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Crowdfunding site Localstake sees surge in deals

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Localstake LLC, a crowdfunding startup that connects investors with small businesses, has seen business activity take off as it enters its second year, even as the crowdfunding industry at large awaits the finalization of federal rules.

The seven-employee Indianapolis firm launched in June 2013, raising funds for two companies in its first six months. Over the following eight months, it brokered funding for eight companies and has eight in queue. Localstake’s investor count tripled from August 2013 to August 2014 to more than 3,100, and they’ve poured more than $3 million into various small businesses so far.

“I think some of the recent regulatory changes have helped shed some light on this opportunity,” said co-founder Brandon Smith about what’s fueling growth. “We’ve definitely seen an influx in business activity and businesses that are interested in pursuing this type of financing.”

Smith Smith

Nationally, one of the most common crowdfunding platforms is Kickstarter, where backers contribute to a project in exchange for a gift. Localstake and other platforms take a similar approach, but instead of a T-shirt, the return on investment is monetary.

Localstake has done some equity deals, where investors get a slice of ownership, but it has honed in on debt financing, or so-called crowdlending. Small businesses looking for capital can list a securities offering on Localstake’s website, and investors with as little as a few hundred dollars can invest. The money is repaid with interest through revenue sharing.

The federal JOBS Act of 2012 paved the way for some of what Localstake does. But the U.S. Securities and Exchange Commission hasn’t finalized all the rules from that federal legislation, industry observers said, particularly those allowing non-accredited investors to engage in crowdfunding.

Accredited investors are organizations or institutions with at least $5 million in assets or individuals with at least $1 million in liquid net worth.

“We’re hopeful those rules are finalized this fall so that we can have equity crowdfunding for everybody early next year,” said Jason Best of Miami-based Crowdfund Capital Advisors, one of three co-authors behind the crowdfunding investment framework used in the JOBS Act.

Localstake nonetheless has been able to carve out a niche in the nascent industry. In 2013, the SEC lifted restrictions on the public solicitation of private securities offerings, expanding their reach beyond personal investment banking networks. That allowed Localstake to post offerings online.

And in July, Indiana enacted its own rules allowing non-accredited investors join the crowdfunding fray. It’s one of 12 states that have taken that step, according to crowdcheck.com.

These investors can only invest within state borders, but the two law changes paved the way for Localstake to advertise private offerings to a broad audience and attract a variety of investors. So far, Localstake has brokered investments between $250 and more than $100,000 in companies including Indiana-based Moody’s Butcher Shops, FastTrack Student Loans and Biologics Modular.

It also helped channel capital to two Michigan companies and one Wisconsin company.

The interest in alternative financing, including raising cash through crowdfunding, has been driven in part by small businesses’ struggles in obtaining bank loans.

“If you go talk to 10 small businesses in your community that are successful small businesses with cash flow and profit,” Best said, “I would assume that no more than two of them could get bank financing today.”

localstake-bars.gifThe path to financing may be rockier for startups. Bloomington-based Cardinal Spirits, which was founded in 2012, had considered venture capital firms and other alternatives before settling on Localstake.

The company hasn’t sold its first bottle of Vodka yet, president and co-founder Jeff Wuslich said, although it generates revenue by selling ancillary products. It was able to raise $850,000 through Localstake last summer and currently is building its micro-distillery.

“There are very few deals a year,” Wuslich said about venture capital firms, “and very few are interested in Indiana in a non-tech-related startup or a non-life-sciences startup.”

Localstake is not the only online lending platform out there. Websites like Funding Circle USA and Lending Club, both based in San Francisco, also facilitate capital to small businesses in need.

But Smith said that in many cases, such peer-to-peer lenders are more interested in the loan information—purpose, grade, interest rate—than in the company.

“This is more a pure financial transaction,” Smith said. “With crowdfunding, you are investing in a specific business and learning about that particular business as a part of your investment decision.”

The capital raised through Localstake doesn’t come cheap. Smith declined to provide effective annual percentage rates, but said the deals crafted so far allow investors to get anywhere from 1.5 to 2 times their investment back.

The terms vary because the loan payments are a percentage of gross income. So if a company is doing better than expected, it could pay off its loan sooner than expected, and vice versa. Smith said the target term is about 5 years.

“We do believe there’s added value in that you’re marketing your business through this method and you’re gaining potential customers as well,” Smith said.

Smith said Localstake encourages investors to be evangelists in the companies they fund, as opposed to being passive lenders. And thanks to new rules for unaccredited investors, it also empowers business owners to put their investment opportunity in front of people they already know.

Lauren Leibowitz, a member-administrator with the National Crowdfunding Association trade group, said Localstake stands out in the crowdlending space because its co-founders are broker-dealers. The designation allows them to facilitate the securities transactions, not outsource them.

Besides Smith, the other co-founders are Ryan Flynn and Kevin Hutchen. While the website is their primary tool, the three don’t have backgrounds in tech but come from the investment banking world.

“I really like Localstake because they promote that they have that financial industry experience,” Leibowitz said. “But the funding portals, if they do have it they don’t put it out there. They’re really just soliciting the deals.”

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MainSource opens first Louisville location

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MainSource Bank has served clients in the Louisville metropolitan area for 15 years, but it didn't have a location in the city until last month.

The first branch location for Greensburg, Ind.-based MainSource Financial Group Inc. (NASDAQ: MSFG), which is the holding company for MainSource Bank, in Louisville opened last month at 1901 Blankenbaker Parkway, in Bluegrass Commerce Park. The 5,000 square-foot branch is almost double the size of a typical banking center, according to Tony Schwallie, market president for MainSource Bank.

Like many bank branches, the new office has incorporated technological upgrades that are designed to improve convenience, eliminate human error and allow more personal interaction with the bank customers.

"It allows us more time with the client, even if it's 30 to 60 seconds," Schwallie said.

And that face time with customers is more important than ever, he said.

"When somebody comes into a bank today, they have a specific need," said Mike Gleeson, region president for MainSource Bank. He added there is less demand for transactional business with improvements to technology, but there's still a need for expertise and consultative approach.

Schwallie said employees at bank branches are serving in more of an advisory role, answering questions and helping customers with problems, rather than completing transactions for customers, and the bank is hiring to meet that need.

The new office will serve as the center of MainSource' Louisville operations, and it has a larger staff than a typical branch. Its 17 employees include mortgage loan originators, a commercial banking team, treasury management professionals and a financial adviser.

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Ivy Tech partners with trucking giant Schneider to train drivers

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INDIANAPOLIS — Ivy Tech Community College on Wednesday announced a collaboration with Schneider, one of the nation's largest trucking companies, to train drivers at its corporate college campus.

Schneider will pay all program costs for students seeking a Class A commercial driver's license. Covered in the program will be classroom instruction, behind-the-wheel training with instructors, licensing and endorsements.

 

After candidates successfully complete the 160-hour program, Schneider will pay the tuition costs.

"Schneider is proud of our long-standing relationship with Ivy Tech Community College, and we've hired many of their graduates," said Rob Reich, senior vice president at Schneider. "Their training meets the highest standards and prepares graduates for the industry."

Schneider employs or leases more than 414 drivers and owner-operated trucks in Indiana, and is currently hiring statewide, according to company officials.

"We have a comprehensive truck driving academy, and the opportunity to team with Schneider will make it one of the best driver training programs in the nation," said Sherman Johnson, executive director of Ivy Tech's Corporate College. "Offering these incentives up-front puts students on the fast track to a long and successful career."

In addition to the contract training program Wisconsin-based Schneider offers at Ivy Tech graduates, the company also offers a tuition reimbursement program for the graduates of commercial truck driving schools.

In other news, Ivy Tech has received a $200,000 grant from NASA to increase and promote STEM, or science, technology engineering, and mathematics programs. Four Ivy Tech regions, Central Indiana, Lafayette, Northeast and Wabash Valley will share the grant.

 

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NFL Players Association teams up with Indiana University's Kelley School of Business

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Offerings include career development, professional and certificate programs, and MBA degree

  • Sept. 3, 2014

FOR IMMEDIATE RELEASE

BLOOMINGTON, Ind. -- The National Football League Players Association has announced a partnership with the Indiana University Kelley School of Business to provide customized graduate-level educational programs to current and former NFL players.

The Kelley School will offer NFL players a unique model that will guide them from initial career development through professional and certificate programs and ultimately to a Master of Business Administration degree.

"For more than a quarter century, the Kelley School has provided customized programs that have met the needs of many students within a variety of corporate and educational settings," said Idalene Kesner, dean of the Kelley School and the Frank P. Popoff Chair of Strategic Management.

"Our leadership and innovation in delivering online programs provides the flexibility to design a winning experience for these accomplished athletes, many of whom will one day transition to new careers away from the football field," Kesner added.

“We are excited about the new opportunity the Indiana University Kelley School of Business is offering our players,” said NFLPA executive director DeMaurice Smith. “We pride ourselves in helping our members be knowledgeable about the business of football and putting them on the right path to succeed off the field. This relationship will achieve both.”

Among the tools that will be available to players is the Kelley School's acclaimed Me Inc. program, which enables participants to gain a better understanding of their goals and identifies a structured path toward attaining them. The program includes career coaching and career services.

After completion of the initial career development program, players may continue and enroll in online, noncredit programs on specialty topics such as personal finance, real estate, wealth management and entrepreneurship.

Upon completion of a noncredit professional program, players interested in developing more expertise will be able to enroll in a four-course certificate program. Many players will be able to directly enroll in the credit-bearing certificate programs as well.

Credits earned through the certificate programs will be transferable toward a 30-credit Master of Science degree or a 45-credit MBA. The programs will be delivered in a blended format that includes in-residence and online components.

A key feature of the NFLPA-Kelley MBA program will be the Kelley Capstone Experience, which puts teams of students to work on real-world strategic projects. This will provide students with an opportunity to apply skills and knowledge acquired in the MBA program to actual business problems that directly relate to each person's goals and objectives.

Those in the NFLPA-Kelley MBA program also will have an opportunity to participate in the school's global immersion courses, which present students with opportunities to understand and address problems faced by businesses in an emerging market. Currently the program is undertaking projects in India, Myanmar, Botswana, Ghana and South Africa.

All graduates of the NFLPA-Kelley MBA program who are interested in pursuing corporate careers will receive support from the same career services available to other Kelley graduates. In its most recent survey of MBA programs, Bloomberg Businessweek ranked Kelley No. 1 in terms of student satisfaction, career services and teaching.

Kelley was the first top-15 business school in the United States to develop an online MBA program. Ranked No. 1 earlier this year by U.S. News & World Report, the school has offered online education to corporate-sponsored employees and individuals for 15 years. Clients include Fortune 500 firms such as General Electric, General Motors, Ingersoll-Rand, John Deere and Cummins Engine Co.

The NFLPA-Kelley partnership is one example of customized education at the school. For more information aboutExecutive Degree Programs, call 812-856-5366.

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2015 Best Colleges Preview: Top 10 Business Programs

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Interested in exploring the rankings of these schools and others? Visit usnews.com on Sept. 9.

Applying to college is a journey that involves finding the right schoolsubmitting applications and then – if you're lucky – choosing among the acceptance letters and financial aid awards to find that place you'll call home for the next few years.

To steer you in the right direction, U.S. News surveys colleges and universities each year and ranks nearly 1,400 of them in different categories according to our methodology.

Here, we offer a sneak peek of the 2015 Best Colleges rankings.

These schools – listed alphabetically below – offer the top 10 Best Undergraduate Business Programs. These programs are accredited by the Association to Advance Collegiate Schools of Business and were ranked based on a peer assessment survey conducted in spring 2014.

School (name) (state)
Carnegie Mellon University (Tepper) (PA)
Indiana University—Bloomington (Kelley)
Massachusetts Institute of Technology (Sloan)
New York University (Stern)
University of California—Berkeley (Haas)
University of Michigan—Ann Arbor (Ross)
University of North Carolina—Chapel Hill (Kenan-Flagler)
University of Pennsylvania (Wharton)
University of Texas—Austin (McCombs)
University of Virginia (McIntire)

The actual Best Undergraduate Business Programs rankings of these and other schools will be available Sept. 9, 2014, on usnews.com.

To see full rankings, SAT and ACT scores, scholarship and grant information, graduation rates and more, sign up for the U.S. News College Compass.

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August 27, 2014 News Release Indianapolis, Ind. -- Sherry Rose, a seasoned economic development and marketing manager, will se

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Two local businesses were among 27 companies from across Indiana honored Wednesday as outstanding second-stage companies during the seventh annual Indiana Companies to Watch awards in Indianapolis.

The two local award recipients are RS2 Technologies in Munster and Peepers Reading Glasses, which is located in Michigan City and a division and brand of Sammann Co.

“We at RS2 are very pleased and honored to have been chosen as one of the 27 awardees in the 2014 Indiana Companies to Watch competition,” said RS2 Managing Partner Doug Robinson. “We want to thank all our employees, our dealer/integrators, the end users of our access control products and our suppliers and integration partners for helping us achieve this distinction.”

Founded by Robinson, Gary Staley and Robert Sulek, RS2 manufactures security systems.

“We provide card access systems like those used at Munster Community Hospital and other locations around the world,” Staley said.

RS2 Technologies software is used to control company access through computerized cards. RS2 also designs and prints the accompanying logo-bearing employee photo badges.

“We have 17,000 systems deployed worldwide,” Staley said.

RS2 has grown during the past 16 years, beginning with six staff members in 1998. It now has 18 employees in their Munster corporate headquarters and also have offices in California, Texas, Missouri, Ohio and Georgia, Staley said.

“When we started we all left a company in Illinois because of tax reasons and because of the locations in which our partners lived,” Staley said. “This has been working out very well for the cost of our building and offices are much less than it would have been in Illinois and our taxes are way less. The back of our building is about 15 feet from the state line. Those 15 feet means thousands or even hundreds of thousands in savings.”

Peepers co-owner Alec Sammann said the company is honored to receive the award.

“We’re extremely excited and honored to be one of the 27 Indiana companies to watch,” Sammann said. “Our passion for design combined with experience in the eyewear market has allowed us to bring affordable, fashion forward reading glasses to the people. We’re excited to see where the next few years take us as we continue to grow and innovate within the eyewear market.”

Sammann describes Peepers as “a leading designer and marketer of innovative, expressive reading glasses and sunglasses for both men and women.”

“Our products can be found at thousands of retailers throughout the United States including gift shops, book stores, optical goods stores, grocery stores and many other premium retail outlets under the brands of Peepers, SpecSee and PeeperSpecs," Sammann said.

The awards program is presented by the Indiana Office of Small Business and Entrepreneurship, its Indiana Small Business Development Center and the Indiana Economic Development Corp., and endorsed by the Edward Lowe Foundation.

Companies to Watch is an awards program that celebrates Indiana’s privately-held second-stage companies – those businesses that are past the startup phase – are considered to be established, and face issues of growth, not survival. This year, 165 companies from across Indiana were nominated.

"This year's class of Companies to Watch illustrates the creativity and business skills of Hoosier entrepreneurs," Lt. Governor Sue Ellspermann said in a news release. "They are already making meaningful contributions to our economy and creating jobs in a variety of business enterprises. I congratulate them on their success and demonstrating that Indiana is 'a state that works' for small business.”

Companies honored represent a variety of industries and have headquarters based in 12 counties throughout the state. From 2010 through 2013, these companies generated $379 million in revenue and added 622 employees, reflecting a 120 percent increase in revenue and 96 percent increase in jobs for the four-year period.

Companies to Watch firms must employ between six and 150 full-time equivalent employees, have between $750,000 and $100 million in annual revenue or working capital in place, and demonstrate the intent and capacity to grow based on employee or sales growth, exceptional entrepreneurial leadership, sustainable competitive advantage or other notable strengths.

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IEDC Names Outside Sales Director

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News Release

Indianapolis, Ind. -- Sherry Rose, a seasoned economic development and marketing manager, will serve as the director of outside sales of the Indiana Economic Development Corporation (IEDC).

In her role at the state's job hunting agency, Rose will spearhead strategies and opportunities to tell Indiana's story on the national stage to attract companies to do business in Indiana and help companies currently located in Indiana establish a successful foundation to bring more jobs to the state. This will include identifying and organizing opportunities to meet and interact with chief executives, increasing lead generation, pursuing business attraction prospects and facilitating community and economic development opportunities with community leaders statewide.

"Indiana is one of the best products in the world to sell, and it is in high demand," said Victor Smith, Indiana Secretary of Commerce. "With the best workforce in the country and our predictable, low cost of doing business, Indiana enables businesses to save money and create more jobs. Sherry will connect with long-standing Indiana companies, as well as attract out-of-state businesses that would gain a competitive advantage in Indiana, helping fill our pipeline with promising leads that will maximize opportunities to win more jobs for Hoosiers."

Rose joins the IEDC after an extensive 16-year career in economic, community, commercial and industrial development at Wabash Valley Power. While serving in various development capacities, she most recently led the group's efforts to attract new economic development opportunities to its member systems through collaboration with local, regional and statewide stakeholders. With a focus on community development, Rose facilitated the establishment and development of local economic development programs in more than a dozen counties across Indiana.

"Identifying and evolving the strategy and elements that are needed for companies and communities to achieve success has been my focus for more than a decade," said Rose. "I am excited to put that experience to work with the IEDC team, following leads and showing companies why Indiana is a state that works for business, in turn helping to create jobs and opportunities for Hoosiers in all corners of our state."

Prior to joining Wabash Valley Power, Rose also served in marketing and sales capacities with Bell Atlantic and GTE Mobilnet. She is a graduate of Kent State University and has served as president of the Indiana Economic Development Association and the National Rural Economic Development Association.

Rose's arrival comes on the heels of the most successful economic development start to a year in IEDC history. Already in 2014, the IEDC has secured job commitments from 188 companies that project to create more than 18,300 new jobs and invest more than $3.4 billion in their Indiana operations.

"This is already a record-breaking economic development year for Indiana and the growth of existing companies and the attraction of new business to the state is paramount to our continued success," said Smith. "With new additions to the IEDC team like Sherry on board to continue to broadcast Indiana’s story to more and more companies, Indiana is poised to build on that forward momentum."

About IEDC
Created in 2005 to replace the former Department of Commerce, the Indiana Economic Development Corporation is governed by a 12-member board chaired by Governor Mike Pence. Victor Smith serves as the Indiana Secretary of Commerce and Eric Doden is the president of the IEDC.

The IEDC oversees programs enacted by the General Assembly including tax credits, workforce training grants and public infrastructure assistance. All tax credits are performance-based. Therefore, companies must first invest in Indiana through job creation or capital investment before incentives are paid. A company who does not meet its full projections only receives a percentage of the incentives proportional to its actual investment. For more information about IEDC, visit www.iedc.in.gov.

Source: Indiana Economic Development Corp.

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Bank makes gift to FFA’s ‘Food for All’ program

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MainSource Financial Group recently gave $14,750 to the National FFA Foundation in support of its “Food for All” program.

The Food for All program allows chapters to apply for up to $2,500 to support yearlong service-learning projects that address local hunger needs. The donation will enable FFA to fund additional grants that will serve more students and individuals.

MainSource Financial Group operates 73 full-service offices throughout Indiana, Illinois, Kentucky and Ohio through its banking subsidiary, MainSource Bank, headquartered in Greensburg. Through its nonbanking subsidiary, MainSource Title LLC, the company provides various related financial services.

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Tony Monteleone Joins Launch Fishers

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Entrepreneurial outreach will be key focus in new role

Fishers, Ind. (August 6, 2014) – Launch Fishers announced today that Tony Monteleone has joined the team in the role of Entrepreneurial Services Director.  The newly created role includes several existing functions within Launch Fishers and Launch Indiana as well as some initiatives in-progress or in the planning stages at the rapidly growing entrepreneurial center.

“Tony represents many of the things we see in top entrepreneurial CEOs”, said Launch Fishers Founder, John Wechsler. “He is a smart entrepreneur with a great attitude and that famed mid-western work ethic and that’s what it takes to be successful in business. We are thrilled to have Tony on the team.“

Monteleone was most recently with Indianapolis-based PERQ as Business Development Manager - New Markets where he was responsible for establishing and creating the sales process, creating and growing the sales team, and generating revenue in the Retail and Restaurant spaces.  Prior to this role he was responsible for product leadership of PERQs FATWIN software platform, taking the idea from concept to product in twelve months on the way to the product winning Techpoint’s MIRA Awards for Marketing Technology in 2014.  

Commenting on his new role, Monteleone said  "we have all the right ingredients in place to be an entrepreneurial powerhouse. Being part of a team that is as passionate as I am to enhance the ecosystem needed for our entrepreneurs to thrive is very exciting for me."

Monteleone has founded two companies and organized events through Verge and Startup Grind. In 2012, he was named one of the “Top 50 Business Connectors” in Indiana. Tony also served as a judge at two startup weekends and the 2013 Everywhere Else Conference and was speaker at the 2014 Everywhere Else Conference.

“Tony’s experience in product ownership, sales, business development and marketing emerging technology make him uniquely qualified to help Launch Fishers and Launch Indiana member companies with the challenges faced by innovation-driven entrepreneurs” said Wechsler.

Monteleone’s responsibilities will include management responsibilities with Launch Indiana (the entrepreneurial mentorship joint venture between Launch Fishers, The Town of Fishers and The ISBDC), management and enhancement of The Indiana CoWorking Passport (a network of 20 co-working centers and innovation hubs throughout Indiana) and several programs at Launch Fishers including sponsorship outreach and finalization of the Launch Fishers video studio scheduled to be put into productive use in the Fall of 2014.  Several other programs are in the planning stages for 2015 and Monteleone will play an integral role in those initiatives as well. 

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Ivy Tech center's pact with NWSC Crane good for both

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Ivy Tech Community College’s Bloomington campus once again has showed how it can provide value in this area, formalizing a partnership last week with Naval Surface Warfare Center Crane. Ivy Tech will promote a vast array of technologies developed at Crane to the small business community of Bloomington and the surrounding area for commercial uses.

The partnership is between Crane and the Gayle & Bill Cook Center for Entrepreneurship at Ivy Tech. Steve Bryant, the center’s executive director, said Friday the two organizations have worked together well in the past, but this agreement formalizes the relationship. He said the center stands ready to do anything it can with its faculty members and business relationships to help NWSC Crane connect its portfolio of technologies with commercial users.

 

The reality of what happens at NWSC Crane is far different from and much more extensive than many people realize. Most people know it’s a Navy facility about an hour south of Bloomington, and some know it shares space with a smaller Army facility that stores a lot of ammunition. Fewer still realize just how high-tech it is: “a Federal Laboratory of the U.S. Department of the Navy, providing multipurpose research and development, manufacturing technology, engineering, testing, manufacturing, and fleet support,” as described in the news release announcing the formal partnership.  

It’s a huge economic driver in southern Indiana and its relationship with Ivy Tech will help it turn its large portfolio of technology developed for the military into other valuable uses. Bryant said Crane does a great job of categorizing what it has, but he hopes Ivy Tech will help it connect those products to business opportunities in the private sector.

The agreement is the first of its kind between Crane and Ivy Tech, positioning the Bloomington campus once again as a leader in Indiana’s community college system.

 

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