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03/15/2010

Scoop

[Actually 3/1/2010]: The May Report: 3/1/2010: Former Daley tech advisor and Obama fundraiser Katherine M. Gehl to wear her milk mustache to Washington; David "anything but start-ups" Weinstein spreading seed money on anything but seedlings and this is St. David Day, a Welsh holiday -- it's also marchFIRST and Chopin's 200th; he was Polish you know

March 1, 2010



The May Report: 3/1/2010: Former Daley tech advisor and Obama fundraiser Katherine M. Gehl to wear her milk mustache to Washington; David "anything but start-ups" Weinstein spreading seed money on anything but seedlings and this is St. David Day, a Welsh holiday -- it's also marchFIRST and Chopin's 200th; he was Polish you know


Editor and publisher: ron@themayreport.com, ronaldmay@aol.com, www.themayreport.com, 773-525-3944.

If you missed an article, go here: http://www.tmronline.com/A55951/tmrarticles.nsf/vwFullNewsletter
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TABLE OF CONTENTS

The Scoop section:

-- March 4-5: Co-Alignment of the Corporate and Personal Brand -- A Strategy Framework

-- March 4: CIMA's Mobile Madness
-- For any stragglers out there: Deadline for midVentures25 Chicago Startup Applications is February 28th
-- Motorola mum on plans to move handset business to California by John Pletz of Crain's
-- Katherine Gehl appointed by President Obama to Member, Board of Directors of the Overseas Private Investment Corporation
-- The pussification of the i2A fund: David Weinstein shows his risk averse side which seems to be his only side, by Ron May

[Editor's note: Ron May here. This is a four report day and don't doubt my word on that! Most of the other reports are ready to go.]
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MIT EF Chicago Mar. 16 Event
Bootstrappers and Investors Faceoff

Hear from two companies, currently building their businesses with
revenue, as they engage in a bare-knuckles dialogue with seasoned
investors. We'll discuss how both early-stage and mature companies spark
investor interest, the best approach to finding and acquiring outside
funding, and the potential trade-offs to consider when seeking outside
investment.

Bootstrappers
Chris Hill, Founder and CEO of PerkSpot and creator of Coupon Tweet
Jeff Judge, Co-founder of Interactive Mediums

Investors
Jeff Carter, Co-founder of Hyde Park Angels
Laurence Hayward, Founder and Managing Partner of VentureLab

Moderator
Linda Darragh, Director of Entrepreneurship Programs and Adjunct
Associate Professor of Entrepreneurship at the University of Chicago's
Booth School of Business

Our "bootstrappers" lead off the session, each giving his company's
pitch on why their respective firms would be solid investment
opportunities. Following the pitches, our investors will kick-off a
dynamic discussion, offering their candid feedback as well as a
no-nonsense perspective on the merits of outside funding.

When
Tuesday March 16
5:00-6:15 pm Networking
6:30-8:00 pm Program

Where
At our new host sponsor
Ungaretti & Harris LLP
70 W. Madison St.
4th Floor Conference Center
Chicago

Cost
Free to members; $30 advance payment for non-members/guest

REGISTER at http://bit.ly/9SBTYg

NOTE A NEW NETWORKING AND MEETING LOCATION!
WELCOME OUR NEW SPONSOR, UNGARETTI & HARRIS!

It may be the same address and the same time, but you'll have an
opportunity to meet new people with our new sponsor, the law firm of
Ungaretti & Harris LLP.

70 W. Madison St., Chicago
4th Floor Conference Center

REGISTER at
http://bit.ly/9SBTYg
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The Scoop section:
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March 4-5: Co-Alignment of the Corporate and Personal Brand -- A Strategy Framework

Co-Alignment of the Corporate and Personal Brand -- A Strategy Framework
WhenMar 4 - 5 2010
WhereLoyola University Chicago (map)
DescriptionAligning The Corporate and Personal Brand, Chicago March 4-5 Featured Keynotes: Olivier Blanchard and Dan Schawbel Early-bird Cost: $599.00 -- After Feb 14th, $699.00 Take the Mic! Attendees "Take the mic" and ask the questions. More keynote engagement -- better take-away for attendees. Get your questions addressed. More interaction and participation with keynotes Olivier Blanchard, @thebrandbuilder and Dan Schawbel, @DanSchawbel. - Engage and participate in Town Hall Meetings with Brand Guru - Olivier Blanchard - Listen to and engage with Best Selling Author and Personal Brand Strategist Dan Schawbel - Learn how to develop internal branding campaigns that will increase team loyalty and enhance customer loyalty and brand awareness - Walk Away With Human Resource Services, Inc's exclusive Social Communications Policy Workbook "The Draft" - Cost includes -Continental breakfast and Lunch http://sohobiztube.com/soho_naked_biz_growth.php?internal_event_id=40
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March 4: CIMA's Mobile Madness

CIMA's Mobile Madness. Join CIMA and a panel of industry experts as they debate over mobile advertising in 2010. Moderator Aaron Goldman, Managing Partner, Connectual; Courtney Jane Acuff, VP, Director, Denuo (a Publicis Groupe Company); Erin (Mack) McElvey, Senior Vice President, Marketing, Millennial Media Mobile; Gian Fulgoni, Chairman, ComScore, Inc.; Josh Cherfoli, Online and Relationship Marketing Manager, Porsche Cars North America, Inc. 5:30 pm - 10:00 pm, Mar. 4, Westin, Cotillion Ballroom, 909 N. Michigan Ave, Chicago.
http://www.chicagoima.org/index.php?option=com_azeventdetail&id=45&Itemid=42
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For any stragglers out there: Deadline for midVentures25 Chicago Startup Applications is February 28th

Subject: Deadline for midVentures25 Chicago Startup Applications is February 28th
Date: 2/22/2010 6:09:52 P.M. Central Standard Time
From: gdomoracki@gmail.com
To: RONALDMAY@aol.com

Subject: Deadline for midVentures25 Chicago Startup Applications is February 28th

Message:

If you're a startup in Chicago or the Midwest, your company should apply to midVentures25 -- Chicago's largest startup demo day and conference.

Our Application deadline for startup companies is February 28, 2010. The event will be held in Chicago's Loop on March 11, 2010, from 5:00 p.m to 10:00 p.m, where we have over 22,000 square feet of demo space at 200 S. Wacker Drive to showcase the Midwest's burgeoning tech community.

Click here to apply online for a table to demo to investors, http://midventures25.com/?page_id=19 meet new partners, and compete for over $7,500 in technology and legal services, computer hardware and free online advertising.

Contact:
Geoff Domoracki, CEO
midVentures Group, Inc.
Phone: 312 613 2735
E-mail: geoff@midventures.com
http://www.midventures.com

Entrepreneurs to showcase 25 investor-ready Midwest technology startups

CHICAGO, IL (February 11, 2010) - The idea is simple. If you assemble 25 of the most promising technology startup companies from around the Midwest in one room, the investors and tech community will come.

Chicago is thriving with innovation as bootstrapping technology entrepreneurs are warming up to the affordability and wealth of startup resources in the region. In an effort to put a spotlight on Midwest technology startups and accelerate this phenomenon, a group of young entrepreneurs have created midVentures25 (http://www.midventures25.com)
.

midVentures25 is a demo day and conference that will showcase 25 of the hottest technology startups for an evening of pitches, ideas, networking and deals. On Thursday, March 11, 2010, the startups will demo their products and services to a room full of over 250 investors, entrepreneurs and the Chicago tech community. Each company selected must fit the following criteria:

1. The startup company must be founded or currently located in the Midwest.
2. The startup company must be no more than three years old.
3. The startup company must possess a high growth potential and be ready for market (i.e., "investor-ready").

Investors and attendees can expect to see the latest in the fields of mobile applications, internet technology, software, and alternative energy. "The focus of midVentures25 is to show the national technology and investment community that the Midwest has an abundance of early-stage innovators within the technology, consumer, and sustainability space," said Geoff Domoracki, founder of midVentures, and host of the event.

The Judges

1. Andrew Mason, Groupon
2. Chuck Templeton, OpenTable
3. Jason Heltzer, OCA Ventures
4. Biju Kulathakal, Redbox
5. Adam Siegel, InklingMarkets
6. The Google Execs

The Sponsors

1. Google
2. Illinois Technology Association
3. ChicagoMicro
4. PaskyIP.com
5. GoldCald.com

Entrepreneurs and investors can register for the event at http://midventures25.eventbrite.com.

Event Details:
Date: Thursday, March 11, 2010
Location: 200 South Wacker Drive, 12th Floor
Time: 5:00 PM - 10:00 PM

About the Hosts
midVentures25 was created by Jonathan Pasky, Geoff Domoracki and the midVentures team, and is held with support from Pasky IP, Goldstein, Caldwell, and Associates, and Google Chicago.

About midVentures
midVentures is a Chicago-based technology venture development firm that focuses on incubating new startup concepts for investors and entrepreneurs. Run by a group of 20-something University of Chicago graduates, midVentures' clients range from venture capital firms to privately wealthy individuals interested in the technology space. midVentures also actively incubates its own web, mobile, software, and microfinance ideas.

About Pasky IP
Pasky IP specializes in providing intellectual property and technology/business legal services to entrepreneurs and emerging, mid-market and institutional clients. Firm expertise includes high technology patent prosecution, startup general counsel services and IP asset management.

About Goldstein, Caldwell & Associates
Goldstein, Caldwell & Associates (GCA) is a Cleveland-based seed capital investment and business development company that helps young entrepreneurs turn their ideas into viable businesses. Through seed funding, business development expertise, mentoring and a youth-focused culture, GCA helps portfolio companies accelerate the start-up process. For more information on GCA and its portfolio companies visit www.goldcald.com.


--
Geoffrey Domoracki
312-613-2735
http://www.midVentures.com
Head Guy
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Motorola mum on plans to move handset business to California by John Pletz of Crain's

Motorola mum on plans to move handset business to California

By: John Pletz Feb. 23, 2010


(Crain's) - Motorola Inc. won't say whether it's planning to move the headquarters of its phone business from Libertyville to California once it breaks up the company a year from now.

The Wall Street Journal reported Tuesday that Sanjay Jha, CEO of the handset business, is considering a move to California.

A company spokeswoman said, "We have not announced plans to relocate our headquarters, and we will continue to have a meaningful presence in Chicago."

Regardless of whether Mr. Jha moves the headquarters out of Illinois, the phone unit's center of gravity will continue to shift westward. And California's economy will get a bigger economic benefit, in terms of new jobs, if Mr. Jha is successful in turning around Motorola's cell phone business.

"That's where all the developers are going; that's where the core of the business is going," said Tavis McCourt, a Nashville-based analyst at Morgan Keegan & Co. "A disproportionate share of the benefits will happen there."

Mr. Jha is betting on such a turnaround on smartphones with Google's Android software. And he's been rapidly adding software engineers to Motorola's Sunnyvale, Calif., offices, which are near Google's operations in Mountain View.

Motorola won't disclose specifics on mobile devices employment at its various offices. But Mr. Jha has made it clear that software-development talent is more prevalent in Silicon Valley, and it's harder to attract such employees here, echoing a longtime lament from tech companies in Chicago.

For software engineering jobs listed on Motorola's Web site, positions in Sunnyvale outnumber those in Libertyville 2-1. It reflects the reality of the phone business. The cell phone invented by Motorola in 1983 had its roots in the two-way radio that the company has made here for decades.

But as phones became essentially handheld computers, a move accelerated by the launch of the iPhone by California-based Apple Inc., software became the key ingredient. And software talent is most plentiful in Silicon Valley.

Adds Morningstar Inc. analyst Joe Beaulieu: "From the point of view of Chicago, they've been cutting headcount and facilities for a couple years now at least. So even if you don't pick up and move the whole business or the headquarters, it's a soft move."

Motorola is one of just 28 Fortune 500 companies based in Chicago, so it figures prominently in the city's collective corporate ego and its ability to attract other big headquarters such as Boeing Co. and MillerCoors LLC.

"If they do move it, it's a negative because of the loss of high-paying jobs and the stature," said Dave Novosel, a Chicago-based analyst at Gimme Credit LLC, a bond-research firm.

Fears that Mr. Jha would move Motorola's phone business to California have been swirling around Libertyville almost since he arrived as co-CEO from San Diego-based Qualcomm Inc. in August 2008. He has yet to move to Chicago, and Motorola continues to pay for temporary housing, according to a recent filing with the Securities and Exchange Commission. Motorola also has offices in San Diego, which is a center for wireless hardware development.

There's a precedent for companies that have moved their headquarters - officially or unofficially - to accommodate a new CEO.

First Data Corp. moved from Denver to Atlanta not long after CEO Michael Capellas relocated there. The company has large operations in both cities and had moved its headquarters to Colorado from Atlanta under a previous CEO.

The executive suite of chip maker Advanced Micro Devices Inc. largely moved from Silicon Valley to Austin, Texas, after it hired ex-Motorola executive Hector Ruiz. Technically, the company's headquarters remain in Sunnyvale, Calif.

Motorola's breakup into two public companies - one making phones and cable set-top boxes, the other producing police radios and corporate wireless computer networks - would give Mr. Jha the opportunity to move the phone unit's headquarters. The non-phone business, run by CEO Greg Brown, is expected to remain in Schaumburg, Motorola's longtime headquarters.

It's unclear whether Mr. Jha would move only the headquarters and a few hundred top executives and support staff, or the entire handset and cable box company. But he told Crain's on Feb. 11, when the breakup was announced, "We're not going to make dramatic changes in locations of assets."

There are several reasons weighing against moving the whole company. Such a move, especially to a high-cost market such as California, would be expensive. It also would be a major distraction. Motorola, which is still losing money and marketshare in the phone business, can ill afford either the cost or the distraction at the moment.

"Moving everything would be really disruptive," Morgan Keegan's Mr. McCourt said. "I think that scenario is less likely."
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Katherine Gehl appointed by President Obama to Member, Board of Directors of the Overseas Private Investment Corporation

http://politicalpotluckblog.blogspot.com/2010/02/president-obama-announces-more-key.html

Friday, February 26, 2010
President Obama Announces More Key Administration Posts
Today, President Barack Obama announced his intent to nominate the following individuals to key administration posts:

· Michael J. McCord, Principal Deputy Under Secretary of Defense (Comptroller), Department of Defense
· Katherine M. Gehl, Member, Board of Directors of the Overseas Private Investment Corporation
· Michael J. Warren, Member, Board of Directors of the Overseas Private Investment Corporation

Katherine M. Gehl, Nominee for Member, Board of Directors of the Overseas Private Investment Corporation
Katherine M. Gehl is presently the fourth-generation Chairman of the Board of her family-owned company, Gehl Foods, Inc. The company has approximately $175M in sales and 200 employees. As Chairman she oversees the development and execution of the company strategy. Previously, Ms. Gehl was a Vice President at Bernstein Investment Research and Management providing investment analysis and planning for private clients, foundations and endowments. Prior to joining Bernstein in 2002, she was Special Assistant to Mayor Richard M. Daley for Technology and Economic Development where she was responsible for developing and overseeing the Chicagoland New Economy Growth Strategy-a five year plan for economic development designed to spur job creation and income growth and position Chicago at the forefront of technologically-advanced cities. In between her work at Gehl and her work for the Mayor, Ms. Gehl was Director of Information Technology Services at Chicago Public Schools for a year and a half, and Director of Organizational Development at Oracle Corporation for three years. Ms. Gehl serves on the Boards of Directors of Public Allies and The Joffrey Ballet. She graduated from the University of Notre Dame in 1988 and holds an MA in education from the Catholic University of America, and an MBA from Northwestern University's Kellogg Graduate School of Management.
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May here. What can we say? A pattern is being established that if you want a job of some sort in the Obama administration it helps to have been a fundraiser for either the Presidential campaign or better yet, the Senatorial campaign. Katherine Gehl follows our own David Jacobson in this regard and he is now U. S. Ambassador to Canada. The woman who was just appointed to be the new White House Social Secretary was also a fundraiser for President Obama. She replaces Desiree Rogers as you probably know by now.

Katherine, having been Mayor Daley's tech advisor, having been an investment banker, and having been the fourth generation chairman of the board of Gehl Foods http://www.gehls.com/display/router.aspx, is now ready to wear her milk stash to Washington, D. C. But her Obama connection goes back to his senate campaign I believe where she was an early fundraiser and that appears to trump all other experience.

What can I say other than Congratulations!
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The pussification of the i2A fund: David Weinstein shows his risk averse side which seems to be his only side, by Ron May

SitterCity (www.sittercity.com) received a small amount of funding in September 2009 for $500K from a variety of backers to round out their $7.5MM in funding from December 2008 and the $7.5MM was not their first round of funding.

See these articles for more info.
http://dealbook.blogs.nytimes.com/2009/11/23/rival-websites-share-thorny-history/

http://www.boston.com/yourtown/waltham/articles/2009/11/22/websites_rivalry_provides_lessons_in_sharing_or_not_sharing_strategic_secrets/?page=2

So, what if anything is the story here?

The story is that part of that $500K came from the i2A fund. Some of the money came from Matt McCall, some from Brian Hand, but I confirmed that Matt was investing as an angel on his own and not through New World Ventures.
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http://mobile.chicagotribune.com/inf/infomo?view=webarticle&feed:a=chi_trib_1min&feed:c=business&feed:i=48996882

Sittercity.com gets more money from investors
Tue 01 Sep 2009
By Becky Yerak
Tribune staff reporter
Full article view
Sittercity.com, a Chicago-based Web site that pairs customers with baby and pet sitters and other caregivers, said it has raised an additional $500,000 from a handful of local equity investors.

The company, which secured $7.5 million in financing in January, said today that it opened a second round of funding to accommodate some new backers.

They include: venture capitalist Matt McCall of New World Ventures; entrepreneur Brian Hand, founder and former chief executive of ShopLocal.com; and venture capital firm I2A Fund. Sittercity.com previously received financing from Point Judith Capital and Apex Venture Partners.

"Even in these challenging economic times, Sittercity.com has increased job postings on its site 150 percent, added an average of 2,000 caregivers each day, and grown our annual revenue 60 percent over last year," Genevieve Thiers, founder and CEO of Sittercity.com, said in a statement. "The online care field has grown dramatically over the past decade and we expect that our business will continue to grow at an impressive rate."

byerak@tribune.com
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May again. So what?, you say.

The i2A fund, let's see, what was that again?

It was a created after years of exploration and thought about the model as a $10MM fund that was supposed to do seed and early stage investing. Remember that it is only $10MM which precludes any later stage deals by definition.

Before I start on this, a bit of context. Let me tell you just one reason all of this matters. Ten million is chump change in VC terms. It is not truly a VC fund, it is a seed fund and t'was meant to be.

Let's say for the sake of argument that there is a little company just starting out, call it Goggle in our little hypothetical example, and their founders are looking around for a place to call home. They start investigating what various states are doing to support high tech start-ups and they come across Illinois. They also look at Michigan, Wisconsin, Indiana, and Missouri.

They naturally come across references to the i2A fund since it has been hyped so much relative to its bona fides. And when they look at it, they discover that 80% of the deals they have done are not seed deals at all but are rather piggybacks on Series A funding, and they also see from the folks involved that it seems to be a insider "the fix is in" set up.

How likely are they to be attracted to coming to Illinois?

Moral of story: when you screw around and make a circus or mockery of the whole thing as Weinstein has done with i2A and SitterCity, far from seed or even true early stage, you poison the well for when there is really a good and potentially very successful deal.

I find it interesting that from a risk point of view, he did not even join in on the deal in December 2008 but rather waited another ten months to see how things were working out. Some people would call that some form of cheating. But maybe there was a reason for the wait. It could have been a sweetheart deal.

Actually, it is quite possible that the ten month wait also came with a lower valuation for the firm. Something funky may be going on with that. I just have a gut feeling. Matt McCall as an angel, Brian Hand as an angel and the i2A.

Well, you can't bat a thousand on every hunch. I am wrong. Matt McCall says that the money he put in was part of one round.

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Subject: Re: Matt, was the valuation lower when you got into SitterCity than in Dec. 2008?
Date: 2/28/2010 10:40:18 P.M. Central Standard Time
From: matt@newworldvc.com
To: RONALDMAY@aol.com


Only one round. I came in at the same time as Apex & Point Judith.

Best Regards,

Matt

Matthew B. McCall
Partner
New World Ventures
111 South Wacker
Suite 4000
Chicago, IL 60606
312-447-6073
matt@newworldvc.com<mailto:matt@newworldvc.com>
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May again. The key point is that the SitterCity deal for i2A was a resounding repudiation and abnegation of the principles upon which the fund was created. It is like cheating on your wedding vows. It is a form of infidelity.

And to put an exclamation point on that, if this fund works the way any other fund works, there is an annual management fee of roughly 2% for the managers of the fund which would be Weinstein, Chaudhary and Felger with Weinstein probably taking the lion's share. So, if the fund has the full $10MM, that means that $200K is being split up by these guys for doing nothing or for just putting money into safe bets! That is an outrage and should rankle anyone in Chicago high tech.

But I am not going to play Bob Dole here, proclaiming "Where's the outrage?" because I know most people in this town really don't care. That is the sad truth.

Look, let me give you a bigger context. After Nicole Loftus of Zorch spoke to TiE over at the CEC on 9/25/2009, I noticed a meeting going on in the conference room where Lord Weinstein (or today, St. Weinstein) sat on the credenza as though he was just passing through.

It took me a while (like six weeks) to find out what that was all about but I did find out that it was a discussion of new and more innovative venture models that could be used here and it was initiated by folks outside Chicago, in fact from TechStars who were "looking us over" as a place to plant some roots. Weinstein did say that they also wanted to see what was coming out of the universities and he did not deny that the whole idea had no local champion.

I looked up TechStars, http://www.techstars.org/ and http://www.techstars.org/companies/ and found some interesting things. First, they are in Boston, Seattle, and Boulder among other places. Second, I notice that two Chicago area firms, Have My Shift and The Next Big Sound, have been funded and are being helped by them. Sean Corbett and Steve Wooten run Have My Shift http://havemyshift.com/ and Next Big Sound http://www.nextbigsound.com/ is run by four founders (if they are all still involved): Alex White, David Hoffman, Samir Rayani and Jason Sosnovsky.

Another of those venture development models is Y combinator http://ycombinator.com/. My point here is, just as with my hypothetical Goggle example, people know Chicago is a great city, but they don't know how anemic our economic development efforts are. Even though we have many things going for us, the lack of seed and early stage capital, and various other infrastructure disconnects make us look weak to outsiders.

Meanwhile here in Chicago, we have our own version of venture development firms and one of them is http://www.exceleratelabs.com/. They offer up to $20K to start-ups and that is in line with YCombinator and TechStars which offer similar amounts of money. You may want to look at their list of mentors which seems to be just about everyone in Chicago high tech who is on the "inside," as they say.

MidVentures is holding its event on March 11th and they are also offering prize money for the winner of $7,500 with the judges being Andrew Mason, Groupon; Chuck Templeton, OpenTable; Jason Heltzer, OCA Ventures; Biju Kulathakal, Redbox; Adam Siegel, InklingMarkets; The Google Execs.

The managers of the i2A fund have set the tone and that tone reflects on all of us.

Does that tell you a little bit why this matters?

Here is what I wrote on it on 9/17/09 right after the SitterCity funding which David conveniently did not mention at the MIT-EF meeting the day before on 9/16/09.

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Weinstein also said that the CEC has moved toward a venture development model and he cares more about quality than quantity. For the i2A fund, the three GPs are David, Kapil and Jason Felger. The LPs get a look see at any deal before it is done and they can join in. First round of funding is generally $250K with $750K held aside as dry powder.

They have done five deals in two years and expect to do seven more in the fund.
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Remember the original announcement of the fund on 2/26/2007:
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Announcement today (Monday, Feb. 26) of the $10MM Innovation Accelerator seed fund

Chicago's Business Leaders Collaborate to Create, Invest and Manage the $10 Million Illinois Innovation Accelerator (i2A) Fund

J.B. Pritzker, the Illinois Department of Commerce and Economic
Opportunity, the Chicagoland Entrepreneurial Center and Illinois Institute
of Technology among Early Investors of Illinois' Most Innovative Seed-Stage
Fund

CHICAGO, Feb. 26 /PRNewswire/ -- Today, the Illinois Innovation
Accelerator (i2A) Fund, a $10 million seed-stage, for-profit investment
fund, was launched with $6.4 million in capital commitment in its first
closing. Seed-stage investing has decreased since the start of the new
millennium as investors have moved "up-market," leaving a "capital gap" in
their wake. The i2A steps up to the plate as the state's most innovative
for-profit, early-stage investment fund.
Structured as a member-managed fund with individual and institutional
investors, the i2A Fund (http://www.i2Afund.com) will be administered by
the Chicagoland Entrepreneurial Center (CEC), a non-profit affiliate of the
Chicagoland Chamber of Commerce, with a strong track record in early-stage
financing. Notable venture capitalist J.B. Pritzker, of New World Ventures,
as well as the Illinois Department of Commerce and Economic Opportunity
(DCEO) played an active role as the early catalysts in the formation of the
i2A Fund.
"The i2A Fund in and of itself is an entrepreneurial initiative. It was
created and funded by several of Illinois' most successful entrepreneurs to
invest in the future of our local economies and the next generation of
pioneering entrepreneurs," said David Weinstein, president of the
Chicagoland Entrepreneurial Center. "Illinois' entrepreneurs stand to
benefit not only from the funding, but also the invaluable knowledge and
resources that each investment and advisory committee member brings to the
table -- such as guidance and connections to target customers, partners and
key members of the management team."
The fund wasn't created solely for technology companies, but rather to
drive invention across multiple industries. The fund will also invest in
consumer product and retail enterprises, new-media start-ups, as well as
companies in biotechnology, nanotechnology, cleantechnology and life
sciences.
"This fund is truly unique and I hope that when other venture
capitalists and private equity firms see the success of it, they will begin
sowing the same seeds and similar funds will be popping up all over the
place," noted Michael Ferro, a well known Chicago entrepreneur, who was
founder of Click Commerce and is also an investor in the i2A Fund.
The i2A Fund will create a vehicle to support an innovation-based
economy. The primary goal of the fund is to provide the first external
capital raised by companies headquartered in Illinois, allowing them to
expand, as well as provide fund members the opportunity to capitalize on
these high-growth opportunities.
"The challenge we have in Illinois is that we have not yet developed a
strong enough culture of seed-stage support for start-up companies," said
J.B. Pritzker, founder and partner of New World Ventures and chairman of
the i2A Investment Committee. "Many start-ups in Illinois fail because they
are unable to find the early capital necessary to succeed at that vital
embryonic stage. The i2A Fund is an effort to give entrepreneurs a jump
start. Through the fund and the support of business leaders, we are giving
them a place to go; kind of a helping hand for these motivated
entrepreneurs."
Each year, the i2A Investment and Advisory Committees expect to
evaluate between 150-200 investment opportunities and invest in four to six
companies that are headquartered in Illinois and the surrounding region.
"Illinois Institute of Technology is dedicated to innovation beyond the
classroom. The i2A Fund supports this initiative, and serves as our
strategic investment partner," commented Lewis Collens, president of IIT.
"University Technology Park on our campus is designed to serve start-up and
high-growth companies, and will also function as a resource for portfolio
companies of the fund."
The state's investment comes from DCEO's Illinois Seed/Angel Fund,
which is investing in other seed stage venture funds across Illinois. Gov.
Rod R. Blagojevich has invested almost $2.7 million from this fund in four
Illinois-based venture funds, which are already investing in emerging
companies throughout Illinois. These investments not only work to help
small businesses expand and create jobs, but will also help to keep these
high-growth companies in the state.
"Since entrepreneurs are the backbone of our economy, nothing is more
essential for them to develop successful new companies than early stage
capital. By investing in the i2A Fund, Gov. Blagojevich and I are helping
to address a critical shortage of this type of financing and continuing to
build a business environment that encourages innovation. This is going to
turn promising ideas into promising companies and create new, high-paying,
Illinois jobs," DCEO Director Jack Lavin said.
The CEC has a great deal of experience in financial transactions, deal
syndication (with its CEC Venture Forum) and post-deal development. The
organization has assisted entrepreneurs in raising more than $40 million in
debt and equity in the past four years with a focus on assisting clients in
raising equity capital in amounts ranging from $100,000 to $3 million.
The first close of the i2A Fund included individual investors Michael
Ferro, Jr., Bob Geras (chairman of the advisory committee), James Gray,
Jules Knapp, Larry Levy, J.B. Pritzker (chairman of investment committee)
and Ralph Wanger. Contributing institutions include: Cardinal Growth Corp.,
Duchossois Technology Partners, the Illinois Department of Commerce and
Economic Opportunitiy, Illinois Institute of Technology, Merrick Ventures,
Mesirow Financial, National City Equity Partners and Wexford Science and
Technology.
For more information on the Illinois Innovation Accelerator Fund,
please visit http://www.i2Afund.com.

SOURCE Chicagoland Entrepreneurial Center
++++++++++++++++++++++++++

May again. The fund was addressing the problem of the dearth of seed capital and it was intended to avoid the co-investor requirements which weakened the TDB that had been run by the ITDA and before that the Illinois Coalition for years.

The $250K sets them up for a "me too" strategy. But it does not have to be a "me too" that represents about one thirty second of the money invested! That is right, about 3% of the firm! Is that what David means by quality not quantity? For Weinstein to do a deal where the i2A fund has 3% or even less of a firm means he is really not doing his job.

OK, so did the i2A ever do seed funding?

Yes, for one deal. Otherwise, no, they did piggybacking on early stage Series A funding for start-ups.

Here are the five deals they have done.
http://www.i2afund.com/portfolio.asp
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Portfolio Companies

Viewpoints.com

Viewpoints.com is an exciting new website that taps into the need for people to share their personal experiences. To voice their opinions. To show others the way. To share insight gained from personal experience. In other words, to review. But Viewpoints is different than other review sites. How? Viewpoints allows people to post reviews across the most comprehensive range of categories of any reviews site. From movies, to restaurants, to education, to health care, to travel and hundreds of other categories in between. And best of all, Viewpoints provides an extensive, easy to understand profile of every reviewer. By visiting Viewpoints, anyone can share-or receive-useful information to help them make smarter decisions.

One Llama Media

One Llama Media is a leader in audio analysis, search and discovery systems. The company develops acoustic analysis, cultural analysis and collaborative filtering tools for music and video navigation, discovery and search. One Llama provides its software to online media aggregators, distributors, and stores interested in improving the way their customers navigate and search for audio assets. Additionally, the Company provides its tools direct to the consumer through its website, www.onellama.com for building and sharing music playlists.

Ifbyphone

Ifbyphone is a hosted voice application and platform company with a simplified approach to the deployment of stand-alone and web-integrated voice services for small and medium sized businesses (SMB). Combining advanced telephony and web services, Ifbyphone's web-integrated voice applications turn the small business telephone into a powerful tool, increasing lead generation, improving sales conversion and enhancing the customer experience. Ifbyphone makes it easier for customers to connect with you from online and off. All of Ifbyphone's applications are accessible via a click on a Web site, an inbound call to a toll free number, an outbound call or with the help of a programmable API. The company's services are available online and through a network of SMB value-added resellers.

Quantum Learning Technologies

Quantum Learning Technologies (QLT) is a developer of web-based, e-Learning virtual worlds and casual games for the pre-K through 8th grade educational and consumer segments. QLT's first two programs, Ramps to Reading™ and SkatekidsOnline™, utilize scientifically-developed and clinically-proven educational activities to help children develop their language, reading, math, and critical thinking skills. The CODiE award winning programs are being used by students and school districts throughout the country and students not only show significant improvement in their reading skills (one standard deviation) but also have a lot of fun while doing so.


Sittercity

Sittercity is dedicated to providing the largest and most trusted network of in-home caregivers nationwide as well as invaluable tools and screening options to help everyone in America find the perfect local caregiver for their unique needs quickly, easily and safely. Sittercity began as a service to assist in finding babysitters of which it is now the industry leader with the largest database of caregivers and has now also become a leading venue for finding senior care, home care, pet care, and tutoring as well.
+++++++++++++++++++++++

May again. The last deal, SitterCity, is to a much greater extent than any previous deal they have done NOT a seed or even early stage deal. Ten months after a $7.5MM venture round makes David Weinstein, Kapil Chaudhary and Jason Felger one word: wusses.

In the most famous article in the history of Upside Magazine, "The pussification of Silicon Valley," the argument is advanced that VCs had ceased to be VCs. As one of David Weinstein's friends said to me, and this was really a friend, "David does not have an entrepreneurial bone in his body." At the end of the day, he's a political hack. Whatever happened to a propensity to take calculated risks?

He and the i2A fund are not doing what the fund was formed to do. It's a joke -- enough said.

But it pays to study the websites. There is more. Quantum Learning Technologies. We have all heard of that firm, right?

No, I had not. And why not?

Perchance it is because the firm is in Ann Arbor, Michigan!!!

Tom Churchwell's blood is boiling. He had to go to Kalamazoo and Peoria because that is where the investors insisted he go to get money. But Quantum Learning whose entire management team has Michigan roots stays put. Why are we pussyfooting around in Illinois? Simple. We have little or nothing to offer.

DCEO has money in the i2A fund!!

That, in case it escaped your attention, is an Illinois agency.

Almost every individual or fund invested in i2A has strong Illinois connections: Mesirow Financial, Cardinal Growth Corp., Duchossois Technology Partners, Illinois Institute of Technology, Merrick Ventures, National City Equity Partners and Wexford Science and
Technology.

And of course the individuals involved: Michael Ferro, Jr., Bob Geras (chairman of the advisory committee), James Gray,
Jules Knapp, Larry Levy, J.B. Pritzker (chairman of investment committee)
and Ralph Wanger, all Chicago related people.

Incidentally, Cardinal Growth has Lederer connections since Ed Finnegan was involved and so was Patrick Daley for that matter.

If you are doing thirty deals, maybe one or two out of state might be OK, but if you are doing five deals, that is 20% of your whole portfolio!

Here are the investors in the Quantum Learning deal:
+++++++++++++++++++++
http://www.quantumlearningtechnologies.com/aboutUs/investors.php

Investors

DFJ Mercury (Houston)
www.dfjmercury.com

DFJ Mercury is a seed and early-stage venture capital firm which invests in compelling and novel start-up opportunities in the information technology, advanced materials and bioscience sectors. We partner with extraordinary entrepreneurs to build globally competitive businesses based on opportunities in Texas and targeted regional tech clusters in the Mid- and Southwest. Our team has extensive experience and strong relationships with technology transfer offices, and appreciates hard science with solid intellectual property. Our firm has a particular focus on university spin-outs and incubation, often investing prior to a business plan or full management team being formed. DFJ Mercury is an active partner in the DFJ Global Network of venture capital funds.


RPM Ventures (Ann Arbor)
www.rpmvc.com

RPM Ventures provides capital and guidance to entrepreneurs starting and building innovative technology companies. We start with the basic idea that venture capital is a service business and our entrepreneurs and portfolio companies come first. In this capacity, we provide unique insight and access for our companies to one of the globe's largest IT customer bases. Additionally, we draw from our own experience in starting companies to define products, find first customers and raise future rounds of capital. We have a passion for early-stage companies, as we believe that any company we'd invest in is also a company we'd want to work in.


Illinois Innovation Accelerator Fund (Chicago)
www.i2afund.com

The Illinois Innovation Accelerator Fund (iČA) is an innovative $10 million for-profit early-stage investment fund created in direct response to the decrease in seed-stage investing that's occurred since the turn of the new millennium. The fund's goal is to provide the first external professional capital raised by companies, allowing them to grow and allowing the fund members to capitalize on high-growth opportunities. iČA's formation was driven by J.B. Pritzker, Founder and Partner of New World Ventures, himself an enthusiastic early-stage investor, the Illinois Department of Commerce and Economic Opportunity, and the Chicagoland Entrepreneurial Center (CEC), a nonprofit affiliate of the Chicagoland Chamber of Commerce, to address this growing but detrimental seed-stage "capital gap."
+++++++++++++++++++++

May again. What David Weinstein is doing borders on fraud, or at least gross misrepresentation in my humble opinion. Where is the protection of the taxpayers of Illinois, the entrepreneurs of Illinois, the economic development of Illinois? I am not as financial protectionist -- capital can go where it brings the biggest return, but this fund was set up for ED purposes and that is why local institutions like DCEO are in it. Talk to Tom Parkinson of Hopewell about this. He ran the EBIC in Evanston. Most other states would not do what we do. It is not too much to ask that the i2A find more deals to do in Illinois.


If David can't find five deals worthy of investment in Illinois he has not looked very hard. Again, it is not a traditional VC fund. It is a seed fund for start-ups -- in Illinois!

He is not doing his job and he quite deliberately did not mention the SitterCity deal back in September at the MIT-EF meeting for good reason.

He knows that it makes his i2A fund a sham.

I feel sorry for Kapil Chaudhary since one day he might want to move on from that Mickey Mouse operation and how will he explain his "juvenile delinquency"?

The only deal they have done that is a seed deal is One Llama. And even they have venture funding, albeit from Illinois Ventures but it is described even on the site as seed funding.
++++++++++++++++++
http://company.onellama.com/section/about/

OneLlama Media Inc. (OLMI) is a software technology enterprise based out of the University of Illinois in Champaign, Illinois. Seed funding has been provided by Illinois Ventures and the Illinois Accelerator Fund.
++++++++++++++++++

May again. So, what do we have?

Five deals.

Four are piggybacking on true venture funding. One is not even in the state of Illinois. One deal that we can honestly call seed funding.

Is that what we call change we can believe in?
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END OF REPORT