The Plain Dealer | By Michael C. DeAloia
CLEVELAND, Ohio — Big opportunity is making its rounds in the Northeast Ohio tech community this year. Take note, entrepreneurs.
Acceleration Systems is experiencing the largess of a new product launch rapidly achieving market acceptance. 43North, a Buffalo, New York-based tech accelerator, is seeking Cleveland companies to apply to join its next class of startup companies. Top winner at the accelerator this year wins a cool $1 million investment. And finally, Cleveland-based OnShift continues to reap investor confidence and cash as the company recently completed an $18 million Series D round of capital.
Accelerating Success. For all of you who follow the regional tech scene, I might suggest you keep an eye out for Acceleration Systems. This is a company that is going to have every opportunity for great success.
The core technology at Acceleration Systems delivers bandwidth optimization designed to increase the speed and efficiency of “any last-mile Internet connection.” In essence, if you are using a slow Internet connection or are in a rural area – the technology created by Acceleration will help create fast, reliable Internet connections.
The technology has been in the works since 2010, although the company was created in 2012 and patents were filed in 2013. In April of 2013, Mike Kister became president and CEO of the company.
Kister has a spectacular entrepreneurial resume including former president/CEO of SkyCasters, LLC (a satellite telecom/ISP) and co-founder of Multiverse, a startup ISP. Since joining the company, Kister has focused on proof of concept and completed a seed round in late 2013.
The key investor in Acceleration Systems is Pete Musser, famed founder, chairman and CEO of Safeguard Scientifics and now CEO of The Musser Group, a partnership capital group based in Philadelphia. To date the company has raised $5 million.
Acceleration Systems is now focused on a new product – StreamBed – that can compress and accelerate streaming data and encrypted data. Both open new doors for revenue growth. Encrypted data was roughly 3 percent of all Internet traffic in 2013, nearly 35 percent of all Internet traffic in 2015, and expected to be 70 percent of all Internet traffic this year. Businesses need their encrypted data to move faster through the Internet … queue Acceleration Systems for their entrance onto the national stage.
Kister has created a “global startup” by having software development in Ireland and CIO located in Hong Kong. Customers are global.
“I love doing startups in Northeast Ohio,” Kister said, because rent is inexpensive, tech talent is abundant and there’s a great Midwestern work ethic. “We move at a startup pace. Meaning we move really, really fast.”
Buffalo Billion. For all the startup entrepreneurs in Northeast Ohio … I am curious to know if you would like $1 million dollars? If so, you should apply for 43North‘s $5 million Start-Up Competition where the grand-prize winner receives a $1 million investment for a 5 percent equity stake (for those of you keeping score at home that is a $20 million post-money valuation). Nine other winners will share $4 million in investments. Other prizes include a year of free space in the 43North’s incubator, mentorship and incentives from Start-Up NY (including free taxes for 10 years). Not to mention a boatload of media exposure.
43North’s Director of Marketing Peter Burakowski recently met with various groups in Northeast Ohio to stir up a lot of excitement for the Buffalo, NY-based incubator’s startup competition.
Borne out of the Buffalo Billion Initiative to invest heavily in high-tech ventures – 43North is a world-renown incubator that has helped companies from Israel, Boston, New York, Taiwan and, yes, even Columbus, launch fast. The ultimate goal of 43North is to target great tech companies, invest in them, and move them to Buffalo. This activity then reshapes local perspectives on the city. Smart.
Burakowski was quick to offer, “Companies of 43North are treated like Rock Stars in Buffalo.” When was the last time anyone said that in Cleveland?
If interested, the 50-question application form can be found on the 43North website. There is an application fee of $100 and applications are due May 31. I would be interested in knowing of any Cleveland companies that apply.
18 Million and Counting. OnShift CEO Mark Woodka and Vice President of Marketing Marti Bowman recently talked with me about the company’s successful $18 million Series D capital raise. Luckily, Marty Felsenthal, managing member of Health Velocity Capital and lead investor of the company’s Series D round, was also available to chat.
It’s always exciting to sit down with an investor not from the Cleveland area to pick his or her brain on what attributes of the company made them want to invest. Turns out that Felsenthal was introduced to OnShiftthrough Jim Weisman over at BioEnterprise. While the initial conversation did not lead to an investment by Felsenthal and Health Velocity Capital – both he and Woodka kept in touch and maintained a great relationship. When the opportunity presented itself for an investment, Felsenthal was captivated by the special culture of OnShift.
“Not often in your investment career is a company executing well, has little churn in employees, is experiencing high growth, high margins and continuously beating its national competition, ” Felsenthal said. Yet OnShift is doing all of that and more.
Felsenthal is reassured about his investment, “I have a lot of conviction around OnShift.” As do others in Draper Triangle Ventures, Early Stage Partners, Fifth Third Capital, HLM Venture Partners, North Coast Venture Fund and West Capital Advisors joined Health Velocity Capital in completing OnShift’s latest round.
Uses for the $18 million in committed capital include building a larger sales and marketing department, adding products and other applications to the core software and enhancing OnShift’s customer care processes.
Woodka was quick to point out the great faith and respect he has in his investor base not to mention his four “take aways” in raising capital:
- establish relationships with investors before you need them
- focus on the business and what investors care about
- be great stewards of the capital
- be honest (not all news is good news)
Cheers to seizing opportunities and wishing great success to everyone involved at OnShift – one of the best managed tech companies in Northeast Ohio and now one of the best capitalized, as well.
**Click here to view the original article.**