News Column

Northwest Indiana IPOs? NWI Tech Foundry hopes so

July 5, 2014

By Joseph S. Pete, The Times, Munster, Ind.



July 05--Are you sitting on an idea that could turn into the next Pandora, Snapchat or Dropbox?

Move fast. Tech entrepreneurs can land $15,000 in seed money, 13 weeks of instruction, office space and free web hosting if they get chosen for the first cohort of the NWI Tech Foundry, a new startup acceletator that will kick off in downtown Valparaiso in August. They will get coaching from investors and entrepreneurs who have been there before.

Launching a startup is risky, since about three-fourths of venture capitalist-funded endeavors never produce a return on the investment, according to a recent Harvard Business School study. But the rewards are potentially huge, since techies started several of today's top Fortune 500 companies in their garages.

Getting that first round of funding can be difficult in Northwest Indiana, which is concentrated heavily in manufacturing and known more for legacy brick-and-smokestacks industries. The NWI Tech Foundry, a new venture helmed by startup veteran Kelly Schwedland, hopes to change that.

"When you look at Chicago five or six years ago, it had a handful of startups and the early accelerators got a lot of ideas off the ground. There were maybe 50 startups in 2008, compared to 250 startups in 2013 after Excelerate Labs got ideas far enough along," Schwedland said. "Now capital is available for funding at the seed stage, when in 2008 investors were only looking at what I call 'A Round' funding for companies that already had revenue and customers. That's already shifted."

Fledgling technology companies that design software or offer web-based services can, however, participate in the new program in exchange for about 1 to 3 percent of equity. The NWI Tech Foundry aims to cultivate more of a startup ecosystem in Northwest Indiana, the way the Techstars accelerator in the Merchandise Mart has in Chicago. A long-term hope is to nourish at least two companies that are later successful enough to have IPOs, or initial public offerings, over the next decade.

The NWI Tech Foundry can accept companies with up to $50,000 in revenue, even if they have already received funding from investors. They could have a fully developed product or little more than an idea and the need for help coming up with a business model. The preference is for rounded-out teams rather than single-founder companies.

"What we're looking for, beyond the entrepreneurial team, is an idea with market size and scalability," he said. "We're looking at if they have validated their idea, and determined whether their solution is best to the product they've identified."

Selected companies, typically founded by people between the ages of 25 and 40 years old, get office and meetings spaces, a lounge and fast wireless Internet during the program. They will get mentored by entrepreneurs, investors, venture capitalists, legal experts, investment bankers and top executives from local startups.

At they end, they will get an opportunities to meet with potential investors from all over the country. NWI Tech Foundry also could decide to invest more than the initial $15,000 in exchange for a greater minority ownership stake.

"The goal with the 13 weeks is to bring high-capacity teams to where they can raise a seed round of funding," he said. "We want to get these companies funded, not just to have learned all this great stuff. Ultimately, we're looking at what the seed investors and angel investors are looking at."

The foundry is specifically looking for founders with vision, passion, energy, an appreciation of metrics and a knowledge of their domain. Founders also should be flexible, coachable and adaptive, with big ideas and the razor-focused execution that's needed to build an early stage company up to the point where it's bringing in revenue.

Applications, which can be filed online at techfoundry.org by July 21, have been coming in from across Northwest Indiana, and from cities such as Dallas and Cleveland. The inaugural program runs between Aug. 18 and Nov. 15.

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(c)2014 The Times (Munster, Ind.)

Visit The Times (Munster, Ind.) at www.nwitimes.com

Distributed by MCT Information Services


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Source: Times (Munster, IN)


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