Portfolio Company Highlight: Patrick Fisher of Plazmo

  Omaha-based portfolio company Plazmo Industries  is a manufacturing company providing lamps for LCD applications such as those used for gaming and medical devices, laptops, ATMs, and tens of thousands of other electronic devices. CEO Patrick Fisher has a track record of successful contract negotiation experience with the world’s leading Fortune 500 companies, strengthened by his history of cultivating strong, lasting partnerships with clients, colleagues, and employees. We asked him a few questions about impactful investors and his company.

1) What interested you in joining Plazmo Industries? 
I was looking for a small business that was already past the proof of concept stage, and I wanted to find this business in an industry with real growth potential.  I have been involved in a few start-ups (from scratch) and I was intrigued by this small company founded in Omaha (Plazmo) that had an existing customer base and was ripe for growth.  Also knowing that the probabilities of success are much lower starting from zero when compared to relaunching a business from an existing base, I felt my ability to attract capital in the current environment was better with this type of business investment opportunity.  Risk is always present in small business, but lower when starting with a proven concept. Certainly pros and cons exist for each, but I was impressed with what the founders had carved out in the industry, and also with the potential for growth in the market it serves.

2) Plazmo Industries has grown through the support of several investors sharing in your vision, what do you look for in investors in addition to just providing capital? 
Shared vision and passion.  Investor support throughout the journey is key to success, and so having investors that believe in the business (not only the potential for return on equity) is valuable for the CEO and the management team.  Every investor is different and you can’t expect everyone of them to be as passionate as you are.  Having investors that listen and provide support, in good times and bad, is important to success.  

3) Is there an example that comes to mind of an investor providing over the top value to your company? 
We are fortunate in Nebraska to have supportive angel investors willing to listen and invest in local entrepreneurs.  One example that comes to mind was a time when we needed to raise capital to meet the terms of an asset purchase agreement.  Although we had initially sold debt at an attractive return to raise capital, one of our investors was later willing to invest in equity rather than debt in order to help protect the company’s bottom line and fuel more growth.  We agreed that the business should not take on more debt, but that the equity investment should come with incentive for the investor.  We worked out a fair equity solution that satisfied everyone.  In this case, the investor’s belief in what we were doing with the business was key, and the investor’s team-player attitude went above and beyond what most investors are willing to bring to the table.

4) What excites you most about the future of the company? 
Plazmo serves a niche market that is represented in all of our daily lives.  LCD screens are everywhere in our daily interactions — at the gas pump, at every retail checkout experience, when we travel, at the grocery store, and when we are at work.  Our LCD replacement products help our customers save time & money by extending the life of their mission critical equipment.  Our customers know that visually-bright displays are important to ensure a positive customer experience at an ATM, casino game or self-checkout register — and Plazmo’s products ensure their displays are always performing at their best.  Also by extending the life of our customers’ electronics, we’re helping them to reduce their electronic waste.  For all of these reasons, Plazmo’s value proposition is strong and will continue to be strong for the foreseeable future.

Highlight: Richard Baier, President and CEO of the Nebraska Bankers Association

In 2011, Senator Galen Hadley of Kearney introduced LB 387, the Nebraska Business Innovation Act.  For the first time in Nebraska’s history, entrepreneurs and innovators had an array of financial assistance programs to help startups and innovative companies including the Nebraska Academic Research and Development Grant Program, the Nebraska Innovation Fund Prototype Grant Program, the Nebraska Innovation Seed Investment Fund Program, and the Nebraska Small Business Innovation Research/Small Business Tech Transfer (SBIR/STTR) Grant Program.  All programs required matching funds.  LB 387 was passed unanimously by the Legislature and signed into law by the Governor.
 
  Richard Baier currently serves as the President and CEO of the Nebraska Bankers Association. He joined the Invest Nebraska Board of Directors in 2015 and recently served as Board Chair from 2017 – 2018.
 
1) The Nebraska Business Innovation Act was authored by you and your team during your tenure as the Director for the Nebraska Department of Economic Development.  Have the programs had the intended impact you envisioned back in 2011?
Prior to 2011, the research was very clear that Nebraska was lagging in the areas of innovation, technology and entrepreneurship.  When compared to other states, Nebraska routinely scored 49th out of fifty states.  Governor Heineman understood the many challenges facing our state in these areas and supported proactive efforts to develop reasonable, targeted, public policy strategies designed to stimulate Nebraska’s innovation and entrepreneurship ecosystem.  Our team also recognized that these policies could be executed more efficiently and effectively outside of the parameters of state government.  Since these policies were adopted, Nebraska has made visible strides in improving their competitiveness.  While it is difficult to quantify, it is especially gratifying for me to see how the discussions around innovation and entrepreneurship have changed in our state!  Now the challenge is to continue to grow upon these recent successes.
 
2) Why are you passionate about Nebraska entrepreneurship and small businesses?
Nebraska’s most successful communities possess a solid core of locally based companies as part of their economic makeup.  I firmly believe a successful long-term economic development strategy must embrace business start-ups, small businesses, business retention and business attraction, coupled with strong and attractive communities.  My parents and my in-laws both owned their own businesses.  Their community involvement and investment impressed upon me the importance of hard work and the importance of small business to any thriving community.
 
3) What strengths does Nebraska have over other states in terms of its entrepreneurship ecosystem?
First, we often overlook the fact that farming and ranching are some of the biggest risk-taking entrepreneurial ventures in our country; therefore, risk-taking and a strong work ethic seem to be built into our DNA.  Second, our citizens and community leaders understand the need to work cooperatively to achieve success.  Finally, being a small state and having a Unicameral Legislature, we are able to be nimble, yet aggressively tackle challenges in a focused manner.
 
4) In your current role as President & CEO of the Nebraska Bankers Association, what synergies do you see between the NBA and Invest Nebraska?
Every day, I have the pleasure to represent 179 Nebraska banks whose success and profitability ties directly to the success and growth of their local communities.  Therefore, the Nebraska Bankers Association plays an important role in addressing economic and community weaknesses and subsequently marshalling local and state resources to support growth.
 
5) What excites you the most about the future of Nebraska entrepreneurship?
Nebraska has dramatically improved the environment for entrepreneurs over the past decade.  We have a solid statewide leadership base that appreciates and values the role and importance of entrepreneurs and small business in the state’s economy.  Our state must build upon some of our recent growth and success and focus our attention on crafting new attitudes, public policies and capital sources to propel Nebraska to an even greater future.

Angel Investor Highlight: Beth Engel of Dundee Venture Capital

  Beth Engel is a partner at Dundee Venture Capital located in Omaha and invests in both Nebraskan and other midwestern startups. We asked her some questions to gain more insight on her experiences and expertise:
 

1) Tell us a little bit about Dundee Venture Capital and its goals.
Dundee Venture Capital is a seed stage venture capital firm that primarily invests in scalable technology companies across industries with the exception of bio, pharma, med devices, and hardware. We like to lead or co-lead rounds and write checks between $500K - $750K into businesses whose natural exit will be within 6-8 years, achieving a good return to our investors. We co-invest alongside other investors such as invest Nebraska. We like to work closely with our founders and focus on finding the best entrepreneurs with a strong vision and commitment that we feel can confidently handle the adversity that comes with running a startup.
 
2) How did you get involved in Dundee Venture Capital?
I was originally involved with two Omaha-based startups, so I was familiar with Omaha’s startup community. After a few years Mark Hasebroock convinced me to take a position as the twelfth employee at Hayneedle, helping manage the company’s growth. He, Doug Nielsen, and Julie Mahloch were leading the company at the time and had raised venture capital money from the coasts because there wasn’t really any venture capital money in the Midwest at the time. After Hayneedle was sold, Mark realized from his experience earlier that there was a large underserved market right here in Nebraska and the Midwest and decided to found Dundee Venture Capital. I had enjoyed my time at Hayneedle and realized this was a great opportunity for me. I joined the firm in 2013. 
 
3) What are some things you hope to see in the startup community in Nebraska over the next few years?
Growth is the biggest thing that I would like to see happen in the startup community in Nebraska. I would love to see an increase in the number of startups and their access to funding throughout Nebraska. When we started fundraising for our first two funds, and even now, we’ve had to do a lot of teaching potential investors what Venture Capital is and how we’ll invest their money. It’s my hope that we are able to get to the point where our purpose is well-known, and we can make Nebraska a hub for talent and innovation.
 
4) What makes a startup company stand out to you?
Companies stand out to me that have a clear vision and purpose with the ability to execute. They fall in love with solving the problem and can separate their emotions from their product/service, because often times it needs to change. The best startups have strong leadership and incredible founders that are completely focused and very coachable.
 
5) What is some advice you have for new angel investors?
Get to know the founders and the genesis story of the company. Have a process, and invest in startups that are solving a problem that is big. A lot of times the problem these companies are attempting to solve isn’t big enough to warrant the type of funding that they’re seeking.  Fact check to the extent you can, and do your due-diligence, make sure you’re getting the truth and know the whole story before you consider investing. Exercise control over your emotions and bias. Investing at this stage is very exciting but the amount of companies that actually make it is very small. 

Angel Investor Highlight: Victor Gutwein of M25 Ventures

  Victor Gutwein is the founder and managing director of M25, a venture capital firm based out of Chicago, Illinois.  M25's goal is to grow technology companies by investing in early-stage startups across the midwest. Apart from founding a successful firm, Victor is also an experienced and knowledgable angel investor. We asked him some questions to learn more of his thoughts on investing in the midwest:

1) How would you describe M25’s focus and why have you chosen to target the Midwest?
M25 invests in early-stage tech companies headquartered across the Midwest region - basically from Kansas City to Minneapolis to Pittsburgh. In just over 3 years, we've invested in 76 startups in 24 cities across 11 states - including 4 in Nebraska. We are pretty general on the tech side - our Nebraska portfolio includes marketing SaaS (opendorse and FourStarzz), fintech and digital health (LeverageRx) and B2C ecommerce (Faithbox). 
We've invested deeply in the Midwest for both strategic and practical reasons. I highlight most of them in this blogpost, but overall this region is an incredibly large, vibrant and diverse economy with an increasing percentage of all US VC deals but a miniscule amount of the capital. Additionally, in order to effectively make early (<$1M ARR startups raising $500K-$3M) venture investments, you need to be more "local" and tied in to the community - and you have to be close enough to make the plane flights and travel time cost-effective. 

2) What in particular has impressed you about Nebraska's entrepreneurial ecosystem? 
Locally, the environment is very close-knit. Founders, investors, service providers and community leaders all know each other and help each other. Now that I've gotten involved, it feels like I am one-degree away from every entrepreneur in the state. This is invaluable for me as I source deals, do due diligence and collaborate with others.

3) What technology trends excite you the most? 
Big, slow-moving industries and processes quickly adopting very mature tech (like cloud-computing and smartphones). I'm still impressed by how much opportunity I'm seeing with seemingly obvious and simple applications in industries like healthcare, transportation, finance and real estate. 
Additionally, we are just at the tip of the iceberg for the ways sensors / IoT will be embedded into our everyday lives. We'll be continually shocked at the ways Google Home / Amazon Alexa find ways to be always around us.

4) What makes a startup company stand out to you? 
Lean, rapid growth in key metrics (revenue, MAUs, pilots, customers, etc.). I am an expert in very few things, and I definitely don't know if a startup's product is great or not. But what I can look at are the customer signals, even if early. 

5) What is some advice you have for first time angel investors? 
Do a lot of deals ;) While you may get lucky on one of your first ones, the odds are your deal flow and ability to assess startups will only improve. Additionally, even the best VCs pick more losers than winners, so you need to ensure a large enough portfolio to capture winners in this power-law asset class. Don't know what I'm talking about? Check out this book by the well-respected angel investing guru, David Rose.

Highlight: Nisha Avey of DED

Nisha Avey is head of the Nebraska Department of Economic Development's Angel Investment Tax Credit program. We asked her some questions to learn more about the impact of this unique program.

1) How did the Angel Investment Tax Credit Program get started?  
In 2011, the Nebraska Legislature passed the Nebraska Angel Investment Tax Credit Act (LB 389), pursuant to which the Nebraska Department of Economic Development was authorized to issue up to $3,000,000 in refundable Tax Credits in each year commencing in 2011 and continuing through 2022.  LB156, which went into effect on May 28, 2015, raised the annual maximum allocation to $4,000,000.

2) How does the program work?
 The Act provides a refundable Tax Credit of up to 40% (depending on demand) of a Qualified Investor’s or Qualified Fund’s investment in a Qualified Small Business. Investors and Small Businesses wishing to participate in the program must get certified with the Department and tax credit allocations must be issued before the Qualified Investment is made. Upon allocation of a Tax Credit to a Qualified Investor, the Qualified Investment must be made within 90 days and notification of the investment provided to the Department. The Qualified Investor may then claim the tax credit for the year issued when filing taxes in the subsequent year.

3) Who is eligible to take advantage of it?
Nebraska residents who plan to make a Qualified Investment of at least $25,000 into a Qualified Small Business may apply for a tax credit. The Qualified Small Business must be headquartered in Nebraska, have 25 or fewer employees, at least 51% of payroll must be in Nebraska, and the primary business activity must be using proprietary technology to add value to, or researching, developing or producing a proprietary product, process or service in a high-technology field.

4) What do you see for the future of the program?
The Angel Investment Tax Credit program has been very popular and has been oversubscribed for many years, even after adding $1,000,000 per year. I would anticipate the program will be around for many years, possibly extended beyond the current sunset in 2022.

5) Do you have any specific stories or highlights you'd like to mention?
From 2011 to 2016, 614 Qualified Investments were made into 113 Qualified Small Businesses, with a total of $54,884,750 invested and $19,156,848 in credits issued.

Angel Investor Highlight: Jared Faltys of Northeast Venture Capital, LLC

  Jared Faltys is a founding member of Northeast Venture Capital, LLC located in Norfolk, Nebraska, as well as a Partner/Accountant with Christensen Brozek Faltys PC in Norfolk, Nebraska. Apart from being an ambitious entrepreneur, Jared is a successful and experienced angel investor. We asked him some questions to learn more of his thoughts on angel investing:

1) What interested you in angel investing?  
There were many things that initially interested me in angel investing, including the prospect of forming a group comprised of angel investors with different backgrounds and expertise to collaborate and ultimately invest in companies in our area of the state.  It was also exciting to have the ability to help entrepreneurs get the necessary funding to take projects from merely an idea to reality.  Empowering and supporting entrepreneurs in this way is very important to Northeast Nebraska and Nebraska as a whole.

2) What makes a start up company stand out to you? 
It is often the little things that make a startup company stand out to us.  Perhaps the most important factor that makes a company stand out to us is the company’s management and/or team. Many people have really great ideas, but the success of a startup company is often dependent on the management and their ability to adapt and execute.  In analyzing management, we often look at the leadership team’s experience, commitment and drive.  For us, it is a red flag if the leadership is developing the company in their spare time.  We feel that if they aren’t 110% committed with their time, then we cannot confidently commit our funds. 

3) In your opinion, what advantages do companies have starting up in Nebraska? 
Startup costs and barriers to entry are extremely minimal in Nebraska compared to other states.  Additionally, Nebraska is an extremely business-friendly state and we often seem to take that for granted.  Lastly, our workforce has a good work ethic which is a big advantage.

4) What do you hope to see in the future for the startup community in Nebraska? 
I would hope to see successful communities take the time to cultivate startup businesses and existing businesses.  As a result, I expect startups will be loyal to those communities as they remember what it took to be successful.  That is one of the keys to successful economic development.

5) What is one thing you've learned from your experience as an angel investor? 
I have learned many things but one of the most important things is to spend the time asking questions of and about leadership.  Just because it is a good idea doesn’t mean it will take off.  In connection with that, I remember not to be sold on a concept alone.  I always try to take the time, ask the right questions and then ask myself whether I would buy this service and whether I understand the industry.  If you don’t understand what you're getting into, it’s usually a good rule of thumb to walk away.  Walking away doesn’t mean that something is a bad idea, but it simply means that you have to understand what you are a part of and you believe in what they are doing.  Lastly, it’s important to set realistic expectations for yourself.  If you are investing to get rich fast then you might as well go to the casino instead.  Successful angel investing should include helping develop companies to be successful, which doesn’t happen overnight.