Venture capital we have raised. Angel investment and early-stage guidance4010
The EZ Pass: The next time you make a plane departure by the skin of your teeth because you paid tolls using your EZ Pass RFID chip, think of Santa Fe Capital Group, sponsor of the New Mexico Venture Capital Club where Los Alamos Labs scientist, Gary Seawright, described his RFID tag, initially designed for hogs’ ears, to a roomful of New Mexico angels, some of who went for the deal.
Peachtree Software: Ben Dyer, the founding CEO of Peachtree Software, reached out to Santa Fe Capital to raise the first venture capital round for Peachtree Software, whose accounting software gave meaning to the need for businesses to purchase the earliest laptop computers. The round was $360,000 and it was led by two Florida venture capital funds, notwithstanding that the company was based in Atlanta.
FoxMeyer Drug Company: Bill Tauscher and Richard Bard stood in front of a dozen CFOs of leading pharmaceutical companies and said they intended to buy Fox-Vliet with their company, Lag Drugs, which was in Chapter XI. They were abashed, and alarmed; but, the persuasive ability of Messrs. Tauscher, Bard and David Silver of Santa Fe Capital Group carried the day. Funding was provided by Warburg Pincus, Sprout Group and Citicorp Venture Capital. FoxMeyer grew to revenues of $4.5 billion and was acquired by Cardinal Health
Frontier Communications: Today it has revenues of $5.0 billion and a market capitalization of $4.7 billion, but when Santa Fe Capital Group raised the capital for the forerunner, Citizens Communications, it had revenues of less than $2.5 million. Tommy Hicks, the legendary Texas venture capitalist, was at the SBIC that led the investment.
Mayfield Fund: When Tommy Davis split off from Davis & Rock (providers of $450,000 to launch Intel Corp.), he selected David Silver to help him raise $6 million to launch Mayfield Fund. They traveled the country together for a few months in the early 1970’s explaining venture capital to insurance companies. Pension funds wouldn’t be able to invest in venture capital funds for another seven years.
TIE/communications: Santa Fe Capital Group raised a $350,000 grant from the Connecticut Economic Development Corp. for this first maker of telephones to compete with AT&T after the Carterphone decision of 1968. The TIE phone had such unique functioning of music on hold and conferencing.
Precision Pouch, Inc.: This Chicago start-up was advised by Santa Fe Capital Group in 2012 in a $5 million raise to begin pouching rice, raisin, cranberry, tuna, salmon and other food producers. When food producers switch from boxes and cans to pouches, they are out in front of the drive to reduce carbon emissions, because an 18-wheeler can carry many more pouches of Uncle Ben’s Rice from the manufacturer to Kroger’s warehouses.
Inception Digital Services, Inc.: The Wicks Group, a New York private equity fund, with $2 billion under management, and a specialization in media and entertainment, bought Bonded Services, Inc. several years ago to store movies in canisters all over the world. Inception Media Group, Inc., Santa Monica, CA, was growing its subsidiary Inception Digital Services, Inc. at the same time, which was storing movies on USBs. Santa Fe Capital Group was asked to find an acquirer for Inception Digital Services, Inc. in early 2012 and Bonded Services, Inc. made the purchase in July, 2012.
Cognition Technologies, Inc.: Is Siri understanding your commands better? Are you asking more complex questions and getting back better answers? If so, you can thank Santa Fe Capital Group’s portfolio company Cognition Technologies, Inc., which owns a natural language search engine. We launched Cognition in 2003 with angel capital, meeting multiple payrolls of the six linguistics converting every word in the English language to a digital construct. In June, 2013, the company was acquired by Nuance, Inc., which has the contract to improve Siri.
iBoats, Inc.: The leading e-commerce marketer of boats and boating accessories is not located on the ocean, but in Draper, UT. Bruno Vassel III called on Santa Fe Capital Group in late 2011, not a time when angel investors were opening their checkbooks, for assistance in launching iBoats. Santa Fe Capital Group came through with a moderate six figure round and today, iBoats has sales approaching of moderate eight figures, is EBITDA-positive, and has more than 110,000 products for sale to boaters; more than any other marketer of boats and boating accessories.
ActMedia: “You only need one”, is the halcyon cry of wizened venture capitalists and ActMedia was the biggest hit in Santa Fe Capital Group history. Bruce Failing, now a venture capitalist at Alerion Partners, and his family, conceived of the notion of monetizing the supermarket shopping cart, thus bringing new revenues to supermarkets and a new advertising medium to the brands. We raised $1,500,000 for one-third of ActMedia from Allstate Ventures, BankAmerica Capital and other venture funds in 1976 and the company was acquired by News Corporation, where it now does $1 billion in revenues p.a., for $650 million dollars. Our small equity kicker was our biggest ROI to date.
American Zoetrope Studios: When Francis Ford Coppolla’s 1982 movie, “One From the Heart” went way over budget — $2 million became $25 million when a replica of McCarran Airport and sections of Las Vegas were built from scratch – American Zoetrope became a candidate for a bankruptcy proceeding. Santa Fe Capital Group was called in to effect a workout and turnaround, and collateral was found among Coppolla’s previous highly successful movies to borrow the Company out of its rut.
Mesa Diagnostics: A flow cytometer was invented by scientists at Los Alamos National Lab and Donald Kerr, then the Director, approached Santa Fe Capital Group in 1983 to effect a technology transfer. The flow cytometer was capable of diagnosing strep throat and dengue fever, among others, in minutes, rather than several days. We raised $1.5 million to effect the first technology transfer from a national laboratory to an entrepreneurial company. The monumental event was recognized by Ronald Reagan in a speech at the time.
The Return of the Jedi, Dark Crystals: Santa Fe Capital Group did a number of fundings for Gary Kurtz, a minority partner of George Lucas in the Star War series of movies and a partner of Jim Jensen, in producing the movie, Dark Crystals. The latter was shot in EMI’s studios in London where the Santa Fe Capital Group staff worked in a room shared with 24 Miss Piggies.
Hispanic Communications Network: Jeff Kline, founder of what is referred to as the “NPR of the Hispanic community”, approached Santa Fe Capital Group for an equity round to grow his business. We did not see this as a venture capital deal, and thus we brought in Univision to both make a significant minority investment in HCN and to agree to broadcast HCN’s daily interest programs during prime time, seven days a week. The enhancement to HCN’s valuation was considerable.
Bustin Industrial Products, Inc.: In 2004, Mike Williams, a distributor of truck ramps and stairs based in a suburb of Dallas, TX, called on Santa Fe Capital Group to assist him in a leveraged buyout of Bustin Industrial, East Stroudsburg, PA, the leading manufacturer of ramps, stairs, grabbers and dozens of other products necessary in the container area of large trucks, a company doing more than $10 million in sales. We found a senior and a mezzanine lender, and Mike became the owner of Bustin Industrial. He grew it handsomely and sold it in 2013 to a private equity fund at a handsome capital gain.
Sundstrand’s Processor Division: Sash Spencer, a leading aggregator of manufacturing companies in the 1970s, reached out to Santa Fe Capital Group to raise $76 million of senior debt and the mezzanine capital to purchase the industrial processor manufacturing division of Sundstrand Corp. At the time, it was one of the largest LBOs done for an individual purchaser who put up a minimal amount of equity capital.
COLLISION HUB: Kristen Felder of Jonesboro, AR has spent most of her business career working in her father’s body shop putting new fenders on busted cars and running the paint shop. She moved to the other side of the table when she joined the auto insurance division of Nationwide Insurance. Kristen noticed that many of the people involved in auto accidents and repairing the banged up cars were angry at the other side. So, she read “Smart Startups” in 2008 and called Santa Fe Capital Group for advice and capital to launch a social network for the auto body repair field. We raised $100,000 for Ms. Felder from the Arkansas Angel Fund.
Sonic Branding Solutions: A few years ago, ring tones and wallpaper were a pretty big deal, especially for young girls. David Danon, a New York entrepreneur launched Sonic Branding in order to sell musical ring tones and wallpaper to this demographic (with their fathers paying the mobile carriers’ bills). The girls held ring tone dance parties and burned the minutes as they danced away; and changed ring tones, and danced some more. Santa Fe Capital Group was called on to bring in some capital, and we devised a line of credit for the Company with Chase Bank, using rev-sharing with the carriers as collateral.
Global Axcess: As much as we all dislike paying fees for using ATMs, if you can own the ATMs, it is a very good business. Global Axcess, Ponte Vedra Beach, FL, owned hundred ATMs and wanted to own thousands. It reached out to Santa Fe Capital Group to bring in capital to buy more ATMs. We organized an angel round and everyone made out well – the company and our angels.
Remington Brands: When Victor Kiam’s wife brought him a Remington Electric Shaver, he says in the iconic ads that followed, “I liked the shaver so much, I bought the company.” Actually, Santa Fe Capital Group found the target, as the Bridgeport, CT holding company was unloading a lot of subsidiaries. We introduced Victor to Chase, where David Silver worked and new lots of lenders, and by putting up some personal side collateral, Victor was able to purchase Remington Brands. He ran it so beautifully, he was able to parlay that LBO into a purchase of the New England Patriots.
Enstrom Helicopter: Legendary criminal defense lawyer, F. Lee Bailey, hired Santa Fe Capital Group, to raise expansion capital for this Green Bay, WI helicopter manufacturer. Following the financing and a growth spurt, Lee asked Santa Fe Capital Group if we knew of an acquirer, and we brought in Victor Kiam, who was in an accumulation period of his business career.
The Dallas Aces: Ira G. Corn hired Santa Fe Capital Group to assist with a number of capital raises. The first was to purchase the assets of the Charles Goren estate, he of the fabulous daily bridge column, and bridge accessories, like pads, pencils, tablets, books and cruise line bridge courses. The other assignment was to work on a roll-up by Ira’s other company, Michigan General Corp., in which convertible preferred stocks were used at increasingly higher conversion prices for successive acquisitions. Prior to the existence of private equity funds, Ira, Charles Bludhorn of Gulf + Western (now Viacom) and Harold Geneen of ITT were the GTCR’s of their era.
Nanocrystals Technology: This Briarcliff Manor, NY, early-stage medical science company came to Santa Fe Capital Group for an angel round followed by a $5 million institutional round. After three due diligence visits, we took on the challenge and completed the angel round. We have interest in the $5 million institutional round. Here’s why. The Company’s breakthrough is that it lights up the tumor without sending tubes up the groin of the patient – a lengthy and uncomfortable procedure. It does this sending magnetic nano-particles (“MNP”) to the tumor accompanying the chemotherapy. The MNP localizes the drug delivery, preventing the drug to travel through the blood stream, creating toxicity, when a small, hand magnet is held over tumor.
Albert Einstein, Cleveland Clinic and Mt. Sinai in New York are all involved in pre-clinical trials. Eight patents place a moat around Nanocrystals’ fascinating technology.
Pacific Pioneer Insurance Corp.: “Illegitimati non carborundum est”, Latin for “Don’t let the bastard swear you down”, was the carving highly visible on President Eisenhower’s desk in the Oval Office. It could also apply to the journey that Lin Wu Lan has taken to start and build a property and casualty insurance underwriter, licensed in eight states, and employing 350 people primarily in Cypress, CA. Thirty years ago, Ms. Lan needed to become self-sufficient after taking her two infant children and leaving her domineering husband. Seeing a billboard with an ad that read “Learn to Become an Insurance Agent”, Ms. Lan took the course. She saw a need to provide property and casualty insurance to Asian shop-keepers in Orange County, CA in the 1980s, and being Asian herself, there was immediate trust. That became the base of an empire that she has grown single-handedly. We were asked to raise capital to enable Ms. Lan to buy-out her early backers and today, she is the sole owner of a hugely successful insurance underwriter and agency. It recently became licensed in Illinois, and Ms. Lan is spending some time in Chicago building a sales organization.
MobilPro, Inc.: Jay Wright, founder and CEO of this aggregator of telecom assets, called on Santa Fe Capital Group to raise $55 million in asset-based loans to finance the purchase of a large quantity of pay telephones owned at the time by Cerberus, the New York City-based hedge fund that bought Chrysler Corp. when it was teetering into bankruptcy. We first met Jay when he was CFO of Speedcom Wireless, Inc., a small Sarasota, FL maker of wireless communications equipment, for whom we raised an angel capital round. Mike McKinney was CEO of Speedcom, which he and Jay took public via a reverse merger into a public shell. Our angels made more than 10.0x in one year on the Speedcom investment as a result of being able to exit our investment.
Brokering ISPs and Web Hosters: Santa Fe Capital Group sensed an opportunity to profit from the plethora of small, rapidly-growing Internet Service Providers (“ISPs”) and Web hosters in the period 1997 to 2001. During this time period, we raised relatively little capital for early-stage companies, and focused our skills on brokering the sale of ISPs and Web hosters to large aggregators such as Verio (which was subsequently acquired by Nippon Telephone & Telegraph), Earthlink, Winstar, RMI, Alltel and others. We were the selling broker in 90 of these transactions and to this day, some of the owners of the ISPs and Web hosters who we helped to make wealthy, are members of our angel investing group.