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May 30, 2014
Breaking News: DC Tech Darling Sold
Attention vets with IT skills: The United States Patent & Trademark Office wants you! Attend the USPTO IT Veteran Hiring Fair, June 13 & 14. Meet hiring managers and new opportunities. Register here.
Last night, HelloWallet was acquired by Morningstar for $52.5M. HelloWallet founder Matt Fellowes shared the details with us this morning.
Morningstar, a Chicago-based independent investment research firm, invested $6.75M in 2012 in HelloWallet, a 5-year-old provider of online financial wellness programs. Matt says as time went on, a Morningstar board member made note that the two companies should be one. (The company also raised VC from Revolution, Grotech, and TD Fund.) Matt will remain head of HelloWallet and keep its 50 employees in DC. In fact, he's eyeing some square footage expansion beyond the 10k SF it occupies in Dupont Circle and will add head count. Matt says he'll share more details on what kinds of positions in the coming months. So how did HelloWallet celebrate the acquisition? Matt tells us there's an empty keg in the office today, but it's business as usual. “Everybody was a little gun shy in the wake of LivingSocial, but this is a positive statement about DC tech.”
Behind The Deal: Salsa Labs' $5M
Salsa Labs' latest round of funding comes from old and new faces. The company, which provides software to nonprofits and political campaigns, nabbed $5M from old friend Edison Ventures. It then added a new investor: the Maryland Venture Fund, which requires the firm to move to Maryland. CEO Scott Stouffer says Salsa Labs will also hiremore sales and marketing people. The 65-person company spent 2013 beefing up its customer base beyond nonprofits and political campaigns clustered in the DC region. Scott says those efforts will result in increased revenue by the end of the year. The company's cloud-based software helps organizations manage their online fundraising, advocacy, email, social media, and donors.
Salsa Labs, which has raised a total of $11.5M, eyed bringing in more investors to join Edison but realized most wanted to see the results of its new customer growth strategy first. Scott, who joined Salsa Labs in 2012, says half of its employees are in DC and half are in Reston. It realized that putting them together under one roof would make sense considering the nature of the work. Scott, who had co-founded Visual Networks in the early '90s, took it public and grew it to $100M in revenue, had ties to the Maryland Venture Fund. It was an early investor in Visual Network (so, cha-ching when the IPO happened) and he sat on its board at one point. The company will move to Maryland by the end of this year.
Solving Transit's Biggest Problems
Here's the problem with public transportation: transit systems spend years and loads of money studying ridership trends, safety issues, maintenance concerns, and funding sources. The data ends up in spreadsheets and doesn't get very far. Transit Labs, a 1776-based startup is trying to solve that with a data analytics and visualization platform called TAP that makes the data more actionable. They'll be able to determine nitty gritty info like whether stops along a bus line need to be eliminated for poor ridership or if trains keep breaking down on a particular route. The nine-person startup will launch the pilot on Monday with 24 state and regional transportation systems, including Miami-Dade Transit, one of the 10 largest transit providers in the country.
The company was launched last August by Dag Gogue, who spent years working for consulting firms hired by transit systems. He eventually became an independent consultant and won a competitive bid with the Georgia Department of Transportation to provide performance measures and gather required data for regulatory agencies. The $250k a year contract provided the startup capital to launch Transit Labs. Communications director Farhan Daredia says the company's pilot, which will grow beyond 24 agencies, will not only result in product enhancements but also start a live stream of communication between transportation stakeholders.
Funding Tips For Cybersec Startups
If you're a cybersecurity company, the region's godfather of angel investing, John May, says finding an angel should be easier than finding customers. (Something is terribly wrong if you can't find either.) Angel investors don't have to write checks like VCs do but when they do, they're in for the long haul. At MACH37's “Funding the Startup” panel in Arlington, Va., Wednesday, True Venture's John Burke also said make sure your founder is not alone. Companies with two to three founders are more desirable to VCs.
No Blu Venture Investors' Scott Berg wasn't ordering another beer from the non-existent waiter here. He was saying the government is the best source of non-dilutive capital. When startups get federal R&D grants, it validates the technology and answers a problem that a particular agency is facing. But Hudson Fairfax Group's Tom Frommack warns that the agency need for that technology may come before the commercial sector's need for that technology. Another challenge for startups doing government work is whether they're going to be able to adjust to the commercial grind.
Amplifier Ventures and Tandem NSI's Jonathan Aberman says we're seeing the start of a major shift in federal agencies like DARPA and NSA interacting more with entrepreneurs. He also predicted that the DC region will be as significant in cybersecurity 10 years from now as Silicon Valley is with... well technology in general. Grotech's Scott Frederick says there's already a base of promising startups in the region. Some tips for raising capital: Make sure your startup's valuation is accurate; your product timing is right for the market; and be coachable. Investors don't invest in toddlers who refuse to give up their pacifiers.
Announcing: The Bisnow SuperSchmooze!
Every couple years, you veterans may remember, we put on a big pure networking and food event—so big we can only call it "SuperSchmooze!" The evening of June 12 is our next one. Bring your business cards, and your appetite to the District Center downtown (555 12th Street). You'll find over 20 of DC's top restaurants, offering some of their best food. Plus, a big open bar. And you will find our readers from every local field of business: tech, law, association, finance, commercial real estate, and government, all converging for two hours of fun, food, and schmooze. More info and sign up!
Has your company received outside capital? Or has it made an acquisition? Tell us about it for our ongoing "Behind The Deal" feature.