of the innovation in minimally invasive surgical devices as well as in other areas, we believe this approach is sound. We expect to start generating revenue before the end of this year.
BP: What kind of IP protection do you have? AS: Our goal is to have a massive IP portfolio all of which we will own. We are currently working on global patents in 10 jurisdictions. These include our core process and provisional patents. When we’re done, we will have a few hundred patents, which will support our exit strategy.
BP: What does the competitive landscape look like? AS: Micro manufacturing is very difficult to do and do well and that limits competition. However, there are options to Trio Labs: metal injection molding, CNC machining and electrochemical manufacturing. Each has its own set of limitations like cost, speed or lack thereof, and inability to meet the very precise micro specifications at scale. Trio Labs has proven our technology and we can produce at scale at very attractive margins, giving us a competitive advantage over these traditional manufacturing methods.
BP: This is a $6 million Series A and you’ve raised $5.5M. Who are the other investors? What will the proceeds be used for? AS: We’ve gotten excellent support for our Series A so far. Two of our board members have personally invested, and we’ve also gotten support from VentureSouth and the Harvard Business School Alumni Angels Association. We hope to add VisionTech to our cap table.
In terms of use of funds, we intend to build out our manufacturing infrastructure in 2022. Also, our Series A gives us the runway to continue developing strategic partnerships and ramping up the development projects in our pipeline.
BP: What’s your exit potential? AS: We believe we will have a number of options, one of which is to be acquired by a larger medical device company that will seize the opportunity to control the micro manufacturing space. Another option is to go the IPO route.
BP: Why should VisionTech Angels invest in Trio Labs? AS: Trio Labs is truly defining a new space in the medical device industry and as minimally invasive surgical procedures have become the norm, the demand for smaller devices and miniaturized parts has grown exponentially. We have the technology, processes, and ability to scale to meet this demand. Our leadership and advisory team are truly impressive. Among our advisors is Bill Hawkins, former CEO of Medtronic, and Stephen Nigro, former president of 3D Printing at HP. Bill, Stephen, and our other advisors are actively involved in our strategy and day-to-day operations. Finally, the impact we can make on patients’ lives and potential financial return for investors will be significant.
To learn more about Trio Labs, visit their website. VisionTech Angels’ November Pitch Events will be virtual on Thursday, November 18 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
I can’t exactly remember when I met Joanne Zhang, but I’ve always been impressed with her professionalism. We reconnected at this year’s Innovation Showcase. I’m on the board of the Showcase sponsor, The Venture Club of Indiana, and met all of the startups nominated for the pitch competition. One of the finalists was Joanne, who is the CEO and co-founder of Flourring. Flourring was definitely the “sleeper” of The Innovation Showcase. It wasn’t an app, its financial model wasn’t SaaS, and it’s unlikely to inspire tech geeks. What Flourring does have is a huge market and consumers clamoring for its products. Not by name, but for the benefit of making many of the foods and beverages we eat everyday more natural, clean and healthy. I invited Joanne to present to VisionTech’s Screening Committee, and we all agreed she and Flourring should present at our October Pitch Events. Here’s a sneak preview.
BP: Tell me about your professional career before becoming an entrepreneur. JZ: My career track is very different than many entrepreneurs. I spent 20 years in the corporate world, including 14 years at Praxair and a year with Danisco, an ingredients company. Over the course of my corporate career I worked in marketing, procurement and supply chain, and finance. At Praxair, I was in charge of finances for a $200 million business unit. I’m grateful for my time in corporate because it created a strong foundation for my own startup company. I know how and where to avoid mistakes and have been able to run the company professionally from the start.
BP: How did Flourring come to be? JZ: Flourring started as a part of Phytoption LLC, a Purdue innovation startup company I co-founded. We had an SBIR award from the National Science Foundation to develop ingredientsfor drug, food, cosmetics, and agriculture. During that project, we have developed clean and functional ingredients applicable to the food and beverage industries. So we plan to use Flourring to focus on commercializing FLOURA™, a series of all natural, functional flours that could replace traditional emulsifiers and texturizers, many of which are artificial. Traditional emulsifiers, while present in many, many processed or restaurant foods, are usually not natural ingredients and are heavily processed themselves.
BP: What pain points did you identify in the market and how are you solving them? JZ: There are two big pain points: Consumers’ demand for cleaner, more natural foods and food producers’ needs for a natural alternative to traditional emulsifiers that works for their products. Our proprietary natural flours solves both.
Natural and organic foods have been around and very popular with a segment of the population for a long time, but it’s only been recent years that the general consumer population has begun looking for and requesting more natural ingredients. As a mother myself, I had trouble finding healthy snacks for my own child that didn’t contain artificial additives. So there is now a growing “clean label” movement among consumers who are questioning the additives in foods and basing their purchases on what’s on a product’s label.
Consumer packaged goods (CPGs) companies see what consumers want but up until now there were hardly any feasible substitutes for traditional chemical surfactants, gums, or other types of unwanted emulsifiers and stabilizers. And they can’t just remove them as emulsifiers are needed to prevent separation of ingredients, create a smooth texture and extend shelf life. As an example, a liquid coffee creamer would have separate layers, if they took out the emulsifier. Can you imagine how unappealing it is? With FLOURA™, we’re providing a single ingredient option that’s non-GMO, gluten free, all natural, and doesn’t require chemicals to produce it, and works for a variety of food and beverage, supplements, and even some personal care products.
BP: What’s the FLOURA™ product range look like? JZ: We currently have several types of flours under the FLOURA™ brand that address the specific requirements of plant milks, creamers, shakes, and smoothies; sauces, soups, and salad dressings; bakery items such as cakes and tortillas; nutraceuticals like hemp oils and essential oils; frozen desserts like ice creams and ice cream novelties; and finally, natural lotions and creams for personal care. In each of these categories, FLOURA™ helps ensure the stability and texture with desirable natural ingredient for a cleaner ingredients label.
BP: What’s your traction like thus far? JZ: We are building our customer pipeline, and have signed letters of intent from two customers, one in the U.S. and the other in Europe. Both were looking for natural alternatives to current emulsifiers and found Flourring.
BP: How big is the market? JZ: The ingredients market in the United States, Europe and Asia is huge. The overall global emulsifier market is estimated at $8.4 billion (USD), along with another $12 billion for stabilizers or texturizers. If that surprises you, consider this: emulsifiers and texturizers are used in a wide range of not just food and beverage products but also personal care, pharmaceuticals and even industrial applications. Flourring is targeting is clean label products, a market projected to reach $51.1 billion (USD) by 2024. Consumers are driving growth in this segment. More than 90% of U.S. consumers believe food and beverage options with recognizable ingredients are healthier. Beyond this, the market is attractive because of the spend of individual companies, which can range from a hundred thousand a year to a couple of million dollars.
BP: What’s your exit potential? JZ: Very straightforward. There are only a few large players in the ingredients market and they’re watching the trend of clean labels, which has accelerated with COVID-19. Some have already been in contact with us.
BP: Are you required to have FDA approval on your products? JZ: No, our ingredients are natural—corn, rice—so FDA approval is not required. We have gone through a legal review by one of the largest legal firms for the food industry to determine the labeling, and the conclusion was that FLOURA™ is labeled as a flour such as rice flour or corn flour.
BP: Do you have any IP protection? JZ: I’m very proud of our IP protection. We have a lot of experience with patents so securing a worldwide patent for our process was a priority. That patent was filed in 2018 and is pending in many countries or regions worldwide. Ultimately, we’ll have several patents broken down from the initial filing that will protect our products and technology from different angles, which include materials, processing, and applications.
BP: Do you have competitors beyond traditional emulsifiers? JZ: Our natural functional flours are the first of their kind emulsifiers on the market so no, we don’t currently have competitors other than the additives such as modified starches, gums, and synthetic chemicals we want to replace.
BP:How much are you planning to raise and how will the proceeds be used? JZ:We are raising a $1 million seed round, of which we already have $800,000 committed. Half of the funds will be used to scale our manufacturing and the other half will fund our 2022 runway. We have a vice president of sales and will build a production team after the round is closed.
BP: Why should VisionTech Angels invest in Flourring? JZ: There are three very compelling reasons to invest in Flourring. The clean ingredients market is predicted to enjoy high growth for the foreseeable future. Consumers are communicating their preference for natural ingredients and CPGs are responding where they can. Flourring provides new options that can enable CPGs to meet consumer demand. Second, this is a low-risk opportunity. We have established our products and processes. Now, it’s time to scale, which is what this raise is about. Finally, cost will not be a barrier to market entry. Our products are priced at or below competing products. Too, our gross margins are high, about 75% at scale, because the costs of our raw materials are low.
To learn more about Flourring, visit their website.VisionTech Angels’ October Pitch Events will be virtual on Thursday, October 28 at Noon ET and at 6 p.m. ET. Pitch events are open to our members and accredited investors interested in joining our group. To register, check your email for an invitation, go to our Events page or email Ben Pidgeon at bpidgeon@visiontech-partners.com.
