Entrepreneurial royalty makes a cameo appearance at demo day

Crain’s tech reporter John Pletz attended Impact Engine’s investor day on Wednesday and filed this report:

It’s not unusual for startups to pull out all the stops on demo day, when they make their pitches to a room full of investors.

But it was hard to top Shayan Nahrvar’s pitch for wow factor at the Impact Engine demo day on Wednesday. He got Richard Branson to plug his website, Raise5, which helps freelancers such as artists sell their work to paying customers but deliver the proceeds to nonprofits.After winning an entrepreneur contest sponsored by Mr. Branson, Mr. Nahrvar asked the billionaire founder of the Virgin empire to make a video plug for his presentation. It was a long shot whose odds grew worse as demo day got closer.

“We didn’t hear anything until (Tuesday night),” Mr. Nahrvar said. “It arrived early the next morning.”

In the video, Mr. Branson says: “It’s simple, entrepreneurial and it works.”

Mr. Nahrvar could use the help. Entrepreneurs focused on solving social problems – providing clean water in developing countries or turning donations of time into cash for nonprofits – face an even bigger challenge than most startups.

They have to do well financially and do good, all while competing for investors alongside companies whose sole focus is making money.

Toronto-based Raise5 is one of eight teams that went through the 12-week Impact Engine, an accelerator program for socially conscious startups at 1871 in the Merchandise Mart.

They made pitches Wednesday to more than 300 potential investors at Chase Auditorium. It’s a unique audience that included angel investors and venture capitalists but also philanthropists, says Linda Darragh, director of entrepreneurship programs at Northwestern University’s Kellogg School of Management and co-founded Impact Engine.

“You’ve got philanthropists looking at investing instead of just making grants,” says Ms. Darragh, who developed Impact Engine with Northwestern professor University Jamie Jones and recruited OpenTable founder Chuck Templeton to run it. “This changes the game.”

It’s the first year for Impact Engine, but Ms. Darragh liked what she saw Wednesday. “I’ll really be happy a few months from now, when we can say they’ve gotten funding and are on the ground with their products.”

John Pletz is a senior reporter covering technology for Crain’s. Follow him on Twitter: @JohnPletz

Elevate Digital snares $2.7M in funding

By John Pletz

A Chicago-based interactive kiosk startup has lined up $2.7 million in venture funding.

Elevate Digital develops interactive ad-supported kiosks, which have been installed at Navy Pier and other locations around Chicago, to provide information such as weather and tourist destinations to users. The company partnered with Groupon to include the Chicago-based daily-coupon giant’s deals on its kiosks.

Elevate Digital will receive $2.7 million in its first round of venture funding from St. Louis-based Advantage Capital Partners and Chicago-based Metropolitan Capital Bank.

The company plans to use the money to expand into new markets and add new display products. Elevate expects to double its headcount to about 20 and will move into new offices at 200 S. Michigan Ave.

John Pletz covers technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

Excelerate, TechNexus make Forbes incubator ranking

By John Pletz

Excelerate Labs and TechNexus were named among the nation’s top 10 startup incubators by Forbes magazine.

Excelerate, now starting its third class, was ranked sixth. TechNexus, started in 2007, was ranked ninth. Topping the list were Silicon Valley’s Y Combinator and Boulder’s TechStars, which has since branched out to other cities.

Accelerators are intensive mentoring programs for startups, often lasting three to six months, designed to help entrepreneurs turn ideas into companies that can get funding from venture funds.

Forbes said it based rankings primarily on valuation of companies that have gone through the programs, as well as funding received and whether companies were later bought or went out of business.

John Pletz is a senior reporter covering technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

1871 picking up long-term tenants

By John Pletz

The tech startup hub in the Merchandise Mart called 1871 is lining up venture funds, universities and other long-term tenants along with young companies.

New World Ventures, the fund backed by J.B. Pritzker (who helped launch 1871), as well as venture funds I2A, Sandbox Ventures and Hyde Park Angels will lease office space in the building. OCA Ventures and Lightbank will sponsor conference rooms in the facility.

University of Chicago, Northwestern University, Illinois Institute of Technology and University of Illinois also will have offices in the space. Excelerate Labs, the startup accelerator, says it’s leaving a loft in Greektown to move into 1871. The Illinois Science and Technology Coalition and Chicagoland Entrepreneurial Center, which is managing the programs at the facility, also are moving in.

“We’ve got two of the top five business schools in the country, a top design school and a top computer-science program — they’ll all be in one hallway,” says Kevin Willer, CEO of the Chicagoland Entrepreneurial Center.

The facility, which formally opens next week, is designed to have flexible space for about 400 entrepreneurs to launch new companies. So far, startups moving into the space include Code Academy and Food Genius. Entrepreneurs pay $125 to $400 a month for space.

“We have enough applicants to fill it,” Mr. Willer says. “We have gotten a great response. We’re trying to be deliberate and select the best of the best.”

Applicants are selected by an independent review committee.

John Pletz is a senior reporter covering technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

An upbeat 1Q for Chicago tech

By John Pletz

Chicago startups had a strong first quarter, with 32 companies launched, 17 companies raising money from investors and a dozen more being acquired.

The Chicago tech-networking site Built in Chicago reports that 17 companies raised $33 million, including BodyShopBids, Eved, GTrot and Tap.Me.

There were 12 companies raising at least $127 million in exits during the quarter, including digital ad agency Roundarch, which was sold for $125 million, credit-card comparison site FeeFighters and test-preparation company PrepMe.

John Pletz covers technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

Groupon snaps up FeeFighters

By John Pletz

Feefighters, an online startup that helps small companies comparison shop for credit-card processing fees, has been bought by Groupon Inc.

The company, which sprang from the University of Chicago’s Booth School of Business, raised $1.6 million last January from Hyde Park Angels, i2A Fund, OCA Ventures and Sandbox Industries. Most of the employees will join Groupon, CEO Sean Harper said in a blog post Friday.

Terms of the deal weren’t disclosed.

(Crain’s November 2010 “Chicago Business Today” video, above, takes you inside Feefighters.)

John Pletz is a senior reporter covering technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

New Venture Challenge sees surge of applicants

By John Pletz

Would-be entrepreneurs eager to create the next big thing are flooding into the University of Chicago’s business-plan competition.

The New Venture Challenge, the annual business-plan contest at University of Chicago’s Booth School of Business, received a record number of applications this year.

There were 119 entries, up from 89 a year ago, says Steve Kaplan, professor of entrepreneurship and finance who runs the New Venture Challenge.

The program has seen a surge in interest as more students come to Booth looking to start their own companies. The success of past participants, including GrubHub Inc., FeeFighters and Power2Switch, in raising venture capital also has helped. Last year, Booth-related startups raised a record $85 million in venture funding.

John Pletz is a senior reporter covering technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.

Lightbank, Tullman fund sink $4M into SoCore as Wrigleys, Ferro hit the exits

By John Pletz

SoCore Energy LLC, which provides solar panels to retail stores, has raised another $4 million in venture funding from investors including Lightbank.

The Chicago-based company, which provides solar panels to retailers including Walgreen Co., Ikea, J.C. Penney Co. and Lowes Cos., raised money amid worries over the wisdom of solar investment sparked by Solyndra LLC.

The latest round brings total investment in SoCore’s to $12 million since it was founded in 2008, says CEO Pete Kadens. The company last raised money in 2010.

Investors in the round included Allscripts CEO Glen Tullman’s 7-Wire Ventures, its largest backer, and new investor Lightbank, the Chicago-based venture fund started by Groupon Inc. co-founders Brad Keywell and Eric Lefkofsky. The new investment doesn’t include an undisclosed amount to buy out previous investors the Wrigley family and Michael Ferro’s Merrick Ventures LLC.

Mr. Kadens says much of the new investment will go to hiring additional staff, primarily engineers. It has 25 full-time employees, mostly in Chicago, up from 19 a year ago, and just moved into offices at 225 W. Hubbard.
Revenue grew to $10 million last year, up from $3 million in 2010, as users moved to take advantage of federal grants for alternative-energy investments such as solar panels that ended last year. Yet he expects revenue to hit $40 million in 2012 and for the company to become profitable.

Mr. Kadens says that unlike wind-power subsidies that are drying up, investment tax credits for solar equipment continue through 2016. “We don’t see that affecting us all that much,” he says. “If we stay focused, we still have the chance to be successful.”

The company, which designs and installs solar panels for retailers and other customers, finances the cost of equipment about half the time and leases it to customers. Other times, customers finance it. He says banks are still willing to finance the equipment, and the price of solar energy is declining.

John Pletz is a senior reporter covering technology and aviation for Crain’s. Follow him on Twitter: @JohnPletz.