By Tom Ballard, Director of Innovation and Entrepreneurial Initiatives, Pershing Yoakley & Associates, P.C.
Knoxville’s only locally-based angel fund is planning a celebration later today.
The event, billed as an “informal open house,” will celebrate the first anniversary of The Lighthouse Fund and its inaugural investment in a Knoxville company.
“We formed the legal entity a year ago and made our first investment in DataFlyte Inc. in September,” said Geoff Robson, President of the fund. The tagline for the start-up in which The Lighthouse Fund has invested is “meter reading at the speed of flight,” a clever way to describe the service that it provides.
As Robson explained, DataFlyte uses a small airplane that expedites what has been a time-consuming process of reading utility meters into a several hour event. In the case of the start-up’s inaugural client, it takes one hour and 38 minutes to collect readings from 25,000 individual customers. Existing technologies rely of vehicles driven through a utility’s service area. Their data capture rates average about 500 customers in a normal eight-hour day.
“This was a good fit for us,” Robson said of the DataFlyte opportunity.
The Lighthouse Fund led the $600,000 syndicated deal, bringing in two Chattanooga funds – Blank Slate Ventures and the Chattanooga Renaissance Fund – as well as four individual investors from the Scenic City.
“This is an example of how we will lead deals,” Robson said. Leveraging relationships with other funds and individuals provides a number of advantages for Lighthouse.
“It brings us into a broader footprint and a higher quality deal flow,” he explained. “It also builds connections with people with specific industry expertise.”
About 20 people have invested a minimum of $50,000 each in Lighthouse thus far, but there are opportunities for others to join.
“We want to try to do 10 to 12 deals with the existing fund,” Robson said, adding the focus will be on early stage “post-revenue or close to revenue” start-ups.
He expects about 75 percent of the investments are likely to be focused in one of four areas – software, healthcare services and IT, imaging, or instruments and controls.
“The (management) team is critically important,” Robson says in describing the characteristics of a successful applicant for funding. “We also want to see a large market opportunity and a well-defined solution to a market problem.”
In addition to Robson, other key players in The Lighthouse Fund are John Morris, who is a Co-Founder and also Secretary of the Limited Liability Corporation, and a core group of investors that includes Roger Kiger, Joe Matteo, Jeff Peters, and Nadeem Siddiqi.
We asked Kiger his reasons for being so active.
“I could not do now what I did 10 years ago in raising money,” the successful businessman said. Kiger and his brother own several marinas, and he also owns a wealth management firm.
“There is a fundamental need to help businesses get started,” he explained, adding that The Lighthouse Fund process also helps de-risk the investments. “Finding a way to solve both problems is a good thing.”
Robson says that The Lighthouse Fund has built a process that allows each of its investors to be as active as they want to be.
Because it is a fund rather than a network, investment decisions are made on a majority vote of the members. At the same time, individual members can also make separate sidecar investments on their own.
TOMORROW: The first of a two-part series about DataFlyte.