Meet Speedy Lemur. An unusual name for a unique approach by two Minnesotans innovating the model for early stage tech investments. The brainchild of Peter Zugschwert & Kevin Spreng, Speedy Lemur provides between $10,000 – $500,000 of (royalty based) growth capital for app and software developers, online merchants and other owners of revenue generating assets. How does it work? From the website:
“Speedy Lemur will purchase the right to receive a portion of your royalty or other revenue stream. We will set the purchase price based on your capital needs and current and projected revenue.
The portion of the royalty or revenue that we would be entitled to received would be a fixed multiple of the purchase price (1.5x to 5x) or fixed return (10% to 35% IRR).
We typically would be entitled to receive 15% to 90% of the applicable royalty or revenues starting immediately after the purchase. On occasion we will delay commencement of our participation until the first anniversary of the royalty right purchase. You pay only the agreed upon percentage of revenue. If you have no royalties or revenue there is no payment due.
We want you to maintain ownership, grow your business, and build a successful, long-term enterprises with solid revenue streams. For us this means regular and increasing royalty payments.”
Benefits outlined include:
* Payments depend on the royalty or revenue you receive
* Eliminates ownership dilution
* Ends conflict over valuation
* Provides growth capital with flexible repayment terms
* We won’t push for an exit
* No personal liability
* Reduces capital cost through interest deductibility by up to 40%
Mr. Zugschwert has a rich history in the Private Equity industry, including 14 years CFO experience with early stage ventures in the software, hardware, business process outsourcing, web hosting, wind development, and retail industries. Mr. Spreng, entrepreneur and a business lawyer, is a Partner with Robins, Kaplan, Miller & Ciresi. His 20 years of experience spans hundreds of financing/acquisition transactions and he’s worked as in house counsel to a global venture capital firm.
Doing anything new and different requires an open mind, patience and agility. Not wanting to get ahead of themselves on what is sure to be a learning experience, Speedy Lemur Founder Peter Zugschwert noted:
“We are open for business. A few prospects are identified and want to ensure the first deals go well out of the shoot. We don’t want to claim that we are a some large venture, rather an initiative aimed at exploring possibilities.”
Joy Lindsay is President of StarTec Investments, a private VC firm Co founded with Thomas McLeod in 1998. Joy started her technology career with West Group (sold in 1996; now West, a Thompson Reuters company) as an exective in software, sales and marketing. Unlike most venture firms, StarTec has no Limited Parters, whereas Joy & Tom not only make all the investments decisions but they also draw on personal funds.
Ms. Lindsay is quite active in the local high tech and investor scene: she is a member of the Sofia Angel Fund – a group of 30 women that makes investments in women led/run companies; 2010 Vice Chair of the Minnesota High Tech Association; Vice President & Secretary of the Minnesota Venture Capital Association and also a member of the MOJO/MN initiative.
StarTec saw its first win right out the gate with Xiotech (acquired in 2000 by Seagate Technology); since inception, the duo has made 18 Minnesota investments and seen 1 IPO (Compellent). StarTec currently maintains 8 portfolio companies with a focus on early stage (100-500k) Science & Technology startups. They prefer pedigreed entrepreneurs/referrals from trusted sources, but do consider the blind plans and pitches they receive (1 per day on average). StarTec maintains no public website.
“ST. PAUL, Minnesota– For all of her fierce opposition to angel tax credits, Rep. Ann Lenczewski (D-Bloomington) now has a more pressing issue to focus on: how to pay for them.
Legislative sources say the question has moved beyond passing the bill to financing it. By one estimate, the credit enjoys the support of 100 lawmakers in the 136-member Minnesota House. But like anything else in Minnesota politics, it ain’t over till is over.”
Indigo Identityware (Sig-Tec Corp) has raised $1,275,000 according to a recent SEC filing. The Chanhassen company provides a Secure Identity Management solution with an Integrated Behavioral Single Sign-on (SSO) for Hospitals, Banks, Police Stations, homes and other enterprise environments.
By Alex Polacco
Professor, College of Business, SCSU
St. Cloud State University has developed a Microlending Program to encourage business and economic growth in the local community. The program currently supports new and existing entrepreneurs in St. Cloud, Sartell, Sauk Rapids, Waite Park, and St. Augusta; but will expand its customer base to include a wider area in the future. Serving a segment of the entrepreneurial market that does not qualify for conventional loans, the program provides loans that range from $500 to a maximum of $25,000. The program also provides technical assistance, education, and other resources to applicants. Aspirants can take advantage of the knowledge support provided by: SCORE, a group of retired executives who serve as business consultants; Legal Core, free 30 minutes of legal advice; and SCSU’s centers for Economic Education and Continuing Education.
Arthur Ventures Growth Fund is a “pre series A” fund organized in Fargo, North Dakota. The Fund Managers are pursuing investments in Minnesota and can prove it. They raised an 11 million dollar fund about two years ago and have since made 4 investments with an estimated 5 million remaining “to put to work.” Arthur Ventures makes early stage investments in startup companies from a variety of sectors but are known for their software pursuits with respect to their strengths and experiences. Arthur Ventures is ramping up fundraising efforts for a second fund, aimed between 20-30 million.
Arthur Ventures is the offspring of North Dakota’s biggest software success story – Great Plains Software – which was sold to Microsoft in early 2000 for 1.1 billion. Great story and quality conversation with guests Zach Robins, James Burgum & Tadd Tobkin!
By Eric Kelsey, Twin Cities Business
“In his annual State of the State address, Governor Tim Pawlenty on Thursday urged the Minnesota Legislature to approve an angel investor tax credit.
In his speech, Pawlenty did not provide details about the angel investor tax credit, but he indicated that the tax credit would be one of the six priorities of his proposed “jobs creation” bill.”
By Thomas Lee, Med City News
“ST. PAUL, Minnesota– In a packed State Building Office hearing room Tuesday, witness after witness rose to speak in support of H.F. 2750, a bill that would grant $32 million in tax credits over three years to angel investors who fund risky, high tech start-up companies. Entrepreneurs, investors, university officials, industry groups warned lawmakers that the lack of early stage capital meant innovative start-ups in Minnesota would either die or move to another state.”
Direct Podcast Link
Matt Crowe is an Entrepreneur – first and foremost - a Venture Capitalist second. He’s been building businesses since the age of 16 and he reflects regularly at Matt’s blog – business and philosophy. He’s also a columnist for Real Business Magazine, a blogger for the Star Tribune, published Author and host of an online talk radio show called The Matt Crowe Show.
So, what is a Huckleberry already?
“A problem in need of a solution” says Mr. Crowe, Founder and Chairman of Huckleberry Ventures, an emerging Minneapolis, MN Venture Capital firm.
Huckleberry puts an explicit emphasis on building companies through their “holistic” model compared to that of a more traditional Venture Capitalist approach. The difference? Huckleberry integrates their “brand of ideas” into a methodical process of discovering real problems, pooling (multiple) teams/talent and creating a competitive environment centered around guidance and support…all before injecting the capital. Whereas Entrepreneurs and CEO’s typically pitch investors with their products and plans, Huckleberry aims to (first) go directly to consumers using their own hybrid crowdsourcing technology, ideation engine and diligence tools to uncover what large scale problems markets are facing. Next, they gather results and push out “Huckleberry’s” to the Entrepreneurial community across the country in the form challenges that will culminate in a Minnesota-based competition known as the “Huckleberry Harvest” featuring a prize in the million-dollar range. What’s more, is that Huckleberry will also function as a fund, exclusively focused on consumer products and services. Their target investment is “Post Angel, Pre-VC”, but they “have the means to last into the VC Stage of single digit millions.”
“We’re trying something different and new with leveraging technology,crowdsourcing and an event..this is like the combination of Virgin, the X-Prize, Y-Combinator, Sequoia, Techstars – all combined into one…” – Matt Crowe
This unique platform will be released early this spring at http://whatsyourhuckleberry.com and consumer-side beta testers can sign up here now 
The seed stage, or initial funding round for a startup business, is critical to getting a company off of the ground. Often raised from founders, friends or family, this round lays the foundation which allows an idea to blossom into a product or service.Yet, founders often struggle with structuring the seed round. Questions naturally arise, such as:
* What is the valuation (worth) of my company?
* Should the investment be structured as equity or debt?
* How much of the company should I sell to investors?
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Robins is an associate with Aethlon Capital, a private investment bank. He received his JD from William Mitchell College of Law and his BSBA from The University of Arizona.
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