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Innovation. It’s not where you start – it’s where you can go.

2011 Annual Report


“Elevate Ventures is providing exceptional value to Northern Indiana, as well as the entire state, through its Economic Gardening Program. The expert entrepreneurial services furnished to high-growth potential companies gives those companies sound analysis of their businesses and the tools to envision and execute a development plan for success. Several of our second-stage, highgrowth potential companies are participating in the Economic Gardening Program and are very impressed. We’re proud to be a sponsor of the program.” JOHN REGETZ, CO-DIRECTOR, LA PORTE COUNTY has a rigorous due diligence process a small company. What we found, however, with Elevate greatly facilitated our ongoing was asking for something, it was place for Elevate.” MICKEY LEVITAN, FOUNDER/CEO, COURSELOAD. “Elevate Ventures has become a critical piece of the funding continuum in Indiana. Elevate does a great job of identifying and supporting entrepreneurial endeavors that, given the resources, can attract top senior management talent. Teaming with the entrepreneur and Elevate, Indiana has successfully started a Brain Gain at the Board and executive level.” MARK REIFF, CEO, REIFF SEARCH SOLUTIONS. “Working with the Elevate team has been exhilarating and enlightening. Opening your business model, ideas and decisions to potential investors can be like opening Pandora’s Box; that has not been the case with Elevate Ventures. The Elevate team has been open-minded and they have challenged us in new ways. This practice has been “Elevate which, in all candor, was a bit of a gulp for was that working through the effort investment efforts. If a new investor likely we had already put it in ECONOMIC

DEVELOPMENT

ALLIANCE.

invaluable to us.” statewide small organization, Management seeks strong companies the entrepreneurial economy. Elevate enables both of people in realizing businesses. There morning because Elevate Capital worked together.”

“As a business financing Cambridge Capital to partner with other that share our vision that spirit of Hoosier businesses is key to maintaining a strong Indiana Ventures is a valuable partner. Working with Elevate Ventures our companies to reach farther and assist more their own dreams of building successful are Hoosiers who drive to work every Ventures and Cambridge DANIELLE

MCDOWELL,

CMO,

MY

BEST FRIEND’S HAIR.

JEAN

WOJTOWICZ,

PRESIDENT,

“Working with Elevate Ventures and the 21 Fund has been an invaluable experience for our MBAs interested in entrepreneurial companies. It has demonstrated to our next generation of rising entrepreneurial stars that the State of Indiana is committed to providing an innovationfriendly environment to establish and develop new ventures. Elevate Ventures is a validation that the future of Indiana resides in the innovations being created today.” DR. DONALD F. KURATKO, PROFESSOR OF ENTREPRENEURSHIP & INNOVATION, THE KELLEY SCHOOL OF BUSINESS. “The Economic Gardening Program is incredibly attractive to a variety of companies that have the potential to grow, but lack the means to do so. It only makes sense for the bank to position itself with a program like this one, because we ultimately want to see many of the same companies use our resources to achieve their business goals. It’s exciting to be affiliated with a program that helps us identify these CAMBRIDGE

CAPITAL

MANAGEMENT

CORPORATION.

high-growth opportunities and allows everyone to succeed.” STEVE WHEATLEY, VICE PRESIDENT, KEY BANK.


Table of Contents Elevate Ventures Testimonials > 1 A Letter from the Chairman & CEO > 2 Our Challenge in Indiana > 3-4 The Emergence of Elevate Ventures > 5-6 The Venture Development Conundrum > 7-8 Our Talent: Home Again in Indiana > 9-10 John Bodman: Experience at Elevate Ventures > 11-12 Ken Gramley: EIR to CEO > 13-14 Our People in the Field > 15-16 The Elevate Ventures Angel Network > 17-18 Smarter Investments For Indiana > 19 Department of Public Works Profile > 20 The Entrepreneurial Need in Northern Indiana > 21 The Quick Start Initiative: A Bridge Strategy > 22 About Economic Gardening > 23 Attracting Capital to Indiana > 24 Wellfount Case Study > 24 Our Toolbox Today > 25-28 Future Goals > 29-30 Stakeholder Acknowledgement > 31-32


Pictured Below, from left to right: Howard Bates, Chairman and Steve Hourigan, CEO

1


Innovation Is Alive and Well In Indiana: A Message from the Chairman & CEO

It has never been so critical for individuals to embrace innovation as it is today. Whether Hoosiers are struggling with unemployment, underemployment or recognizing the pace of global competition, the need for creative problem-solvers becomes imperative and necessary now. Elevate Ventures has embraced this in its entrepreneurial venture development efforts in 2011 and its plan for 2012. Access to mentorship continues to broaden as incubators, accelerators and organizations like Y Combinator, Tech Stars, Gen Y Capital Partners, JumpStart, Innovation Works and Elevate Ventures offer seed money, business guidance, material resources, and access to angel investors and venture capitalists. These resources are obvious manifestations of the current national entrepreneurship movement, which is further reflected in the host of economic topics prominent during the 2012 presidential campaigns centered around the critical catalyst for job creation in this country. Indiana economic development leadership have recognized and prioritized the importance of identifying, incentivizing, and accelerating high growth or “gazelle” Hoosier companies that have become the engine for growth and diversification in our state economy, according to scholarly research from the Kaufmann Foundation and the Team Pennsylvania Foundation. Because of the potential of entrepreneurship in our state, Elevate places a pronounced emphasis on providing incentives and programs that support innovators and entrepreneurs while leveraging the importance of access to talent, resources, networks and customers. Toward these aims, the IEDC and Elevate Ventures have established a partnership on building this entrepreneurial support network statewide. This supportive network will fundamentally change both the value proposition and risk taking culture essential for starting and successfully building businesses, providing a much needed foundation on which our Indiana economy can grow and thrive.

The reality of the negative impacts of economic duress over the last three years has forced the problem solvers to the forefront as we must adjust and adapt our view on how we address the growth in our state economy. The Elevate model is one of the cornerstones of that new strategy with a venture development formula providing not only investment capital, but entrepreneurial assistance involving experienced Entrepreneurs-In-Residence who have successfully built, operated and successfully exited high growth companies. In order to execute on this new formula, Elevate Ventures has initiated several key programs, including: > Providing seasoned entrepreneurial assistance to first-stage and second-stage entrepreneurs in Indiana. > Creating a state-wide investor and entrepreneurial network to make available angel investment and other forms of non-traditional capital to more Indiana companies. > Adopting a regional approach to encouraging and supporting entrepreneurship with a particular focus on Indiana’s under-served regions. Through these initiatives, Elevate Ventures has already made a great deal of progress. Not only have partnerships formed across the state, but unique efforts have also begun to tackle the economic challenges of the State’s Northern Regions. These new initiatives are expected to raise millions over the next year and launch program after program providing resources for entrepreneurs, supporting the growth of companies at all stages of development. You will see further expansion of these initiatives during 2012 and 2013. Elevate Ventures has demonstrated that it is a significant force for economic development in Indiana; company by company, region by region. Going forward, we will creatively nurture and develop emerging and existing high-potential businesses in order to create high-performing, Indiana based companies. Where we are now is only the beginning – because innovation is alive and well in Indiana.

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3


Our Challenge In Indiana

According to the 2011 Innovation Cities Index, no Indiana cities ranked in a list of over 300 metropolitan areas. These results indicate that Hoosier entrepreneurs face significant impediments, limiting both progress and growth. This reality is corroborated by recent data from Jumpstart, Inc., a venture development organization headquartered in Northeastern Ohio. According to Jumpstart’s 2010 study, the 17 counties in Northern Indiana were historically dominated by traditional manufacturing, including steel, industrial products, and automotive related businesses. Structural changes in competition, markets, and productivity have ravished the region‘s economy, resulting in persistently high unemployment and below average per capita income. Furthermore, the region‘s population has become stagnant. Thus, while innovation and invention were at the heart of the region‘s historic manufacturing preeminence, entrepreneurship today is not a significant element of the regions’ culture and economy. There are few success stories of startup businesses as a result of local venture and angel investment, there is little research and development in the region, and few organizations have emerged to assist entrepreneurs with the challenges they face. Those that have emerged are underfunded, understaffed, and lack essential talent experienced in entrepreneurship and investment capital. As a result, Northern Indiana has failed to capitalize on entrepreneurship to support its economic development and although their need for stimulating economic activity is apparent, their challenges are mirrored throughout many of the regions in Indiana.

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5


The Emergence & Growth Of Elevate Ventures

Elevate Ventures, Inc. is a 501 (c)(3) not-for-profit venture development firm launched in April 2011. It currently manages the 21st Century Research and Technology Fund investment for the IEDC under a professional services agreement. Elevate also provides advisory services to entrepreneurs around the state and supports strategic initiatives throughout central and northern Indiana.

To address many of the existing challenges in the Northern Regions, Elevate Ventures focused on attracting financial support from national foundations, the State and the communities in the region under recent initiatives like the Regional Entrepreneurship Action Plan (REAP) and the Quick Start Initiative, a one year bridge strategy to the full threeyear REAP.

In late 2011, Elevate Ventures partnered with the IEDC and successfully leveraged the 21st Century Fund to attract $34.3 million federal dollars under the State Small Business Credit Initiative. With a team and infrastructure already in place, Elevate Ventures launched seed fund, angel fund, and high-growth lending programs throughout Indiana.

By providing these resources through Elevate Ventures, Indiana communities are empowered to create, attract and retain high-growth companies, ultimately cultivating higher paying jobs, greater tax revenue and filling major gaps in the continuum of venture development activities in Indiana.

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Venture Development Conundrum Still Exists In Indiana Research Grants

Self Funding Friends & Family

Research Core Technologies

SBIR STTR

GAP GAP

Idea Development

21 Fund Gazelle Investments

Angel Investors Seed Funds

Product Development

GAP Institutional Investments

GAP

Early Growth

Rapid Growth

Maturity

“I’m here to provide some of my exp message that Elevate Ventures is here they don’t need to leave the state to fi Elevate Ventures Fills The Continuum Gaps Elevate Ventures, Inc.

Research Grants

Self Funding Friends & Family

Research Core Technologies

7

SSBCI Angel Funds

SSBCI Seed Funds

Idea Development

SBIR STTR

21 Fund Gazelle Investments

Angel Investors Seed Funds

Product Development

Early Growth

SSBCI High Growth Lending

SSBCI Enhancement

Rapid Growth

Institutional Investments

Maturity


One of Elevate Ventures’ primary focuses is to address the current venture development conundrum that still exists in Indiana through the provision of services, tools and resources. This conundrum exists for a variety of reasons - not only are technologies and ideas not fully commercialized because the resources are lacking, but a resulting limited number of startup successes lead to the perception that there are limited technology-based entrepreneurial activities. This perceived lack of opportunities creates a roadblock for attraction and retention of talent, as well as local and outside capital - which leads to the a continual struggle to commercialize technologies and ideas.

perience and to spread the

e as a resource for [entrepreneurs] – find quality assistance.� -Ryan Pfenninger, Entrepreneur-In-Residence Elevate Ventures addresses marketing confusion by identifying a clear funding road map, and it aims to fill that funding gap by leveraging public dollars into increased private investments. Elevate uses the tools at its disposal, including its Entrepreneurs-In-Residence, its investment team, the Elevate Business Ignition System, and support from various stakeholders to create a uniform evaluation process and to stimulate and grow viable entrepreneurial opportunities. Ultimately, solving this conundrum will lead to increased visibility of Indiana gazelle companies to regional and national investors. It will also lead to the development of more companies that will become high-impact and highgrowth companies.

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Pictured Below: Ryan Pfenninger, Entrepreneur-In-Residence

9


Our Talent At home again in Indiana

Ryan Pfenninger has a long list of accomplishments. He started and sold a company from his college dorm room before the age of 20. He’s worked with stars including the infamous rapper T-Pain while working at Smule, a well-known creator of popular iPhone applications. He’s the Chief Technology Officer (CTO) for MarketRiders, one of the most publicized online resources for private investors, and consults with some of the fastest growing startups in the country. He accomplished most of these in one of the strongest entrepreneurial communities - Palo Alto, California. Why did Ryan decide, one day, to pack up and bring his skills back home to Indiana? The answer, in large part, is because of the emergence of entities like Elevate Ventures. Ryan joined Elevate Ventures shortly after its inception in 2011 as an EntrepreneurIn-Residence. “I’ve watched the Indiana entrepreneurial community struggle for so long and in so many areas - I’m tired of watching Indiana schools cultivate so much talent only to watch the smartest kids leave. Unlike a decade ago when I graduated, I want to make sure that if someone wants to start a company in Indiana, they can find the resources here to succeed. Being part of Elevate Ventures gives me an opportunity to be a part of the resources that Elevate provides for Hoosier entrepreneurs.” Elevate Ventures works to constantly attract successful entrepreneurs like Ryan who can work with startup companies that are facing many of the same struggles he and other entrepreneurs have faced before. At Elevate Ventures, our staff are here to identify strengths, diagnose weaknesses, and help fill gaps.

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John Bodman: Experience at Elevate Ventures

As the most senior member of the Elevate Ventures team, John Bodman knows from experience that it is very easy to overvalue funding and undervalue expertise – and that those tendencies are true both for venture firms and their applicant companies. “I know too well that few venture capital firms practice the business principles that focus on the creation of jobs, as well as economic growth. Firms and organizations often believe that money is all that is required to get the job done. More often than not, however, both money and a certain expertise are needed to take a company to its next level,” Bodman says. At Elevate Ventures, expertise is not an undervalued quality. “That’s why we have people like John Bodman - he has a wealth of experience and deep insight into how we can be effective,” says Steve Hourigan, CEO of Elevate Ventures. John Bodman comes to Elevate Ventures with over 35 years of experience in the oil, gas, nuclear and coal industries and from his position as President of Amax Coal Sales Company, the third largest coal company in the United States. He has spent the last 15 years owning, operating, managing and coaching small companies to achieve their next levels of excellence and profitability. He graduated with a Bachelor’s degree from Princeton University and an MBA from Harvard University. Recently added to the Elevate team as a Venture Partner, Bodman explains that, “Elevate understands the essential role of expertise, something they demonstrate in each of their encounters with an applicant company”, he explains. “They sit down and evaluate not only funding needs, but also the team, their business plan, and a range of other aspects of what makes a particular company better than its competitors.” When asked why he sees value in Elevate Ventures, Bodman replied simply, “It is built to be a difference maker in Indiana.” What Bodman doesn’t realize is that it is his expertise and the quality of his coworkers that truly makes the difference.

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Pictured Below, from left to right: Ken Gramley, CEO at Emerging Threats Pro and Matt Jonkman, CTO at Emerging Threats Pro

Ken Gramley: EIR to CEO

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Matt Jonkman founded Emerging Threats Pro with a vision: he wanted to help customers repel the increasingly frequent network attacks with which they are barraged. A technical innovator with a long career in security, Jonkman created a team to deliver a product which does just that, and it has received great feedback from customers and experts in the security industry. But there were pieces missing to their puzzle particularly on their management team. Part of the answer arrived with Ken Gramley, a Rose-Hulman graduate and long time resident in North Carolina, who had recently joined Elevate after his last venture with a security appliance company. Ken was looking for his next startup


leadership opportunity through the interface platform provided by Elevate Ventures and he soon recognized his own complementary skill set to Matt’s with Emerging Threat Pro. Just a few months later, he became the company’s acting CEO. This allowed Matt to focus his expertise on the technology as CTO, while Ken took the reins in fund-raising, building the team and its resources, and managing the business to help the company grow its revenue. According to Ken Gramley, “The answer to a successful company is rarely only additional funding. In this case and in many others, Elevate Ventures recognized that, in order to build a successful company that would continue

growth well beyond its potential, it needed help attracting the right members to its team. Matt was one of many Hoosier entrepreneurs that needed more than funding – he needed a partner that would have a vested interest in his growth and who could provide the resources to achieve it.” For more information on Emerging Threats Pro, please visit: http://www.emergingthreatspro.com

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Northern EIRs, pictured from left to right: Tim Braun, Mark Vreeke, Dave Corcoran, Charlie McGill and Robert Clark

TIM BRAUN LOCATION: North

Central Indiana Region 2011 HISTORY: Most recently, Tim held the role of President & CEO of Lucid Energy Technologies, which he led through the R&D process, product development and market strategy for its LucidPipeTM system. Previously, Tim served 11 years in the trust and investment industry. WITH ELEVATE SINCE: August

DAVID CORCORAN LOCATION: Northeast

Indiana Region 2011 HISTORY: David has provided consulting services for the last decade to companies including Apple Computer, Sun Microsystems, Department of Homeland Security, NIST and many others. Experienced in angel fund-raising and successful exits, he sold his last company to VeriSign, Inc. He continues to serve in senior business development roles, including his current work on Symantec’s mobile authentication technologies. WITH ELEVATE SINCE: November

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Our People In the Field

Elevate Ventures has both the resources to carry out its initiatives and a team of experienced Entrepreneursin-Residence (EIRs) to work effectively with Hoosier entrepreneurs. These EIRs, with the right knowledge base and footprint in the field, guide entrepreneurs through all stages in their company development and nurture the establishment of a network of angel investors and other resources.

ROBERT CLARK LOCATION: Northeast

Indiana Region 2011 HISTORY: Robert has been an entrepreneur for over 20 years. He previously founded the Clark Angel Network, and has a consistent history of concept development, business planning, capitalization strategies, fundraising and executive oversight. WITH ELEVATE SINCE: July

CHARLIE MCGILL LOCATION: Northwest

Indiana Region 2011 HISTORY: Charlie has over 30 years of entrepreneurial and business development experience, and has been recognized for his small business activity in the State of Indiana by the SBA and the U.S. Congress. Under his lead, the City of Valparaiso’s Economic Development Center benefited from over $53 million in private investment, after which he was named the first Executive Director for the newly formed Entech Innovation Center. WITH ELEVATE SINCE: October

MARK VREEKE LOCATION: North

Central Indiana Region 2012 HISTORY: Mark earned his PhD in Chemistry from the University of Texas in Austin. He was one of the founding partners at Rational System, which is currently responsible for managing the transportation of 15-20% of the entire US natural gas market. Prior to and during his tenure at Rational Systems, Mark was employed by several medical device and diagnostic firms – however, he most notably played a role at TheraSense in the launch of a product resulting in the eventual purchase of ThereaSense by Abbott for 1.2 billion. WITH ELEVATE SINCE: January

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“Elevate Ventures is committed to supporting Angel Investing in Indiana, and this source of capital is essential to

economic growth and the

advancement of technology” – Dave Clark, Venture Partner

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The Elevate Ventures

Angel Network The Elevate Ventures Angel Network (EVAN) is the largest organized network of angel investors, angel groups, and other resources in the State of Indiana. EVAN fosters investment in Indiana-based seed and early-stage ventures by providing deal flow, due diligence, and co-investment capital. It connects entrepreneurs to growth-stimulating expertise and other valuable resources. EVAN’s members contribute to the growth of Indiana’s economy by supporting new entrepreneurial leaders with not only capital, but with technical expertise and support. In the end, this support system fosters business growth and employment opportunities across Indiana. EVAN will be comprised of new and veteran angel investors who collaborate with multiple objectives, including:

> Educating new angel investors and enhancing the skills of veterans > Growing an enduring collaborative network of investors > Identifying and investing in promising, early stage companies > Tapping the collective expertise and contacts of the group > Building momentum for continued funding of early stage Indiana companies Elevate Ventures recently launched the Indiana Angel Network Fund, a source of capital dedicated to supporting angel investing activities in Indiana-based companies. Please join as an investor today to learn more about connecting with entrepreneurs in Indiana at: www.elevateventures.com/apply

“We see Elevate Ventures as an integral part of the capital formation ecosystem that is developing in Indiana. They have the knowledge, depth and experience to help entrepreneurs. Equally important is their willingness to work with groups like StepStone Angels to help identify, evaluate and co-invest in deals with us, which ultimately makes our investment much more valuable to the companies we support.” Oscar Moralez, Managing Partner at Stepstone Business Partners 18


Smarter Investments For Indiana Investments in Innovation for a Better City

The Elevate Ventures “Investments For Indiana” Program leverages its commitment to Hoosier companies who are in the best position to solve many of the Hoosier municipal challenges. These include obstacles like CSO EPA compliance requirements, dewatering solutions for municipal waste that can reduce weight thereby decrease “tipping costs” for removal of the waste for municipalities, and the cost-effective delivery of lighting solutions for towns and cities that will reduce the energy cost and maintenance of these lighting solutions. The combination of these technologies could serve to reduce the overall burden and cost on municipal leaders who are looking for economical and scalable solutions that help abate the reduction in tax revenue and provide an equivalent level of service on a lower budget. Six dimensions are integral to this concept: smart economy, environment, governance, lifestyle, transportation, and community. There are currently 102 smart city projects worldwide, with Europe leading the way at 38, North America at 35, Asia Pacific at 21, the Middle East and Africa at six, and Latin America at two. Elevate Ventures hopes to move forward with this project through a partnership with municipalities and their energy consultants.

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Department of Public Works Profile In developing the Elevate Ventures “Investments for Indiana” Program, Elevate staff looked to Gary Gilot, the Director of the Public Works for the City of South Bend. Recently named the “Public Works Leader of the Year” by the national American City & County magazine, Gary attracted the national spotlight after implementing several practices that emphasized the use of cost-effective technology innovation. A few of his team’s accomplishments include: > Forming a partnership with the University of Notre Dame using high-performance computers to heat the Conservatory greenhouse at a local park > Managing combined sewer overflows through CSOnet and addressing a significant environmental challenge through low-cost innovative technology, rather than high-cost conventional infrastructure > Using easy, low-cost techniques – like using salt brine to maintain winter roads and creating an in-house concrete crew for city construction on road work – to keep costs down for the city Gary Gilot, much like the “Investments for Indiana” Program, emphasizes the need for creative economic thinking for high-efficiency,

low-cost solutions. Gilot’s actions represent all of the tenets of the program’s philosophy, from the need for a smart economy to a concentration on transportation, environment and governance. When asked what kind of value he saw in implementing the “Investments for Indiana” Program, Gilot responded that, “We all must do more with less. We need to actively look for better answers. Local government needs innovation and entrepreneurial calculated risktaking. We are looking for ways to reallocate resources and find better technical solutions with lower life cycle costs...The intrinsic rewards and satisfaction of being part of a high-functioning city government, that can operate like a business and collaborate with universities, helps attract and retain change agents and bring out the talent and self-motivation of our entire engaged team. This formula will work for other cities and through similar minded cities networking we can accelerate the pace of change and adoption of new ideas and approaches in the state and the nation.” Gilot is a licensed professional engineer in Indiana. He has a bachelor of science degree in civil and environmental engineering from Clarkson University in Potsdam, New York, and a masters degree in business administration from Indiana University at South Bend.

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The Entrepreneurial Need in Northern Indiana:

Creation of the REAP In 2010, Northern Indiana communities were ready for a change – and after a partnership between the Economic Development Administration (EDA) of the US Department of Commerce, the John S. and James L. Knight Foundation, the Surdna Foundation, the Indiana Economic Development Corporation (IEDC), private investors in Northern Indiana, Jumpstart Community Advisors, Inc. and Elevate Ventures, Inc., they were ready to make it with the development of a collaborative plan. Under the partnership, a customized plan termed the Regional Entrepreneurship Action Plan (REAP) was developed to help the three Northern Indiana regions develop stronger regional entrepreneurship and innovation capabilities, stimulating job growth and wealth creation. The REAP outlines the rationale and process for providing regional entrepreneurs with expert assistance and investment capital, accelerating the growth of high potential startups and existing companies.

Primary Goals of the REAP > Focus on creating more new firms > Remove barriers that block emergence of high-performing companies > Target areas of the Hoosier economy that may be fertile sources for high-growth The funding for the REAP will total $18 million over the next three years, with $9 million from national funders, $6 million from State programs through Elevate Ventures and $3 million from regional organizations and investors. Of the $18 million, 87% of the funding will go directly to services and investments in highpotential startups and Economic Gardening companies, while 13% will be allocated toward administration.

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The Quick Start Initiative:

A Bridge Strategy Quick Start is a one-year pilot program designed to provide expert advisory services to accelerate entrepreneurial opportunities and assist small high-growth companies. It is intended to stimulate regional entrepreneurial activities and generate early-stage results in support of fundraising for the REAP. Launched in October 2011, Quick Start was developed to support the future activities that would be executed during the REAP. In addition to the initial creators of the REAP, the Quick Start program is also supported by the following: > Each of the three Northern Indiana regions > Local Economic Development Organizations (LEDOs) > Regional Economic Development Organizations (REDOs) > The Indiana Small Business Development Center (ISBDC) > University Partners

Strategies & Implementation > Implement an Economic Gardening Pilot Program to identify and assist 75 high-potential growth companies in northern Indiana via a partnership with the Lowe Foundation to achieve rapid growth. > Place at least one Entrepreneur-inResidence (EIR) in each of the three Northern Indiana regions to assist entrepreneurs and provide new highpotential ventures with solidified funding and business execution strategies. > Form a statewide network of angel groups to organize and empower local leadership and build investor knowledge while leveraging private investment into promising companies.

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About Economic Gardening The Elevate Ventures Economic Gardening Program provides sophisticated technical assistance to second-stage companies that have both the intent and capacity to grow their business. This Indiana program will provide economic gardening assistance to selected Indiana businesses in the Northern Indiana regions, as part of the REAP. These companies will interact with an experienced national economic gardening team that will deliver economic gardening services tailored to each business’ particular situation.

Examples of Technical Assistance Provided by the Program > Identifying qualified sales leads by sorting contents of extensive databases > Mapping geographic areas to facilitate targeted marketing efforts > Reviewing core strategies related to commodity and/or niche markets > Analyzing employee temperament to build strong management teams and recruit new hires that fit the organization’s dynamic > Examining social media utilization to connect with customers For more information about the Economic Gardening Program, please visit: http://www.elevateventures.com/programs/ economic-gardening


Wellfount Case Study Wellfount is an institutional pharmacy, specializing in the delivery of pharmacy services into skilled nursing homes by providing on-site dispensing services and technologies at the point-of-patient care.

Attracting Capital to Indiana Although Elevate Ventures focuses its investment and advisory services on Hoosier companies and entrepreneurs, they are constantly working to draw other sources of capital into Indiana. These sources of outside capital are critical to entrepreneurs, because Hoosier companies must be able to find the funding they need in order to continue their growth. Elevate Ventures understands this need and is willing to step in at any phase to provide the support those entrepreneurs require.

Wellfount integrates three key technologies that transform the 12-touch prescription delivery structure typical among traditional institutional pharmacies into 6 touches. The benefits to long-term care facilities are multi-fold: up to 50% reduction in drug waste leading to lower drug costs, increased staff time on care-giving versus non-value add administrative paperwork functions, reduced prescription-dispensing errors, and automated compliance and audit trails. The 21st Century Fund invested in Wellfount in mid-2010, providing critical momentum for the company to secure a $6 million series A from the Michigan-based venture-capital firm, Arboretum Ventures. In addition, Elevate Ventures’ staff played an active role at the Board level with impacts on sales strategy, management round-out, and operational efficiencies. Paul Leamon, CEO and President of Wellfount, speaks highly of the 21 Fund investment and the company’s on-going relationship with Elevate Ventures. “The 21 Fund investment in 2010 came at a critical juncture for Wellfount, whose entrance into a high growth stage was constrained by private funding and economic challenges. Elevate Ventures’ staff, in the 18 months since their investment, has supported our critical decisions as we position ourselves for significant growth in the coming years.” Wellfount is Arboretum Ventures’ first investment in Indiana. As a result of this direct connection, Arboretum Ventures is now working with Elevate Ventures to actively evaluate other Indiana-based venture opportunities. You can visit the Wellfount website at: www.wellfount.com

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BU SIN ES

Dev Produ ct elom pen t

What is the purpose and advantage? > These Toolboxes or Tool Series save time and reduce mistakes because they were created, adapted and used by experienced entrepreneurs and executives as they mentored their own investment portfolio of startup companies. Who uses these tools? > EIRs and investors who work with early stage companies. What problems does it address? > A lack of human resources to provide guidance to entrepreneurs as they start their own companies > The need to take entrepreneurship programs to the next level of service within a constrained budget

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> The need of investors to ensure the success of the startup companies that they invest in > The need to do more to get innovative technologies commercialized. What are the benefits of using this system? > This complete system of tools and processes is specifically designed to “ignite” the progress of companies at an early stage. The result - a significantly higher success rate for startups. > The Business Ignition System allows mentors with different skill sets to provide consistent, critically needed assistance to entrepreneurs – not just advice.


Intake

Business Ignition System Evaluation & Selection

Angel Co-Investment Program

Presentation to Elevate Team

Presentation to Elevate Team

Due Diligence

Comprehensive Due Diligence

Elevate Committee Review

Elevate Committee Review

Co-Investment Eligibility Determination

IEDC Review

Closing

IEDC Board Review

Company Oversight

State Budget Review

21 Fund Gazelle Program

Closing

Active Monitoring

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e4 Process engage In the beginning of an interaction with any company, Elevate engages by understanding the team, the product, the marketplace and the challenges that the company faces in its fundraising and growth.

evaluate Our EIRs assist companies with the Elevate toolbox, identify potential gaps and weaknesses and provide the resources that it believes will lead these companies to success.

emerge The company emerges with new plans for its management team, its business plan, potential funding resources and many other tools that will help it compete in the marketplace.

expand With Elevate’s active and continued support, the company is prepared to achieve its potential in wealth creation, economic impact and job growth.

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Pictured Above: Ting Gootee, Vice President of Business Investments

The e4 Process & the Elevate Evaluation Elevate Ventures transforms high-potential companies into high-performance organizations – and they do so through understanding that not every company is ready for an investment decision when they walk through the door. Elevate uses a standard set of tools, like its Elevate Business Ignition System and its experienced Entrepreneurs-In-Residence, to engage a company before making an evaluation and to provide assistance before reaching an investment decision. “Investors look for certain characteristics in both entrepreneurs and their business ideas - but entrepreneurs often don’t know how to interact with investors effectively. We know that most venture opportunities don’t come perfectlybaked. Our value-add is to make them ready,” states Ting Gootee, who spent her entire career in investment management and has an MBA in finance and a Chartered Financial Analyst designation. “It’s almost like killing two birds

with one stone. Entrepreneurs come out of the process with improved strategies and pitches. By virtue of making entrepreneurs ready via a standardized process and criteria, investors are also presented with consistency in deal flow and deal quality.” Since its official launch in August 2011 through January 2012, Elevate Ventures has engaged with over 180 entrepreneurs and has provided over 1000 hours in assistance. “We measure our effectiveness by the number of entrepreneurs we assist, and the number of those who receive private funding.” Ting continued, “Ultimately, we are measured by our entrepreneurs’ success in driving economic growth and wealth creation.”

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Future Goals Elevate Ventures has developed a number of impactful initiatives and resources, and it has made those opportunities available to entrepreneurs all over Indiana and beyond. It is only through meeting the standards set forth here that Elevate will continue translating its own success through their portfolio and prospective companies.

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Qualitative Measures > Create a nationally competitive project selection process > Develop a nationally recognized venture development program with top-notch Entrepreneurs-In-Residence > Foster an environment and a culture that promotes wealth creation and intelligent risktaking and creates a hub for talents in various sectors


Pictured Below (First Row, left to right): Ting Gootee, Dave Clark, Phil Lodato, Matt Tuohy, Jonathon Fruchte, Linda O’Keefe (Back Row, left to right): Rachael Boss, Tim Braun, Charlie McGill, Steve Hourigan, Howard Bates, Karl Koehler, Mark Vreeke, Ryan Pfenninger, Dave Corcoran, Alex Bowers, Robert Clark and Ken Gramley

Quantitative Measures > Establish a statewide angel network of at least 12 Hoosier communities > Raise funding from national foundations, the State and the three (3) Northern Indiana regions for the REAP and Quick Start Initiatives for a total of $18 million over the course of the next three years

> Increase amount of dollars invested state-wide > Raise capital leverage of public dollars from 3.4 to 4 > Grow the number of successful company exits > Increase the number of high-paying jobs in technology-based ventures

> Improve deal flow by generating over 400 leads annually > Set the target number of 21st Century Fund investment recommendations to twelve annually

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Stakeholder Acknowledgment Northwest Indiana Stakeholders North Central Indiana Stakeholders O’Merrial Butchee – Director, Gerald I. Lamkin Innovation & Entrepreneurship Center, Ivy Tech Kathy DeGuilio-Fox – Director, Purdue Technology Center Don Koliboski, ED Director, NWI Forum David Tang – Sr. VP, National Material, L.P. Frank Szczepanski, CEO, IV Diagnostics Greg Crowley, PE – President, Crowley Engineering Group, LLC William J. Lowe – Chancellor, Indiana University NW LeAnn McCrum – Director, SBDC Robert Pellar – Horizon Investments John Vinzant – CEO, Vinzant Software

Northeast Indiana Stakeholders Joe Ruffolo – Partner, Ruffolo Benson Chris Straw - President & CEO, Team Quality Services Kay Schwob, Director - Huntington University Enterprise Resource Mike Sutter – Owner, Michiana Laminated Products, Inc. Rick Sherck – Executive Director, Noble County Economic Development Denny Springer – Principal, PolyForm, LLC Mark Sapusek – Visionary Web Lane Gerber – CEO, Trusted Manufacturing Brian Emerick – President & CEO, MicroPulse, Inc. Rae Pearson – President, Alpha Rae Personnel, Inc. Karl LaPan – President & CEO, Northeast Indiana Innovation Center Daryl Yost – Director, Northeast Indiana Innovation Center Gil Perry – Counselor/Trainer, Partners in Contracting Corporation Jane Rich – Regional Director, Northeast Indiana Small Business Development Center Alan Tio – President, Whitley County Economic Development Lionel Tobin – President, Stuart Manufacturing Mark Becker – Executive Director, Northeast Indiana Fund/ Northeast Indiana Regional Partnership Mike Davidson – President, Segway LLC Doug Horner - CTO & Co-Founder, Medical Informatics Engineering Bruce Lisanti – President & CEO, Medical Informatics Engineering Karen Goldner – President, Bowmar Corporation

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Robert J. Bernhard – Vice President for Research, University of Notre Dame Brad Bishop – Executive Director of OrthoWorx, Inc. Tobias W. Buck – Chairman & CEO, Paragon Medical, Inc. Nick Deeter – Founder & Chairman, OrthoPediatrics Corp. Mark Dobson – President, Warsaw/Kosciusko County Chamber of Commerce Richard W. Florea – President & CEO, SMART Temps, LLC Jan Fye – Regional Director, North Central Indiana Small Business Development Center Larry Garatoni – President & CEO, HQ Investments, Inc. Gary A. Gilot – Director of Public Works, City of South Bend Tracy Graham – Managing Principal, Graham-Allen Partners Steve Hartz – President, Value Tool & Engineering, Inc. Glenn E. Killoren – Partner, Barnes & Thornburg, LLP Jim Larkin – CEO, Scientific Methods Jennifer Laurent – Executive Director, Marshall County Economic Development Corporation Patrick McMahon – Executive Director, Project Future Shelley Moore – President, Insight Strategic Concepts Jim Orbik – Chief Operations Officer, Nautic Global Group Alan Tehan – President, Precision Automotive Dave Van Vactor – President, Van Vactor Construction Jim Larkin Larry Garatoni OrthoWorx CPEG Jim Walsh, Executive Director, North Central Indiana Business Assistance Center *Please note: There are many North Central contributors to the original initiative beyond those listed.

Organizations & Individuals That Have Committed Financial Support to Quick Start City of Fort Wayne, Tom Henry, Mayor Cole Foundation, Maclyn Parker Grabill Bank, David Arnold, Executive Vice President & COO Greater Fort Wayne Chamber of Commerce, Mike Landram, President & CEO Northeast Indiana Fund, Mark Becker, Executive Director


Parkview Health, Mike Packnett, President & CEO Star Financial, Jim Marcuccilli, President & CEO Steel Dynamics, Keith Busse, Chairman Adams County Economic Development Corporation, Larry Macklin, Executive Director Fort Wayne-Allen County Economic Development Alliance, Jill Perillo, Chair DeKalb County Economic Development Partnership, Ken McCrory, Director Huntington County United Economic Development Corporation, Mark Wickersham, Executive Director LaGrange County Economic Development Corporation, Keith Gillenwater, Director Noble County Economic Development Corporation, Rick Sherck, Executive Director Steuben County Economic Development Corporation, David Koenig, Executive Director Economic Development Group of Wabash County, Bill Konyha, President & CEO Wells County Economic Development, Mike Row, Executive Director Whitley County Economic Development Corporation, Alan Tio, President CB Richard Ellis Bradley Community Foundation of St Joseph County, Inc. Community Foundation of Kosciusko County, Inc. Corporate Partnership for Economic Growth, Inc. Dane & Mary Louise Miller Foundation, Inc. Ron & Lisa Fenech Foundation, Inc. Lexus of Mishawaka William Schmuhl Trust Michael Bieganski Value Tool & Engineering, Inc. Mutual Bank Crowe Horwath, LLP General Sheets Metal Works, Inc. University of Notre Dame Barnes & Thornburg LLP Chamber of Commerce of St Joseph County St Joseph County Airport Authority Peter DePuty Charles Hayes Inc Garatoni Family Foundation Regency Search Group, LLc

Baker & Daniels, LLP Lark Investments LLC Judd Leighton Foundation, Inc. Hand Family Foundation, Inc. Woodward Realty & Insurance, Inc Warsaw/Kosciusko County Chamber of Commerce The Papers Synergy Consulting, Inc. PB Phend & Brown, Inc. Max A. Courtney McPherson Lean Partnership, Inc Elkhart County Community Foundation May Oberfell Lorber Pfeiderer Ester Charitable Trust Tuesley Hall Konopa LLP Dennis J Schwartz Lake City Bank Teachers Credit Union Cascade Partners LLC Michael Lindburg Farmers State Bank Schurz Communication, Inc. Tower Bank & Trust Company James Schwartz D.L & D.J Wiekamp Foundation Orthopediatrics Corp OrthoWorx, Inc. Grubb & Ellis Krieg DeVault LLP Martin’s Super Markets RSM McGladrey, Inc. Holladay Properties SMACNA of Michiana DEPCO Partners, LLC SMW LMCC Yoder, Ainlay, Ulmer & Buckingham, LLP Porter County Community Foundation Legacy Foundation Crown Point Community Foundation Unity Foundation of Laporte Porter County Economic Development Alliance Laporte County Economic Development Alliance

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All photography courtesy of the Monon Community Center


Annual Report 2011