Monthly Archives: November 2016

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.

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