Metro Startup Launcher

The "Sharing Economy" has been an amazing driver of wealth and convenience for the world. Companies like Uber, Lyft, and, Airbnb have dramatically changed the way we get from one place to another, stay in one place or another, and get things done. They also have created HUGE company valuations and wealth for investors. Where does Louisville fit into this? Can we get a piece of the pie? Are we actually poised to be a leader in some areas of the sharing economy?

Most people these days are familiar with Uber and Airbnb. If you like to travel, they can make your life a whole lot easier, more convenient, and more cost-effective. They have attained recent valuations of $60+ billion and $30+ billion, respectively, and they continue to grow rapidly. But, there's only so many markets and services that will work with these kinds of software-based peer-to-peer plays, right? Actually, I believe the sharing economy will continue to dominate the landscape of great scalable companies for quite a while. I also believe that Louisville can and will make an impact in that arena.

I was triggered to write this article by the recent announcement of a $185 million investment in a trucking startup called Convoy. CapitalG, the investment arm of Google's parent company, Alphabet, just led the round. Trucking is a $740 billion per year industry in the U.S. More individuals in the U.S. are employed as truckers than any other occupation, and, the industry is often very inefficient. Many truckers are independent contractors. They rely on various brokers to send them business. Attempting to maximize their profits by efficiently planning trips is a critical function that is sorely in need of automation, artificial intelligence, and overall disruption.

That's where companies like Convoy come in. They're "Uberizing" the business of trucking, and CapitalG saw enough potential to bet $185 million on the company. Convey is not even a Silicon Valley company! Imagine that. It's in Seattle, which, granted, is a much more tech advanced community than Louisville, but it does show that companies outside of Silicon Valley are creating major disruptions in the sharing economy.

This is where Steve Case's Rise of the Rest philosophy will really kick in. More and more companies in the central parts of the United States will begin to develop these technologies. Why? Because, experience in an industry is where the ideas come from, and a lot of industries besides software tech are located in pockets around the country besides Silicon Valley.

I recently posted an article that shows the MOST successful age for an entrepreneur to start a company is 50! It's not 22. It's 50. (By the way, I am exactly 50 years old...just saying...😁.) So why is that age successful? It's because the entrepreneur has experience in their industry. They've seen a need for a long time, and they came up with a solution to solve that need. That's a BIG part of the Rise of the Rest Philosophy. Need + Experience + New Technologies = Huge Opportunity!

So, how can Louisville be a leader in the sharing economy? For one thing, we need to maximize our strengths. We're a nationwide leader in logistics and healthcare. We're centrally located. We have lots of great universities and industries. Let's look for the entrepreneurs who are coming out of these industries and SUPPORT THEM by investing in their companies and helping them grow in any way possible.

So, how are we doing? Are we building any sharing economy companies? Yes we are! Some examples include:

Meta Construction Technologies, LLC (http://www.meta-ct.com/) is "transforming the heavy highway industry with innovative software solutions." The company originated in the University of Louisville Entrepreneurship MBA program in 2016, and their first product, BlackTop, is a mobile tracking and dispatch platform that lets asph...

Increasing the number of local angel investors has been the goal of Metro Startup Launcher from the very beginning. We've done a lot of blogs, emails, and podcasts, and now we've participated in two different types of crowdfunding campaigns. How's it going? Well, one of the companies just landed an investor/partner that has agreed to invest up to $10 million and is launching one final $300,000 local investor round.

Learn more about this final $300,000 angel round!

 

So what's working and what's not working?

If you look at angel investing in our area, here's what's happening:

1. Companies like Edj Analytics, MobileServe, and SentryHealth (formerly Edumedics) are raising millions of dollars in capital. They're raising capital the "classic" way, using a Regulation D 506(b) SEC exemption. Under this type of exemption, you can raise an unlimited amount of capital from accredited investors, up to 35 non-accredited investors per year, and you must only raise capital from people with whom you have an existing relationship. Generally, an accredited investor is defined as a person with an income of $200,000+ or $1,000,000 net worth (excluding the value of their home). You cannot use any form of public advertising. This method of capital raise is still very successful, IF you know the right people. You must find a lead investor to help you set up your capital raise, get all the right paperwork in place, and encourage all of their friends to invest. Typically, they shoot for $25,000+ investments from each investor.

2. One local company, Cuddle Clones (https://cuddleclones.com/), has utilized the Regulation CF exemption for equity crowdfunding. This is a newer method of crowdfunding that allows anyone, accredited investors or non-accredited investors, to invest. It is very similar to Kickstarter in that you can publicly advertise as much as you like; however, you can actually sell equity investments in your company. Investments can be very small, as little as $100 per investor, so just about anyone can afford it. You can raise a maximum of $1,070,000 per year using this exemption. To use this method, you must utilize one of the licensed online equity crowdfunding portals (such as WeFunder, StartEngine, or SeedInvest). They provide great online resources for walking you through the process and for collecting your funds. But, they're not so great at marketing the capital raise for you. You must be prepared to execute a significant marketing effort (and dollars) in order to make this work. Your capital raise also is limited to a set period of time. If you haven't completed your full raise, you're out of luck. Finally, with most of the portals, you cannot access any of your raised funds until the full capital raise has been completed. However, if you perform an amazing marketing campaign for your capital raise, this process can be very effective. Over $100 million has been raised using Regulation CF since it became legal in May 2016.

3. Finally, another local company, Blue222 (https://blue222.com/), has been successful in utilizing the Regulation D 506(c) SEC exemption. The 506(c) exemption allows a company to raise an unlimited amount of capital from an unlimited number of accredited investors only. You can publicly advertise as much as you like. The one caveat is you must prove that each investor in an accredited investor. The great thing about this exemption is that it is easy to set up, and you don't need to go through a licensed portal to collect funds. You can deposit the funds directly into your account and utilize the money immediately. In the first trial run of this method, Blue222 raised $214,000. Blue222 has intentionally chosen to raise capital in small chunks using the 506(c) exemption. Each small chunk of $200,000 to $300,000 is being sold at higher valuations. This allows earlier investors to get more bang for th...

Jennifer Williams of Cuddle Clones is making Louisville startup history! Cuddle Clones already made world history by creating the only scalable company that allows you to order online and create a lifelike replica of your pet (https://cuddleclones.com/).

Now, they just made Louisville history by becoming the first Louisville area company to sell equity in their company to the general public under the new Regulation CF crowdfunding laws. These laws allow a company like Cuddle Clones to sell equity in their company to ANYONE for as little as $100 minimum investments. This method of startup fundraising is the way of the future. It will help Louisville get more startups started and let a lot more local people share in the profits!

INVEST NOW!

 

Check out my interview with Jennifer and find out:

◊ Where did the idea come from for Cuddle Clones?

◊ How did they get started?

◊ Where did their early funding come from?

◊ How did they decide to use Regulation CF crowdfunding to raise capital, and what's the process like?

◊ What can we do to continue to improve Louisville's startup scene?

 

Transcript (machine generated, so please forgive the typos):

Alan: 00:02 Hey everybody, welcome to the Metro Startup Launcher podcast. This is Alan Grosheider, and today I'm talking to my friend Jennifer Williams. She's the chief cloning officer of the company. She started called cuddle clones and in my opinion, Jennifer's now blazing a trail that will be the way of the future for startup companies to raise capital in the area and said, Hey Jennifer, how are you? Good. So she just started a regulation cf crowdfunding capital raise that allows anybody, not just rich accredited investors to invest as little as $100 bucks in her company. But first let's kind of talk a little bit about what your company is it called. It's called cuddle clones. Tell us what's the. What do you do at cudell clones

Jennifer: 00:53 and our flagship product. The cuddle clone is a stuffed animal that's made to look just like your pet. So customers go onto our website, they upload pictures, they tell us all the special characteristics about their pet and make a few choices and in several weeks they get a plush animal that looks just like their pet and has the markings and every other sort of special thing that represents their pet.

Alan: 01:19 How did you get it to look? Right? I had to have some that came back and you're just like, what is that?

Jennifer: 01:30 Definitely. Um, it took a while. Uh, this business started out of an idea from the University of Louisville Entrepreneurship Mba program and we kind of did a lot of the academic thing, like a business plan and industry analysis. And at the end of the program we said, okay, well, does anyone actually know how to make a stuffed animal? And we're looking at each other like, no.

Alan: 01:53 Okay.

Jennifer: 01:55 So a good two years from the program until we launch to get the product. Right. So we went through several consultants. Um, we did, we looked at the US, we looked at Vietnam, we looked at uh, other places, uh, ended up in China where we actually own our own workshop now and that's actually a really good competitive advantage for us just because we have full control over the quality and there are employees, so, so that's super nice

Alan: 02:31 entrepreneurs, a lot of opinions as to whether you can start a company where you don't necessarily know how to do exactly what you're going to do. And I'm, I've always been of the opinion that the entrepreneur, the person who makes the company work is the person that just pulls everybody together. There. Tom Sawyer that gets everybody on board and con...

What a week we had recently for local entrepreneurs! I hope you had a chance to attend some of the Kentucky Startup events. With Endeavor's International Selection Panel and Steve Case's Rise of the Rest Tour making Louisville its only return city to date, we have a lot to be proud of.

So how do we keep up the momentum? We're collectively doing a lot of great things, but let's see if we can crank it up a notch!

At Metro Startup Launcher, we're working on a better way to increase the amount of available capital for local startup companies, spread the risk much more effectively, and help all of our local angel investors make more money (statistically, an AVERAGE of 27% annually).

How do we do that? Well, to start we've stumbled into some funding that will help make a huge difference in our area:

1. We've partnered with a group that is creating multiple $500,000 mini-funds that we can access for very early startup capital.

2. The same group also is creating two $100 million funds that will be available for follow-up capital.

3. Finally, we're tying in crowdfunding to allow a lot more local investors to get involved in the whole process.

The investment strategy we're using is based on what we've learned over the last couple years of researching multiple studies of successful angel investors throughout the United States. (If you sign up below, we'll send you a short eBook that summarizes the studies.)

We're calling this the 1000x Club, and the idea is pretty simple:

1. Build a huge list of potential angel investors in the Louisville area, adding lots of people who currently are not angel investors.

2. Use local pitch groups, angel groups, accelerators, and individuals to screen and recommend startups and/or companies that are further along in the process.

3. Work with our partner funds to provide capital for local companies.

4. Allow lots of local angel investors to piggy-back on the fund investments using the new equity crowdfunding mechanisms that were promoted by Steve Case and made legal under the JOBS Act, allowing smaller investments from any investor (accredited or non-accredited).

5. Encourage more local investors to invest small amounts ($100 to $5,000) in 10 to 12 startups every year.

6. Help a higher volume of startups raise their first $25,000 to $100,000 and get started.

7. Get enough people involved that we can quickly raise $1 million (1000 x $1,000) for any local startup that has proven itself.

Why is this important?

1. We need to keep companies here. Rubicon Global is a great Louisville startup success story, but they moved to Atlanta for a $1 million investment. Now it's a $1 billion valuation company. Wouldn't it be nice if they had stayed in Louisville?

2. Lots of startups need a small amount of funding to get started. These days, $25,000 can be enough capital for an online business to at least prove an interest in their concept. The more of these we produce, the more we can build the next Rubicon or Airbnb right here in Louisville.

3. Statistically, investors who invest in 12 or more companies in 5 years AVERAGE a 27% annual return! Wouldn't it be nice to invest small amounts in a way that statistically produces great results, spreads the risk out to a lot more people, AND helps produce great companies and jobs in our area?

So, I'm asking for your help in one or more of these ways:

1. Become a potential 1000x Club "micro-investor."

2. Help to screen and review startups for the club (in exchange for equity).

3. Help to get the word out to your friends to join the 1000x Club.

All you have to do to join is sign up below, and I'll send you more information as we progress.

Thank you!

Photo Credit: https://www.flickr.com/photos/ges2016/27866935085

Alli Truttmann just celebrated a HUGE milestone for any business: the 10-year anniversary of her company, Wicked Sheets. According to data from the Bureau of Labor Statistics, about 20% of businesses fail in their 1st year, about 50% of small businesses fail by their 5th year, and only 30% survive over 10. And things are really starting to heat up now with her upcoming appearance in front of an audience of 96 million on QVC!

Alli has been interviewed for a lot of Louisville area publications, but as she mentioned during our talk, she's never been interviewed about how she got her funding to get started, what it takes to be an entrepreneur, and what she would have done differently.

Since our mission at Metro Startup Launcher is increasing the number of local "micro-angel" investors and helping more startup companies get their early funding, we really enjoy learning how our amazing local entrepreneurs made it happen and getting to know them a little better.

So, enjoy our podcast interview with Alli Truttmann.

Transcript (machine transcribed, so please forgive the typos!)

Alan: 00:03 Hi everybody, welcome to the Metro Startup Launcher podcast. I'm Alan Grosheider, and today I'm talking to my friend Allie Truttman. She's the founder and ceo of Wicked Sheets. Hey Alli. How's it going?

Alli: 00:19 Great. Thanks so much for having me on today.

Alan: 00:22 Yeah, we finally got on after a month of you blow me off so I know you, but

Alli: 00:29 when we delve into what the, the things I've been through the past couple of months, I think you'll understand why it's been hard to get me on the phone.

Alan: 00:36 I know you've had a lot of stuff going on. I'm totally kidding and I will. We'll definitely get into talking about all the stuff with in China and it's. I know you've been super busy so I'm totally kidding. So what I would try to accomplish on the podcast, just you, you know, a little bit about metro startup launcher and our primary focus has sort of morphed into really being focused on trying to figure out how to get more angel investors in our area, investing in startups and then helping startups utilize that and hopefully crowd funding to, to get a lot more startups started. So in talking to you and other successful entrepreneurs, I just really want to get a lot more information about how you became an entrepreneur, how you got started, what triggered you to want to be an entrepreneur and uh, you know, advice that you would have for other entrepreneurs and maybe mistakes you made that you could help somebody else avoid.

Alli: 01:34 They're absolutely. If you, if you don't mind, I'll go ahead and take that one question and say, how did you become an entrepreneur and getting into the business world? I actually, if you ask my parents, I actually was designing what I didn't realize were small businesses when I was really young. So, um, I, I fashioned myself and inventor of sorts, not in the very technical science realm, but, you know, there were always things that when I was younger I would notice and I would say it would be so much better if, you know, for instance, OK, before the radio would tell you what the song was or who sang it, I, I, my mom said I was like six or seven years old. And I was like, if only your radio would tell me who sings a song or what the words are that I'd be a better singer.

Alli: 02:20 And then everybody laughed and then we sold painted rocks in our neighborhood. And um, my favorite was like a double toasted tostito that we took chips and we, um, we basically flame broil them over scented candles and sold them to people as flavored to Tostito. And I mean, I know it was a great idea really. And uh, you know, and thankfully my first co-founder was my next door neighbor and he and I, he was, he actually grew up to be an actuary and he was alway...

MobileServe is a fast-growing mobile app company that helps organizations track and encourage participation in volunteer activities: tracking, managing, and reporting their social impact.  They're a great example of how you can see a problem in your own workplace and then create your own solution that you and many others can use.  They're also a great example of how a Louisville area company can help us participate in the Rise of the Rest of the entrepreneurial startups in the U.S.

In this podcast, I talk with Ben Reno-Weber.  Ben and his co-founder Chris Head, started MobileServe to solve a problem that Ben saw while he was working as the CEO of the Kentucky YMCA Youth Center.  He wanted a better way to track the activities and participation of volunteers.  These guys are great examples of how to pick an idea and get started, even while you're still working your day job.

Well, they're full time now and chugging along very well with successful capital raises and customer growth.

Learn how Ben got the entrepreneurial bug, how they got started, and Ben's thoughts about our startup community.

Transcript (Machine transcribed, please excuse the typos!)

Alan:                                      00:00                     Hey Ben.

Ben:                                       00:00                     Hey Alan.

Alan:                                      00:07                     We're recording now. So anyway, just to get us started, I'm going to talk about how we met each other. I think Ted Smith introduced us a while back, didn't he?  Ican't remember now. It's been awhile.

Ben:                                       00:25                     I feel like I've known you for awhile.

Alan:                                      00:29                     I think maybe Ted did introduce us because I came down to your office in Shelby Park and we sat out on the balcony and it was a beautiful day and we were talking about all the amazing things that we knew that nobody else knew and if everybody else, everybody else just followed our lead. We'd be taking over the world here and we'd be blowing silicon valley or out of the water.

Ben:                                       00:57                     Definitely. Yeah, definitely trying to figure out how to grow the entrepreneurial ecosystem and as many entrepreneurs in the pipeline as we can and as many investors interested in as we can.

Alan:                                      01:08                     Yeah, and you guys, I'm really impressed with what you guys are doing because you're sort of checking all the boxes. I think there are so important these days which is starting a company that's leverageable from what I know, I haven't gone through exactly what you're doing, but it seems to be a very leverage-able company that you know as you continue to improve and it's just going to improve for all your customers and it's something that'll work for a million customers or 10 and if, if I understand what you're doing it, we need more of that and it's something that helps people so we can kind of get into a little bit more about that. But I just wanted to start by throwing you some praise. I think you're, it's good to see somebody building a company that I think is a more modern type company that is very leverage-able. So congratulations.

Ben:                                       02:04                     I'll tell you, if I ever write a book about this experience, I'm going to title it Cliche. We've done all the things people said that we would do and experienced all the things that people said we would experience. So I don't know that our experiences are particularly a special but certainly validated a lot of what it takes to get a company off the ground. So I'd say we're off the ground.

Artificial intelligence is quickly affecting more and more of our lives, like it or not.  I personally look forward to the day that lots of "bots" do all my busy work and leave me free to be much more creative.  Could AI take over the world?  Elon Musk thinks so.  But, I tend to focus more on what it will do FOR us vs. what it will do AGAINST us.  I'm a pretty optimistic guy.

Well, artificial intelligence is advancing in Louisville, and local entrepreneur John Williamson is at the forefront.  I spoke to John about his entrepreneurial journey and his latest venture, RCM Brain.

Listen to the latest Metro Startup Launcher podcast to learn:

♦ How can public speaking improve your entrepreneurial skills?

♦ Do most entrepreneurs start early?

♦ Why clearly expressing your vision and getting others excited is so important for an entrepreneur.

♦ How important is persistence in the startup world?

♦ Does a person's childhood play a factor in entrepreneurial drive and success?

♦ What was John's progression into starting actual companies?  Ups and downs?

♦ How did John get started with his current company, RCM Brain, and what does the company do?

♦ How is RCM Brain using artificial intelligence?

♦ What do we need to do to improve our startup community?

In the latest edition of the Metro Startup Launcher podcast, I interview Ted Smith, CEO of Revon Systems, Inc.

Ted has been a major influencer of our startup community in many ways for quite a while.  He's been a researcher, an entrepreneur, and even the Louisville Metro Director of Innovation.  Now Ted is the CEO of Revon System, a leading developer of software applications for the treatment of chronic health conditions.

Ted, Revon Systems, and their associated colleagues at Apellis Pharmaceuticals are doing amazing things to give Louisville a big star on the map in the world of healthcare innovation.  They're setting an excellent example of how we all should think much bigger about what we can accomplish right here in the Midwest.

In this interview you'll learn:

♦ What is Revon, and how could their technologies improve healthcare?

♦ What's the background of Revon and Apellis?

♦ How should a local entrepreneur think about raising capital in Louisville for big vision, risky, world-changing projects?

♦ What combination of innovator and business person makes for a great entrepreneur?

♦ How does luck and timing factor into the business world?

♦ What was Ted's route to becoming an entrepreneur?

♦ How can our startup community improve?

One thing that makes a startup investment in Kentucky extremely attractive is the Kentucky Angel Investment Tax Credit.

If you're an accredited investor and a Kentucky resident, you can get an amazing tax credit (40 to 50%) on startup company investments.

This is a TAX CREDIT, not a deduction.  In other words, you get a dollar for dollar reduction of your tax for up to 50% of your investment in a qualified Kentucky startup company.

These tax credits were designed to encourage qualified individual investors to make capital investments in Kentucky small businesses, create additional jobs, and promote the development of new products and technologies.  And, they have been extremely successful.

Tax credits are non-refundable (only count toward actual Kentucky state taxes that you owe).  The amounts that you can claim in any one tax year may not exceed fifty percent (50%) of the total amount of credit awarded or transferred to the taxpayer.  However, any unused credits may carry-forward for up to fifteen (15) years.

A tax credit may be transferred by a Qualified Investor to an individual taxpayer in accordance with procedures outlined by the Department of Revenue.

The state maintains a list of Qualified Small Businesses, and these businesses must:

♦ be engaged in bioscience; environmental and energy technology; health and human development; information technology and communications; materials science and advanced manufacturing; or other new economy knowledge based activity;

♦ have no more than one hundred (100) full-time employees; and

♦ have more than 50% of its assets, operations, and employees located within the Commonwealth of Kentucky.

The business must also meet one of the following conditions:

♦ a net worth of ten million dollars ($10,000,000) or less, or;

♦ a net income after federal income taxes for each of the two (2) preceding fiscal years of three million dollars ($3,000,000) or less;

♦ has not received investments eligible for more than one million dollars ($1,000,000) in aggregate angel investor tax credits; and

♦ has filed an application with and received KEDFA certification as a Qualified Small Business in the program.

Click here to learn about our tax credit eligible companies!

To be a Qualified Investor, you must be:

♦ an individual, natural person;

♦ an accredited investor according to Regulation D of the U.S. Securities and Exchange Commission in

effect as of the date of the requested certification;

♦ no more than a twenty percent (20%) owner in and is not employed by the Qualified Small Business prior to making a Qualified Investment in that business;

♦ not the parent, spouse or child of an individual holding in excess of twenty percent (20%) ownership interest in, or who is employed by, the Qualified Small Business prior to making the Qualified Investment;

♦ seeking a financial return from the Qualified Investment; and

♦ an approved Qualified Investor in the program.

A Qualified Investment is:

♦ a minimum cash investment of $10,000 made by a Qualified Investor in a Qualified Small Business;

♦ offered and executed in compliance with applicable state and federal securities laws and regulations;

♦ is exchanged for consideration in the form of equity interest in the Qualified Small Business; and

♦ has been approved by KEDFA as a Qualified Investment in advance of actual investment

The total amount of tax credits or each calendar year, the total amount of tax credits available for the Kentucky Angel Investment Act program shall not exceed $3,000,000. The total amount of tax credits approved to a Qualified Investor in a calendar year shall not exceed $200,000 in aggregate.

Steps to Invest

Step 1 - Complete this form: http://thinkkentucky....

Local company SkuVault has won a lot of awards and made a lot of headlines lately.  They're one of the local Endeavor companies, and they're a shining example of how to go from scrappy bootstrapped startup to amazing success story.

On this episode of the Metro Startup Launcher podcast, we talk to Andy Eastes, co-founder and CEO of SkuVault.

If you're interested in being an entrepreneur or investing in local startups, you don't want to miss this podcast.

Here's what you'll learn about SkuVault:

What does SkuVault do?  Who are SkuVault's competitors?  How do you start a company these days when there seems to be competition everywhere?

Do you have to have an earth-shattering, brilliant idea to start a company?  Why a niche mentality and a great "story" gives you an edge.

What's Andy's story?  Any early entrepreneurial experience?  How did he become the entrepreneur he is today?

Why are lots of small steps and partnerships important to get things started?  Why is very hands-on client interaction critical to early success?

What steps did the company take to bootstrap and get started with no funding?  How important are great partners?

What's the long-term plan for SkuVault?

Suggestions for our startup community, including better communication between all parts of the startup community.

What's the motto that Andy learned from an early mentor that will work for any business?