Giving businesses a boost

January 20th, 2016

News Coverage:

January 17, 2016 1:03 AM

Giving businesses a boost

Angel investors look to help startups, struggling companies make profit

Lisa Green | The Journal Gazette

Don Scifres is drawn to not just ideas, but skills.

You might expect that from an angel investor.

Scifres knows it takes a strong, balanced combination of both to best ensure a business can be profitable.

“We really try to invest in A teams,” said Scifres, a managing partner of VisionTech Partners, which announced Jan. 6 it has opened a Fort Wayne VisionTech Angels chapter.

“It’s better to invest in an A team with a B idea than a B team with an A idea because at the end of the day it really comes down to ability to execute the plan,” Scifres said. “Ideally we’re going to have an A team with an A idea.”

VisionTech traces its roots back to 2008, originally known as StepStone Partners. It was rebranded a few years later as VisionTech. The partners have invested at least $8.2 million in 16 companies, Scifres said. With two more deals in the process of closing and two other companies being reviewed, it’s possible the investments could cover 20 businesses and exceed $9 million soon, he said.

VisionTech started in Indi­anapo­lis and opened a second chapter in Warsaw about six years ago. It also has chapters in Bloomington and Lafayette.

Fort Wayne seemed like an underserved market, Scifres said.

“Things came together in terms of leadership, level of interest and market need as well as entrepreneurs,” Scifres said.

VisionTech might be the newest investment group, but it won’t be the only one in the market.

The same week VisionTech announced its Fort Wayne chapter, the local Regional Angel Investment Network – or RAIN – announced its latest deal.

RAIN, which started about six years ago, said it recently acquired the operating assets of Prentice Products Inc., a full-service printing, digital printing and metal etching company.

“We’re a little bit unique in that were a type of hybrid in that we don’t just look at startups,” said Mark Hagar, a managing member of RAIN. “We tend to work a little bit more on the distressed side.”

RAIN doesn’t disclose the value of investments, but has eight in its portfolio, Hagar said.

Manufacturing is a niche interest. Kendallville Custom Printing was another RAIN acquisition, Hagar said. That deal folded the business into Specialized Printed Products in Fort Wayne.

Hagar said the success of RAIN depends on how you measure it.

“Almost all of them are still in existence in some form. The name may not be out there, but the enterprise in some form is still operating,” Hagar said. 

He thinks there’s room in the market for more angel investor groups. Individuals in those may look at business potential differently than traditional lenders.

Although RAIN will evaluate startups, the entrepreneurs involved have to show sales.

“We haven’t looked at anything that is pre-revenue,” Hagar said. “It has to be in the market and producing some revenue.”

“Once they’ve proved the market a little bit and that they can satisfy a need in the market, those are the first steps,” he said.

In 2013, those involved with RAIN directed Hagar to take a closer look at startups. But not every concept passes muster.

“We looked at a substantial number of deals, well over 100 in 2013 and we really didn’t invest in any of them because most of them were pre-revenue,” Hagar said. “There’s a need if people are willing to take that risk. It’s just we’re a little more risk-averse.”

VisionTech has appointed Eric Beier, a physician turned businessman-entrepreneur, president of its Fort Wayne chapter. Beier founded and sold a successful Fort Wayne medical consulting firm, MedOptima, and is now CEO of a startup company, Matrix-Bio.

He was previously involved with Fort Wayne’s Main Street Venture Partners. He is meeting with the local VisionTech chapter this week.

“My goals as president for 2016 are twofold: to recruit 20 members – we’re currently at nine – and to create a solid source of capital and mentorship for entrepreneurs and startup companies in northern Indiana,” Beier said in a statement. 

VisionTech’s partners have backgrounds in information technology, life sciences, medical devices and manufacturing, Scifres said. There is some growing interest in ag technology, as well.

Scifres said VisionTech looks at 250 to 300 deals a year and looks more closely at about 50. Usually just 12 to 15 of those are presented to its investors for consideration. VisionTech partners – the choice is up to each individual – invest in four to six startups a year.

Taking an idea – even a solid one – and turning it into a profitable enterprise is hard work, Scifres said.

While being your own boss may have an element of glamour, being an “entrepreneur is really hard work … It’s a challenge maybe some people don’t fully understand when they get into that world,” Scifres said. 

“While I’ve always worked hard, I’ve probably never worked harder than when I was in startup situations.”