Sep 142012
 September 14, 2012  Posted by at 5:00 pm  Add comments

Patientco, one of the companies I work with at ATDC, recently raised a $3.75 million Series A investment from BlueCross BlueShield Venture Partners and Sandbox Industries (read more here).

It’s an easy company to get excited about.  Co-founders Bird Blitch and Josh Silver are great entrepreneurs and terrific people.  I love working with them.  They are solving a huge problem that almost all of us can identify with – how to make sense of your healthcare bills and understand what you are paying for, what your insurance pays, and what you owe and who you owe it to.  They bootstrapped the company and built the business with a product that right out the gate provided value to the healthcare providers by getting them to sign up faster, and to the patients by making it easier to pay.  Josh built much of the product himself and I watched Bird pound the pavement to build their initial customer base.  Now it’s time to scale and further invest in making it easier to understand your healthcare bill – and that’s why now was the right time for them to raise this money.

At today’s ATDC CEO Roundtable, Patientco CEO Bird Blitch shared why he chose SandBox / BCBS from multiple offers, including local options, even though it didn’t meet one of his goals of raising the round from a local investor.  He talked about the obvious advantage that a strategic investment from BCBS through SandBox gives them access to help they need growing the company.

In explaining how much he enjoyed working with them, he talked about how he thinks they not only have more access to customers and partners that can help Patientco, but they also had more time to focus on his business.  His reasoning was other funds have to divide their time between two masters – LPs and the startups they invest in.  For SandBox, time spent with LPs (BCBS) is more efficient because they are actually spending time with his customers and partners.

I think that’s great insight.  In my two previous ventures, we had Total Technology Ventures (TTV) as an investor from their first two funds.  I saw a similar advantage.  Their funds were largely comprised of strategic LPs like Synovus and TSYS.  Prior to Bird’s comment, I thought it was working with smart people from the fintech space that made them great partners.  But looking back, I think the fact that they not only had the connections I needed, but the hands on time they spent with us is what made the difference.

At iKobo, all three of our venture investors (TTV, Council Ventures, and Greenhill) had a fintech focus that benefited us.  But ‘smart money’ doesn’t just mean industry strategic investors.  Council Ventures (now focused on healthcare IT) brought a unique value through their model of Operating Partners.  They engaged their experienced LPs to serve in their board seats and provide mentoring to their portfolio companies.  One of those Operating Partners, Jim Balkcom, was our Chairman.  His experience and leadership was invaluable.  I’m blessed to have him as a close friend and mentor to this day.

It’s easy to fall into the trap of defining smart money as VCs with large funds, great track records, and impressive rolodexes.  By that definition, we might think of ‘smart money’ as coming from outside the Southeast.  In my time as an EIR at ATDC, I’ve gotten to know local VC’s through a unique lens – seeing first hand how they work with the companies they invest in.  We may have a shortage of venture funding  – and as entrepreneurs we may wish the economics of deals here looked more like Silicon Valley – but we do have some awesome local investors that bring a lot more to the table than just money.

When raising money try to find smart money.  It might mean a strategic investor like Sandbox / BCBS or TTV – or it might mean a firm that works with it’s portfolio companies in building their companies by providing much more than money.  Like Bird and Josh at Patientco, you’ll be glad you did.

  One Response to “Smart Money”

  1. At tonight’s ATDC Entrepreneur’s Night Dave Williams told his Blinq Media story. In his advice to entrepreneurs he urged startups to make sure their first investment was from a strategic investor or angel that would partner with them in growing the company. For Dave, that was Paul Iaffaldono who brought strategic knowledge on the advertising space from his time leading ad revenue at the Weather Channel and prior advertising experience. Paul also ‘doubled down’ on his initial investment in Blinq when the company needed it most.

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