SpotHero, already parked at Excelerate, snares 500 Startups investment

Aug 23, 2012 // by jswima1 // Blog // No Comments

By Steve Hendershot

The ten companies participating in Chicago-based tech accelerator Excelerate Labs get to make their formal pitches to investors next Wednesday. That hasn’t stopped one of the participating companies, parking-reservations startup SpotHero, from securing an initial round of funding beforehand from Silicon Valley venture-capital firm 500 Startups.SpotHero met with 500 Startups founder Dave McClure when Mr. McClure visited Excelerate last month, and finalized the deal shortly thereafter. SpotHero will receive an undisclosed sum between $50,000 and $100,000 and become a 500 Startups portfolio company — and not a participant in the 500 Startups accelerator, which would force SpotHero to relocate to California. SpotHero will remain based in Chicago.

Mr. McClure met with each Excelerate company, but SpotHero’s introduction was made easier because of some additional connections. SpotHero cofounder Mark Lawrence worked out of 500 Startups’ Bay Area offices while visiting an entrepreneur friend earlier this year, SafeShepherd’s Robert Leshner. Mr. Leshner, who moved his company (formerly called MelonCard) to California from Chicago in 2011 to participate in the 500 Startups accelerator, had also told Mr. McClure about SpotHero. “There was already kind of this warm feeling,” Mr. Lawrence says of his first meeting with Mr. McClure.

SpotHero is still figuring out how much money it will seek at Excelerate’s investor presentation “Demo Day” next week. But Mr. Lawrence figures the pitch will go down easier now that SpotHero carries a 500 Startups endorsement.

“Having their name on something is a pretty good mark,” Mr. Lawrence says. “That’s In addition to Excelerate. Together, I think it will definitely make it easier” (to raise money).

That’s in addition to the connections that come from befriending Mr. McClure and the entrepreneurs from, well, 500 startups. “We can bounce off both the (500 Startups and Excelerate Labs) networks for introductions, so it’s nice to have backing from both,” Mr. Lawrence says.

Steve Hendershot writes “Silicon City,” Crain’s weekly post on Chicago tech news and newsmakers. Check it out every Tuesday on Crain’s blog for Chicago entrepreneurs.

Follow Steve on Twitter: @stevehendershot.

Veteran tech entrepreneur Flip Filipowski’s latest venture raises $35M

May 14, 2012 // by jswima1 // Blog // No Comments

By Lisa Leiter

SilkRoad, the Chicago-based human resources software company run by veteran tech entrepreneur Flip Filipowski, raised $35 million in a Series C funding round.

New investors include Keating Capital and NTT Finance, joining Intel Capital, Crosslink Capital, Foundation Capital and Tenaya Capital, among others.

SilkRoad plans to use the new funding to further expand worldwide and to launch new products. It’s also planning an initial public offering. That news comes on the heels of rival Workday filing to go public last month.

Since launching in 2005, SilkRoad has raised a total of $129 million.

Crain’s Lisa Leiter spoke with Mr. Filipowski today about SilkRoad and the Chicago tech scene. (For more background on Mr. Filipowski’s recent doings — and his long, tangled history on Chicago’s tech scene as the founder of Divine Interventures — check out this Crain’s piece from 2010 by Senior Reporter John Pletz.)

How big is the market for human capital management software?

It takes a little bit of guesswork . . . $75 billion minimum total annual market opportunity. It makes it about the size of the automobile market.

Why do you see such potential in markets outside the United States?In China, for example, they have to have a very transformational impact in their own businesses so they become design leaders rather than a low-cost labor force. They are already outsourcing to Brazil and chasing the next low-cost labor markets. They know their top talent is being recruited by multinationals and they have to violently oppose that multinational approach and make their companies more progressive and more capable of employee engagement and commitment than they ever have in the past. If you were to ask me 10 years ago, I would have said that was surprising, but today I consider that the center of the human capital management movement.

Are you planning an initial public offering of your stock?

Yes. We think the earliest would be the fourth quarter of this year; otherwise, the first or second quarter of next year.

Why do you think now is a good time to go public?

Human capital management software generally that’s in the cloud has a profile where only so much can be developed under private investment. Private investment is a different kind of capital than public money; it’s much more expensive and it demands a different attention span. It has more emphasis on things like profitability, whereas public money has more emphasis on growth. And to converge on growth for a SAAS (software as a service) company, you have to drive the business on that fundamental need for growth. If you don’t do that, you will perish.

Most of your investors are in Silicon Valley, not Chicago. Why?

The cloud space has been more understood by the VCs on the West Coast. I think most of the investors and VCs in the Midwest do not have a technology software or cloud-based strategy.

How is the Chicago tech startup scene different today than it was during your time at Divine Inc. and the dot-com boom?

I think the Chicago tech scene is very vibrant. I’m very pleased to see that. I certainly know a lot of the folks in the tech scene and I am very enthusiastic for them as they are for us. I see quite a few very good stories coming out of this area. I, for example, love Groupon, and I am probably in the minority. I think their idea of forming an operating system for conventional property — whether that’s restaurant seats, or anything else — of knowing where mobile customers are and giving them reasons to purchase inventory that is going to go obsolete, is a brilliant strategy and will ultimately result in Groupon being extremely valuable.

Do you own the stock?

I own like 1,000 shares. That doesn’t move my mouth to endorse anything.

Follow Lisa Leiter on Twitter: @LisaLeiter.

Veteran tech entrepreneur Flip Filipowski’s latest venture raises $35M