Yearly Archives: 2016

Southeastern and Texas cities are doing particularly well among the country’s 200 largest metro areas, according to the Milken Institute

Congratulations to Tampa, Orlando and Jacksonville as a few of the Florida metro areas with the strongest gains in their rankings!

Competing metros: Tampa Bay rebounds to best performance in decade in Milken Institute rankings

Posted December 16th, 2016 by Tampa Bay times

Here’s a feel-good column to unwrap this holiday season that will reveal the Tampa Bay metro area is rebounding as one of the better performing, larger metro areas in the United States.

That’s great news after a decade of rough times in the bay area economy, hitting a low ranking among the nation’s top 200 metros at No. 169 in 2009. That’s when the recession cut deepest in Tampa Bay and Florida, and the housing market bust was most intense.

So here’s the best gift, courtesy of the Milken Institute’s just released 2016 annual survey of the best performers among the country’s 200 largest metro areas.

Tampa Bay ranks No. 33, up 25 spots from No. 58 in 2015 and up a whopping 136 metro spots from seven years ago when this market pretty much hit bottom at No. 169.

That bears repeating. The Tampa-St. Petersburg-Clearwater metro area leapfrogged 25 (from 58 to 33) metro areas in one year and 136 of the nation’s 200 top metro areas since a low in 2009.

Looks like all the talk of “swagger” by Tampa Mayor Bob Buckhorn isn’t just political hype after all.

Why do we care if we are 33rd this year? Because the trajectory has been up seven years straight. These are not static changes. Every one of those 200 metro areas is striving to do better, to out-compete its peers.

Rising so quickly as Tampa Bay has is testament to the improved Florida economy but also points to the local efforts at economic gains achieved over time.

Tampa Bay’s ranking this year is the highest it has been since 2005, when this metro market ranked 25th by Milken in that year’s metro survey.

That’s an impressive comeback, one that underpins the growing confidence in this metro area’s broader business community. Unemployment is down. Tourism remains strong. A construction boom is under way from the downtowns of St. Petersburg and Tampa to southern Hillsborough north to Wesley Chapel.

And new companies with major league names like Johnson & Johnson and Citigroup are expanding here while up-and-coming area firms from CareSync and BlueGrace Logistics are winning strong investment backing and aggressively adding jobs.

And on Jan. 9, this market gets to kick off the new year by basking in the public spotlight as host of the third annual College Football Playoff National Championship at Raymond James Stadium in Tampa.

But enough with the self-congratulatory back slapping. There’s more to learn from the Milken Institute survey, which has been analyzing metro performances since 1999.

The survey’s “Best-Performing Cities: Where America’s Jobs Are Created and Sustained” index uses a comprehensive set of data to rank both 200 large and 201 smaller metros across the United States. Measures like growth in employment, wages and technology output are heavily weighted. Milken chooses not to include cost-of-living and quality-of-life conditions (which arguably would only improve Tampa Bay’s status).

Here are a few key takeaways from the overall survey.

  • At No. 1, San Jose/Silicon Valley repeated as the top metro area among 200 large metros, both as the nation’s innovation capital but also for its top rating for wage growth.
  • Top metro performers were strikingly stable compared with 2015. The top six large metros in the 2016 rankings were the same as last year, though there were a few ranking shifts among those six. In all, 19 of last year’s top 25 metros made the cut in 2016.
  • Milken researchers said the top-performing metros have “cohesive strategies” that distinguish them from others and offer lessons that may be adaptable for other localities. Here’s one lesson for Tampa Bay: All the top ranked metro areas have major tech sector clusters and high rates of entrepreneurship. This market is working to raise its tech sector, and the still-young startup community here is gaining ground. Consider this a strong reminder to keep the focus, energy and resources on these core Tampa Bay sectors.
  • While Tampa Bay’s comeback in the rankings is impressive, another Central Florida metro also deserves attention. The Orlando metro area ranked 9th in the nationwide large metro rankings, soaring from 28th last year and making it the only Florida metro area to crack the top 10 in 2016. The principal driver: job growth. The smaller Orlando metro market routinely outpaced job expansions reported in larger metro markets of Florida.

Let me suggest another factor in Orlando’s success not captured in the Milken survey. That metro area’s economic development organizations are regionally streamlined to speak with one voice. They are also efficient and communicate to each other so they rarely duplicate efforts or compete against one another. Tampa Bay, by contrast, still struggles to operate as a single market, though there are signs of improving cooperation.

  • While Orlando, Tampa Bay, Fort Lauderdale and Fort Myers metro areas saw strong gains in their Milken rankings, Florida cities like Tallahassee, Pensacola, Ocala and Lakeland saw their rankings drop.
  • In the related Milken rankings of 201 smaller metro areas across the United States, the Villages ranked tops in Florida at 13th, though it fell from 6th in the 2015 survey. Bringing up the rear: In Citrus County, the Homosassa Springs metro area ranked 170th, improving from 187th last year. The area’s economy, which encompasses Crystal River, was hurt by the premature closing of the Duke Energy nuclear power plant there. A replacement natural gas plant now in the works should help a slow rebound.

A final footnote: Among the top 10 large metros ranked by Milken are two Southeast markets (other than Orlando at No. 9). Raleigh, N.C., a perennial hot spot for higher wage jobs and a better educated workforce, ranked 6th this year, as it did in 2015. The other metro on the upswing is Nashville, which landed at 7th from 18th in 2015.

St. Petersburg economic leaders toured Raleigh earlier this fall to learn some of its best practices. Tampa business leaders took a benchmarking trip to Nashville in 2013.

These kinds of trips can only contribute to a better performing Tampa Bay market.

 

TissueTech’s Umbilical Cord Technology Shows Promise in Spina Bifida Patients

New Hope for Spina Bifida’s Youngest Patients

Posted November 1st, 2016 by TMC

Seven years ago, Lovepreet K. Mann was standing at a crosswalk in Salt Lake City with her husband and colleague, Dr. Ramesha Papanna. They had been testing an underwater glue for fetal surgery, and a thought suddenly occurred to her. There, on the street in Utah, the couple began a discussion that would ultimately lead to a patch made from human umbilical cord. Today, it is being used to help repair spina bifida in babies before they’re even born.

A “super C-section”

Spina bifida is a birth defect characterized by an incomplete closing of the bones and membranes surrounding the spinal cord. In most cases, tissues and nerves are exposed in an opening along several vertebrae in the baby’s back, making him or her highly susceptible to life-threatening infections and sometimes triggering complete paralysis of the legs as well as bladder incontinence and a range of cognitive difficulties. The condition is typically detected in a pregnant woman’s 20-week anatomy scan, during which time the ultrasound tech identifies either a lemon-shaped head or a “banana sign,” both caused by pulls in the cranial area from the spinal malformation.

For decades, the standard treatment has included postnatal surgery, but sentiments shifted after the groundbreaking NIH-funded MOMS Trial (Management of Myelomeningocele Study) initiated in 2003, in which standard repair results were benchmarked against more than 90 fetal repair cases. The results spoke volumes. Babies who underwent fetal repair were much less likely to need a ventricular shunt for hydrocephalus. Furthermore, twice as many children from the fetal surgery group were able to walk without crutches at 30 months of age, compared to those who received the surgery after birth.

Not all patients qualify for the highly specialized, extremely complex procedure, which involves either pulling the skin together or stitching a patch directly onto the spina bifida site of the fetus while it is still in the mother’s womb. Likened to a “super C-section,” the intricate series of surgical steps (making an incision in the mother, protecting the placenta, opening up the amniotic sac, preserving the fluid, performing the repair through a tiny three-inch by four-inch window in the uterus, replacing the fluid, closing the uterus and then the mother layer by layer) is also not without risk. Most babies who undergo fetal surgery will be born prematurely. There is potential for post-surgical complications and infections. There is the risk of death. And, until Mann, a research instructor in the Department of Obstetrics, Gynecology and Reproductive Sciences at McGovern Medical School, thought of using the regenerative material she and Papanna had been studying to patch the site, there was the likely possibility of scar tissue formation, which meant further injury to the spinal cord as the child grew and developed.

Originally, Papanna, the principal investigator and an assistant professor in the Department of Obstetrics, Gynecology and Reproductive Sciences at McGovern Medical School at The University of Texas Health Science Center at Houston and a maternal-fetal medicine specialist at The Fetal Center at Children’s Memorial Hermann Hospital, was interested in using amniotic membrane from the placenta to seal fetal membranes—the layers of the amniotic sac—after surgeries in utero. He and Mann flew to Miami to meet with expert ophthalmologist Scheffer C.G. Tseng, M.D., Ph.D., who was using a human amniotic membrane patch to repair corneas. After spending a week in his center, the two were even more impressed at its regenerative properties.

What makes the material so “magical,” as Papanna puts it, is a compound called heavy chain hyaluronic acid/pentraxin3, which initiates natural regeneration of the tissues at the repair site, rather than healing by scar formation. The distinction is important in spina bifida repair since one creates a healthy, biologically compatible environment while the other often leads to scarring of the spinal cord to the repair site. This can lead to loss of bladder and motor function later in life. If scarring occurs, further surgeries are required to remove the scar tissue and protect the spine.

“The molecule is the same one that is present around the egg of every woman who ovulates every month, in the lining of the womb and the placenta. This is essential to maintain normal reproductive function,” Papanna said. “Nature has created a solution, and we have harnessed it to our benefit.”

But this wasn’t the fairytale ending Papanna and Mann had hoped for. Despite its phenomenal healing properties, the amniotic membrane patch was paper-thin and flimsy, making it difficult to work with.

“If the site gets infected, the baby dies,” explained Kenneth Moise, M.D., director of the Fetal Intervention Fellowship Program at McGovern Medical School and co-director of The Fetal Center at Children’s Memorial Hermann Hospital. “It’s covering the spinal cord, so it has to be a watertight seal—CSF [cerebrospinal fluid] can’t leak out and infections can’t come in.”

Unfortunately, every time Papanna practiced his stitches on the delicate material, it tore. So he looked to the umbilical cord, which contains the same “magical” molecules as the amniotic membrane, but is thicker and far more pliable.

“It was so obvious,” Papanna said. “The umbilical cord has the same regenerative properties.”

Success stories

Mann and Papanna contacted Tseng, who created a new patch and sent it back to them for testing. After suturing multiple chicken breasts and injecting blue dye as a proxy for cerebral spinal fluid, Papanna and Mann were satisfied that it could provide the watertight seal necessary for spina bifida repair. Papanna’s lab studied its performance in animal models and he was granted approval from the FDA for clinical use in three cases. He and a team of surgeons including Moise, Kuojen Tsao, M.D., co-director of the Fetal Center at Children’s Memorial Hermann Hospital and an associate professor at McGovern Medical School’s Department of Pediatric Surgery, and pediatric neurosurgeon Stephen Fletcher, D.O., an associate professor in McGovern Medical School’s Department of Pediatric Surgery, performed the first surgery in July 2015. A second case was performed a few months later, and the results of the two surgeries were published in Obstetrics and Gynecology in July of this year.

So far, they have been success stories. In both cases, the surgeries went well and the babies were born at 37 and a half weeks, just three weeks shy of full term. At birth, the patch was still in place and there were no signs of leakage or fluid inside. Moreover, both babies retained lower limb function as well as normal bowel movements. The one peculiarity was that, at birth, the site had not yet regenerated—it was semi-translucent, and when Papanna tapped the baby’s head, he could see the cerebrospinal fluid underneath the patch. Within a few weeks, however, the skin grew into the patch exactly as expected.

“Every day you could watch the blood vessels and the tissues grow closer together,” Papanna said. “It was incredible.”

A third case was completed and as the months pass, all three babies continue to exhibit normal leg movement and bladder control and no need for further repair. The true test will come with time, but already the patch is showing promise as the next big advancement in fetal surgery: whereas the MOMS Trial demonstrated that fetal surgery could vastly improve outcomes in mobility and neurological development, this patch could take the procedure a step further, resulting in an even more improved outcome for children with spina bifida. Perhaps, in the future, there will be no more need for surgical revisions, no additional repairs, few if any symptoms. An entirely normal childhood.

“People are trying stem cells and different ‘off the shelf’ patches, but this patch is doing more than any of the others,” Mann said. “It’s helping with regeneration of existing skin. It’s creating organized growth of tissues, and the body doesn’t reject it. Even more, its source is abundant since the umbilical cord from every pregnancy could produce a new patch.”

“Where are all the other babies?”

Currently, Papanna and his team are pursuing additional clinical studies and working to expand their approval from the FDA for more cases. They hope to apply the patch using fetoscopic repair techniques, which would reduce surgical risks to both the mother and the baby. Ultimately, they also aim to create a standard of care for babies diagnosed with spina bifida.

“Right now, the techniques being used to close the spina bifida are all over the map, and the outcomes vary considerably,” said Moise, who recently returned from Botswana where the International Fetal Medicine and Surgery Society convened for their annual conference.

“Nobody has a standard way of treating this, but we all agree that whatever patches or fetoscopic approach we use, the outcomes should be judged against the MOMS Trial. We all want to develop something better than what we’re already doing.”

Moise expects that a standard of care, as well as increasingly positive outcomes, will also encourage OBGYNs to refer more of their patients to fetal centers for counseling.

“We should be three times busier than we are,” Moise said. “There are over 200 babies born in Texas every year with spina bifida. Two hundred. And we might do eight or 10 cases a year. Where are all the other babies?”

Even more, he hopes standardizing treatment will change the climate surrounding fetal repair surgery worldwide. Currently, there are only a handful of sites outside the U.S. that do fetal surgical repairs. According to Moise, many countries, including most of Western Europe, consider a spina bifida diagnosis the equivalent of an unviable pregnancy.

“They think we’re crazy to do what we do,” Moise said.

The endurance test that is entrepreneurialism

21-karl-meltzer-lede-w710-h473We were immensely impressed reading about ultra-marathon runner Karl Meltzer’s hiking of the entire Appalachian Trail recently. Meltzer averaged an insane 47 miles of hiking a day for 45 consecutive days to accomplish this record. While we are no endurance athletes ourselves, we thought that Meltzer’s feat held some relevance for the endurance test that is entrepreneurialism, so we dug a little deeper to find out how he went about accomplishing this incredible feat.

As is detailed in the New York Magazine article linked above, Meltzer used some of the following tenets to guide his efforts in hiking the Appalachian Trail. We’ve added some thoughts below on several of the principles as we believe each applies to building a growth company.

Pace yourself

For Meltzer, this concept meant not going out too fast too early when he felt great at the beginning of his hike. For an entrepreneur, we believe “pacing oneself” is very sound advice in building a great company. The business media loves to glorify once-in-a-lifetime, strike-it-rich successes like WhatsApp’s sale to Facebook, before real businesses have been built and products monetized. From our experience, we know that such successes do happen in each market upswing, but these are very rare; a more likely path to success comes from disciplined adherence to sound business principles over many years. For an entrepreneur, building a company can feel a bit like Sisyphus pushing the rock up a hill, but one customer will lead to another customer, and on and on it will go. Along the way, it is important to celebrate the successes as they come but not get too frustrated if they don’t come all at once.

Beat and broken down? Focus on what you can control

For Meltzer, he had an injury mid-hike, and he knew that an injured shin could be potentially disastrous for his attempt to break the record in hiking the Appalachian Trail. Much to Metzer’s credit, he had the mental discipline and energy to focus on those small steps which were right in front of him, and this focus allowed him to overcome the adversity. For an entrepreneur, this tenet is a great analog to focusing on what one can control along the growth company path. Along the journey, large customers may promise that they are going to buy and then go silent; investors may seem interested but then get cold feet; board members may give contradictory advice. It is critical that an entrepreneur focus on what he or she can control within his or her own company, building the team along the way with people who are trustworthy, smart, and driven. Success is more likely to come from a thousand prudent decisions along the way, not one dramatic thunderbolt as portrayed in the movies.

Practice gratitude

We have to admit that this may have been our favorite of Metzer’s tenets. As minority growth investors, we have to live by this credo, as we are not in control of the companies where we invest and most of the success in our portfolio comes from the hard work of the team on the ground. We are passionate about entrepreneurs and know how hard it is to build a great growth company, so we always try to thank our portfolio companies for their hard work whenever we can. In much the same way, an entrepreneur is only as strong as the team that she builds around her, so investing in a culture where expressing gratitude is the norm makes so much sense to us. People work harder when acknowledged for their contributions, and it takes a team to build something truly special.

Focus on the process

Metzer knew that he couldn’t do the whole hike in one fell swoop, so he broke the hike down into its component pieces which made the daunting task seem more manageable. Similarly, we often counsel our entrepreneurs to build sustainable processes into their companies so that they and their employees can replicate tasks easily and are not as exposed to human error when building a company. By giving employees clearly defined processes which allow them to focus on what’s really important, an entrepreneur greatly increases the chances that his company will be successful. It is easy to look at the totality of what needs to happen to scale a business and become overwhelmed; by breaking the greater task into its component parts and then putting a process around each, an entrepreneur has a much greater likelihood of success.

Embrace struggle

It turns out that hiking the Appalachian Trail faster than anyone else ever has is really hard! Metzer knew that it would be difficult, but he embraced the struggle and accomplished something remarkable. We don’t know any other way to say it, so we’ll just be blunt – building a successful growth company is really hard! However, the rewards, both monetary and intrinsic, can be well worth the struggle, but an entrepreneur must enjoy the journey along the way and recognize that it will be very hard, with many peaks and valleys. A successful exit will likely be monetarily life-changing for many of the employees at a successful growth company, but we have found that most entrepreneurs look back at the journey and struggle of building a team, getting a product to market, winning (or losing) a customer as the fondest memories of their entrepreneurial journey. Enjoy the struggle – it will go by fast and you’ll create a lifetime of memories with great people along the way if you laugh at yourself during the tough times and then celebrate the successes along the way.

And drink coffee

This was our favorite of Metzer’s tenets!  And the only one we can say with confidence we have fully mastered.

The NVCA’s letter to the President-elect

The National Venture Capital Association (NVCA) has sent a letter to President-elect Donald Trump outlining how the entrepreneurial ecosystem is the key to creating new jobs and economic opportunity for Americans who feel left behind by the modern economy.

startup_trendsThe letter outlines an agenda crucial for supporting entrepreneurship and building a strong economy in all areas of the country, including: a tax policy that encourages new company formation; making capital markets work for small-cap companies; encouraging talented immigrants to build or work at American startups; making life-saving medical innovation a reality; increasing basic research investment; and other key policies that would bolster the entrepreneurial ecosystem and foster new company creation.

The NVCA’s letter opens with a brief paean to entrepreneurship:

Entrepreneurship is the key to expanded economic opportunity in the United States.  From FedEx to Genentech, entrepreneurs have fueled growth and expanded opportunity across the American economy.  America’s venture capitalists have been hard at work supporting these startups with tremendous growth potential in areas like personalized medicine, next-generation computing, 3D printing, and synthetic biology.

Young companies, many of them venture-backed, create an average of 3 million new jobs a year and have been responsible for almost all net new job creation in the United States in the last forty years.  In addition, venture capital has backed nearly half of all companies that have gone public since 1974, which have collectively been responsible for 85 percent of R&D investment during this period.  In short, while a small industry by relative standards, venture capital is mighty in its outsized role in supporting economic activity and creating growth and economic opportunity.

27,000 U.S. venture-backed startups have received $290 billion in funding—and 11,000 of those received funding for the first time—since 2012.  To put this into perspective, that calculates to about $170 million invested into 15 startups each day.  An underappreciated truth is that startup activity has proliferated in the middle of the country in recent years.  Since 2012, nearly half of all startups receiving venture capital backing have been based outside of California, Massachusetts and New York.  Specifically, about 12,900 venture-backed companies in the other 47 states have raised $83 billion in funding since 2012.  What’s more, the collective annual growth rate of companies receiving funding in these states (10.1%) has exceeded that of the top three states.

We highlight/excerpt three of their recommendations below, but we also encourage all our readers to check out the NVCA’s letter in its entirety.  (We also provide a few links to some of the relevant Greatest Hits here at Navigating Venture.)

1. Support tax policy that encourages new company formation.  Since the Reagan Administration, our tax code has been relatively effective at encouraging patient, long-term investment, but on net has been hostile to entrepreneurial companies.  For example, punitive loss limitation rules punish startups for hiring or investing in innovation, while benefits such as the R&D credit are inaccessible to startups.  Unfortunately, tax reform conversations in Washington have ignored these challenges while at the same time proposing to raise taxes on long-term startup investment to pay for unrelated priorities.For instance, carried interest has been an important feature of the tax code that has properly aligned the interests of entrepreneurs and venture investors since the creation of the modern venture capital industry.  Increasing the tax rate on carried interest capital gains will have an outsized impact on entrepreneurship due to the venture industry’s longer holding periods, higher risk, smaller size, and less reliance on fees for compensation.  These factors will magnify the negative impact of the tax increase for venture capital fund formation outside of the traditional venture regions on the coasts.

2. Reform the regulatory state to bolster startup activity.  When Washington piles on new regulations it is startups who are most adversely affected because these young, high-growth companies do not have the resources to navigate the regulatory state like large companies.  At the same time, government red tape is inhibiting government entities from tapping into venture-backed innovation in fields such as cybersecurity due to challenges with the government acquisition process.

3. Make life-saving medical innovation a reality.  The future has never been brighter in terms of scientific and health care discoveries that are on the horizon.  Venture capital is investing in revolutionary medical innovation and groundbreaking treatments and cures that are aimed at diagnosing, treating, and curing the deadliest and costly diseases.

Unfortunately, medical innovation is at risk unless policymakers adopt modern approaches to development, regulation, and reimbursement for medicine and medical devices.  Progress has been made to streamline the regulatory approval process at the Food and Drug Administration, particularly for novel technologies, but more improvements are needed.  In addition, we need to establish pro-innovation approaches to reimbursement at the Centers for Medicare and Medicaid.

Thanksgiving: the forgotten entrepreneurial tale

Every child in America learns of the hardships endured by the Pilgrims as they established Plymouth Colony.  Some lucky ones even learn how the Pilgrims found salvation via private property, division of labor, and capitalism.  The luckiest ones of all learn about capital preservation when a venture capital investment fails.

mayflower-and-shallop

Mayflower with shallop – William Halsall, 1882

When a group of Puritans known as “Separatists” fled England they first settled in the Netherlands, where they took menial jobs and over time grew to miss their native culture.  They lacked the resources for a passage to North America, so they sent two entrepreneurs from their congregation to London to seek financial backing – a successful merchant named John Carver and Robert Cushman, a “wool comber of some means.”  While those two were in London, an ironmonger (a dealer in metal utensils, hardware, locks, etc.) from that city named Thomas Weston was visiting one of Carver’s in-laws in the Netherlands and learned of the Pilgrims’ need for funds.

Whether we call that serendipity or opportunistic networking, it resulted in Weston putting together an investor group to back the voyage.  Weston and his London Merchant Adventurers put up 7000 pounds and also recruited experts to assist with the enterprise:  roughly 50 additional settlers with the vocational skills to help build a colony in the new world.  These “non-Separatists” crammed aboard the Mayflower with the Separatists and together became known as the Pilgrims.

What happened to that £7000 investment, you ask?  Here is the story as told at encyclopedia.com

Weston and his fellow investors were dismayed when the Mayflower returned to England in April 1621 without cargo. The malnourished Pilgrims had been subjected to “the Great Sickness” after the arrival at Plymouth, and the survivors had had little time for anything other than burying their dead and ensuring their own survival. Weston sold his London Merchant Adventurer shares in December, although he did send a ship, the Sparrow, in 1622 as his own private business venture.

The Pilgrims attempted to make their first payment by loading the Fortune, which had brought 35 additional settlers in November 1621, with beaver and otter skins and timber estimated to be worth 500 pounds. The ship was captured by French privateers and stripped of its cargo, leaving investors empty-handed again.

A second attempt, in 1624 or 1625, to ship goods to England failed when the Little James got caught in a gale in the English Channel and was seized by Barbary Coast pirates. Again the London Adventurers received nothing for their investment. Relations, always tempestuous between the colonists and their backers, faltered.

Facing a huge debt, the Pilgrims dispatched Isaac Allerton to England in 1626 to negotiate a settlement. The Adventurers, deciding their investment might never pay off, sold their shares to the Pilgrims for 1,800 pounds. Captain Smith, of the failed Jamestown venture, felt the London Merchant Adventurers had settled favorably, pointing out that the Virginia Company had invested 200,000 pounds in Jamestown and never received a shilling for their investment.

By our back-of-the-envelope calculation, the investors got back 26% of their invested capital.  If only they’d kept their long-term perspective…

On a more serious note, that outcome fits into the first category of entrepreneurial failure listed in Fail the Right Way and reflects well on those involved:

  • Liquidate all assets, investors lose most/all money: 30-40%
  • Not realizing the projected return:  70-80%
  • Falling short of initial projections: 90-95%

With “failure” this common, he urges executives to distinguish between business failure and personal failure.  It’s vital to not let the former, which can be a valuable learning experience, pressure you into the latter, which can become a career-damning ethical lapse:

Although the original backers did not get the return for which they’d hoped, the endeavor ultimately succeeded thanks to the intrepid settlers who displayed many of the noble traits found in entrepreneurs:  flexibility (they had to settle further north than intended), persistence (through brutal hardships), the value of good partners (Squanto and the Wampanoag tribe), and the courage and optimism necessary to accomplish the impossible and stupid.

All great and honorable actions are accompanied with great difficulties, and both must be enterprised and overcome with answerable courage.

– William Bradford, 2nd, 5th, 7th, 9th & 11th Governor of Plymouth Colony

Our business – like every business – has its ups and down, but we have much to be thankful for.  Much.   So we’d like to take this opportunity, here at NVSE, to give thanks for the trust and patience of our Limited Partners, the initiative and dedication of our entrepreneurs, the support provided to them by the many friends in our network, and the nation that offers the freedom to pursue happiness.  We love our work, have been blessed with terrific successes and honorable failures, and get to do it all with great people in beautiful weather.   God Bless you and your families – we hope you have a wonderful Thanksgiving.

Birmingham tech firm scores $5M investment

Posted November 14th, 2016 by Birmingham Business Journal

A Birmingham company is poised to capitalize on nearly two decades of steady growth and innovation in financial technology, thanks to a $5 million venture capital investment from Florida-based Ballast Point Ventures.

Prepaid Technologies in October announced the investment, just months after it teamed up with Visa to provide wearable tech payment rings at the summer Olympics.

Though Prepaid believes wearable tech is an industry worth exploring – the company is working on another project with MasterCard and U.S. Youth Soccer – the company’s bread-and-butter remains in electronic payments options like payroll cards, prefunded purchasing cards and incentive programs. The company was founded in 1998 by Thomas McCulley.

“The old-fashioned check processing methods cost businesses a lot of money and a lot of time,” Prepaid President Stephen Faust said. “We’re seeing a huge expansion in corporate purchasing card. These products can be implemented for businesses for very little costs, very quickly. They make a difference to businesses’ bottom line.”

BPV’s investment will allow Prepaid to strengthen their IT capacity, Faust said, streamlining and automating internal process flows to allow staff to work more on client satisfaction and developing product. Prepaid will also add staff and develop their marketing arm.

Faust said the company has benefited from hiring account managers with higher education levels, in addition to banking and finance experience.

“Being able to recruit locally and find talented people to help us move the needle is really exciting,” Faust said.

Faust joined the company in 2008 and began building out their suite of services and technology. The company was expanding around 20 percent annually, Faust said, when McCulley handed over the reins to Faust, who happens to be his son-in-law. Though McCulley remains involved on a daily basis, Faust said he saw potential to grow the business to the next level.

“70 percent of the businesses in the U.S. are still processing payroll checks,” Faust said. “So the opportunity of finding efficiencies there and moving those folks to electronic pay at no cost is a huge opportunity for us.”

Prepaid began to attract venture capital attention, but Faust said he and McCulley felt that nothing seemed like the right fit until they were contacted by Ballast Point. BPV brought “smart capital” to the table, Faust said, because they’d previously invested in a similar company and knew how to take the business to the next level.

“Tommy and I knew it was a no-brainer,” Faust said. “They’re great partners, and we still have control over company to direct it how we see fit. But having that horsepower behind us, with the smart money, made the timing made sense.”

Their Prepaid investment isn’t BPV first venture into Birmingham: the firm recently invested another $5 million into ticketing software company TicketBiscuit.

“We were very impressed with what Tommy and Stephen have achieved to date with no outside capital, and we look forward to working with the entire Prepaid Technologies team as they continue to grow and develop innovative payment solutions for the payroll, loyalty and rewards needs of their clients and partners,” Paul Johan, Ballast Point Ventures partner, said in a release. “Payments and financial technology are areas that are very interesting to BPV given our previous investments in the sector, so we are excited to partner with the talented team at Prepaid Technologies to build a leading payments technology platform in Birmingham. This is a great fit for us given our focus on partnering with rapidly growing private companies with great management teams headquartered in the Southeastern United States and Texas.”

Florida Cities Conquer World’s Best City List

Congratulations to Tampa, Orlando and Miami on making the list of the top 100 World’s Best City Brands!  It’s no surprise to us, but it’s nice to see others recognizing great Florida cities!

Why Tampa was named a World’s Best City brand

Posted November 8th, 2016 by Tampa Bay Business Journal

Tampa has made it onto the list of 100 of the World’s Best City Brands, taking the No. 81 spot.

As one of three Florida cities in Resonance Consultancy’s 2017 World’s Best City Brands report, Tampa faced stiff competition from major, cosmopolitan locations across the globe. Resonance compared principal cities that are defined as the largest city in each urban area with metropolitan populations of 2 million and capital cities with a population of 1 million or more.

Miami ranked No. 31 while Orlando was No. 45 on the list.

“Increasingly, reputation, identity and the perceived quality of place determine where talent, capital and tourism flow,” Resonance said in its report.

The top 10 cities on the list are:

1. London
2. Singapore
3. New York
4. Paris
5. Sydney
6. Amsterdam
7. Los Angeles
8. Tokyo
9. San Francisco
10. Toronto

To measure the perceived appeal of a city in which to live, invest or visit, Resonance based its evaluation on six criteria: place, product, programming, people, prosperity and promotion.

In the place category, Tampa ranked No. 59. In this category, Resonance scrutinized the average air quality index; the average number of sunny days; the homicide rate; the number of excellent neighborhoods and landmarks recommended by locals and visitors; and the number of excellent parks and outdoor activities recommended by locals and visitors.

In the product category, Tampa didn’t fare as well. Resonance examined the ranking of the top local university; the number of direct destinations served by the airport; the size of convention center; the number of very good or excellent attractions and amusements recommended by locals and visitors; and the number of very good or excellent museums and fine arts institutions recommended by locals and visitors. Despite Tampa International Airport’s high scores on other travel lists as well as the number of new nonstop foreign destinations it is providing this year and next, Tampa ranked No. 93 on the list of 100.

In the programming category, Resonance compared the number of very good and excellent shopping, nightlife, restaurants and cultural and performing arts experiences recommended by locals and visitors. Tampa ranked near the bottom of the list in this category, coming in at No. 98.

Under the people category, Resonance measured the percentage of the population that is foreign born. The company’s rationale was this: “The more diverse a city’s population, the more it produces global ideas … on a local scale.” Here, Miami ranked high, taking the No. 4 slot. Orlando was No. 50 in this category while Tampa was No. 56.

Under the prosperity category, Resonance evaluated a city’s unemployment rate, its GDP per capita and number of Global 500 corporate headquarters. Here, Tampa was ranked No. 59.

Finally, in the promotion category, Resonance looked at “city’s ability to tell its story” and examined the amount and frequency of media coverage, online articles, references and place-based recommendations that influence the perception of a city on a daily basis. Resonance looked at Google references to the city and TripAdvisor reviews. Tampa was No. 90 on the list despite aggressive marketing campaigns to out-of-state and overseas locations by Visit Tampa Bay and Visit St. Pete-Clearwater.

Resonance collected the data during the third quarter of 2016.

TicketBiscuit Looks Towards Its Next Phase of Growth

What’s next for TicketBiscuit after its $5M funding win?

Posted October 20th, 2016 by Birmingham Business Journal

Birmingham software company TicketBiscuit is looking to a new phase of growth, thanks to a $5 million investment from a Tampa-based venture capital and growth equity firm.

Ballast Point Ventures recently confirmed its investment in the Birmingham ticketing software company, which TicketBiscuit CEO Jeff Gale called an “endorsement.”

“Investors are smart, especially institutional investors like Ballast Point Ventures,” Gale said. “They don’t invest in companies that won’t be good stewards of their money. I take it as an honor to receive that money and go out to put it to good use.”

The deal comes on the heels of funding wins for several other Birmingham companies, a trend local business leaders hope will create a snowball effect and lead to more investor money flowing into the Magic City.

Founded 15 years ago, TicketBiscuit has recorded steady growth and often ranked as one of Birmingham’s fastest growing companies. The company processes more than $100 million in ticket sales annually for customers like music venues, festivals and event centers.

Largely bootstrapped since its inception, TicketBiscuit needed the backing of a good capital partner to push it to the next level.

Echoing a familiar refrain of Birmingham tech experts and executives like Innovation Depot’s Devon Laney and health care startup Pack Health’s Will Wright, Gale said Birmingham companies like TicketBiscuit are hungry for outside capital access like BPV’s investment.

“We’ve got a really great, budding technology ecosystem here,” Gale said. “For the longest time, it’s been about health care and biotech, thanks to UAB and similar companies, but now we’ve got a true high-tech startup community in Birmingham.”

Tech investment appears to be gaining momentum in Birmingham: Shipt recently raised $20.5 million and GI Partners purchased a majority stake in Daxko.

Ballast Point Ventures recently invested another $5 million in Prepaid Technologies, a Birmingham company with major partners like Visa and MasterCard exploring the emerging wearable tech market.

“I’m really proud to have TicketBiscuit following in the footsteps of Shipt and similar companies in Birmingham to help grow this startup community and outside capital,” Gale said. “My hope is that it will get the attention of inside capital.”

TicketBiscuit’s $5 million investment will fund sales force expansion, marketing efforts and new tech development while the company continues to grow its StateChamps app. The company last year rolled out the software suite targeted for high school and amateur athletics.

TicketBiscuit is eyeing a massive opportunity in this market: Gale says high schools represent the largest ticketing market in the country, with some 500 million tickets sold each year.

“By and large, those tickets are paid for in cash, bought by people standing in line 10 minutes before the event,” Gale said.

Gale said high school and amateur athletics continue to use “old school” ticketing because existing modern technology can be too cumbersome and expensive.

Electronic ticketing solutions like Ticketmaster, where you print out your ticket at home and have a bar code scanned at the venue by a door attendant, require back-end support in addition to technology like scanners and employee training.

“It’s difficult to let everyone print their tickets at home if they don’t have this technology at the gate,” Gale said. “Scanners are expensive, flaky, require training and a robust internet connection – high schools don’t have these things.”

TicketBiscuit hopes to disrupt this market with Share and Tear, new technology that puts digital tickets on consumers’ phones. The tickets are authenticated through the StateChamps app: Gate attendants don’t have to validate the ticket any further than “tearing” it in the app with a swipe of the finger. People can also purchase tickets in bulk and distribute them digitally to their kids; no more wrangling families to hand out individual tickets at the gate.

Several hundred schools are currently using the technology across the country, in addition to eight state high school athletics association.

Gale said tens of thousands of people have downloaded the app for use, and TicketBiscuit only plans to grow from here.

“It’s 2016, and it boggles my mind that the largest ticketing market in the country still operates that way,” Gale said. “It’s our mission to change that with StateChamps.”

BPV Invests in Birmingham-based TicketBiscuit

Birmingham tech company lands $5M investment

Posted October 17th, 2016 by Birmingham Business Journal

One of Birmingham’s fastest growing companies has landed a $5 million investment from Ballast Point Ventures.

TicketBiscuit, an online ticketing and event management software company, announced the investment Monday. The company plans to use the funds to “grow its sales force, bolster marketing efforts and develop additional technology products.”

“This investment opens up serious growth opportunities for us,” CEO Jeff Gale said in a release. “Our team has worked relentlessly to build and support cutting edge technology and provide the best ticketing experiences on the planet. With this funding, we will be able to double down on our investments in talented people and bold strategies.

Founded by Gale in 2001, TicketBiscuit company processes more than $100 million in ticket sales annually for customers like music venues, festivals and event centers. In 2015, TicketBiscuit launched StateChamps, a software suite targeted for high school and amateur athletics.

Ballast Point Ventures, a Tampa-based venture capital and growth equity firm, previously invested in Birmingham-based Prepaid Technologies.

Ballast’s Robert Faber will join TicketBiscuit’s board of directors. Faber also serves as board observer at Prepaid Technologies.

“TicketBiscuit’s industry-leading position in online ticketing is a testament to the vision and platform developed by a great team over several years,” Faber said in a release. “Under Jeff Gale’s leadership, the TicketBiscuit team has had great success to date, and this investment dovetails well with our strategy of partnering with talented entrepreneurs who are building high-growth companies across the Southeast and Texas. We are excited to partner with Jeff and his passionate team at TicketBiscuit to continue building a leading technology company in Birmingham. TicketBiscuit represents our second investment in Birmingham in 2016, and we are excited to continue building our network in this market where a vibrant ecosystem of technology and health care companies has developed.”

TicketBiscuit employees around 50 people in Birmingham and Portland, Oregon. The company announced earlier this year it would be relocating from Riverchase Parkway to a new facility off Valleydale Road.

How Prepaid Technologies and Visa teamed at the Olympics

Birmingham’s Prepaid Technologies is playing a pioneering role in the emerging wearable technology market. The company provided back-end support for Visa’s Olympic payment ring program this summer, which Team Visa athletes used in Rio to make purchases and withdraw cash without carrying around a wallet or credit cards.

Prepaid President Stephen Faust describes Prepaid’s role as “quarterbacking”, ensuring Visa’s playbook came to fruition on the field.

“Someone will have an idea, and they’ll bring us in because we can quarterback the whole process,” Faust said. “You have to have a bank, a processor, customer service, systems to check cards and move money around … we can provide that.”

Prepaid is now looking ahead in the wearable scene, partnering with MasterCard for a U.S. Youth Soccer initiative. Faust said the project will simplify money for parents by providing kids with a rubber wristband loaded with enough money to buy a meal or pay entrance to a tournament.

 

This article originally appeared in the Birmingham Business Journal – September 23, 2016 Weekly Edition.

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