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 July 07 | Entrepreneur article by Carol Tice Perfect Match LightFull Foods & Prolog Ventures Smoothie-maker LightFull Foodswww.lightfullfoods.com was cooked up at 2-year-old Bay Area incubator Brand New Brands in May 2006. The San Francisco company received $6.1 million in venture funding last August from a half-dozen firms, led by Prolog Ventures in St. Louis. Other funders included Unilever Ventures, Burrill & Co., Mattson & Co., Palo Alto Investors, and Great Spirit Ventures. LightFull is headed by co-founders Lara Jackle, 37, a former Balance Bar marketing executive who is Light-Full's CEO, and Lynn Graham, 32, who is marketing vice president. LightFull's 90-calorie Satiety Smoothies — part of the hot "functional foods" trend — are sold in 1,300 grocery locations, including Dominick's, Safeway, Shaw's, Vons, Wegman's and Whole Foods Market. Nine months after the product hit store shelves, Jackle was forecasting more than $1 million in 2007 sales. Entrepreneur: Lara, how did you get involved in LightFull? Lara Jackle: It was a fortuitous story. I had an offer to move to Asia and head up emerging-market innovation for a big worldwide food company. A high-level career coach, Lori Ogden Moore, was helping me decide if this was the right move. She said, "I don't want to confuse your decision, but I know people who just raised a large [amount] of money and want to create the next generation of food products." She introduced me to Will Rosenzweig of Brand New Brands, and I became chief marketing officer of the incubator. Prolog was an investor in Brand New Brands. [After LightFull was conceived at Brand New Brands], my original intention was to stay in the incubator [as an employee], but LightFull was so compelling, I ended up [leaving my job to take] it to market. Entrepreneur: How did Prolog move from incubator funder to a funder of LightFull? Ilya Nykin, Prolog managing director: LightFull didn't have an inside track. We needed to apply the same stringent criteria we apply to other investments. We were looking for the most breakthrough opportunities that address large unmet needs, that can be brought to market in a reasonable time and for a reasonable investment, and that have some scientific validity. This is the kind of company LightFull is. And Lara was the sort of leader we like to see: She has experience, energy, foresight, drive, and vision. Entrepreneur: Describe your relationship since the funding. Jackle: We have a very active relationship. Ilya is a board member — we meet monthly on the phone and quarterly in person. As young women entrepreneurs, [Graham and I are] confident in our ability to market LightFull, but the investment community is male-dominated and can be intimidating. Prolog has been instrumental in helping us retain our independence and authenticity while we discuss possible investments from big companies. Ryla Teleservices & Frontier Capital Kennesaw, Georgia-based Ryla Teleservices, which provides outsourced call-center services, landed $700,000 in funding in 2002 from SJF Ventures in Durham, North Carolina. Ryla has since grown from 21 employees to more than 350. The 6-year-old company received just over $6.5 million in second-round funding in March, with Charlotte, North Carolina-based Frontier Capital as the majority investor. Founded by former D&B call-center manager Mark Wilson, 46, Ryla's president and CEO, and his wife, vice president and COO Shelly Wilson, 47, Ryla had $14 million in sales last year. Entrepreneur: When did Ryla and Frontier first meet? Mark Wilson: A little more than two years ago, when we were seeking growth capital. We were using a small consultancy [which has since dissolved] that provided [introduction] services to small businesses like ours. Entrepreneur: So you essentially met on a blind date? Wilson: That's right [laughs]. We were careful not to have our deal shopped around too much, though. I didn't want to talk to just anybody. Entrepreneur: What exactly were you looking for? Wilson: We wanted a partner that would let us do things in a creative, flexible way. Our approach, of being successful by developing people, requires patience. My experience with VCs is that not all are receptive to that; some are more focused on bottom-line issues. Entrepreneur: What happened in the two years between meeting and funding? Andrew Lindner, Frontier
managing partner: Our model is to track a company for a
while, which is exactly what we did. Ryla fit our stage and sector
focus: We are a growth-capital provider focused on highly differentiated
service businesses in the Southeast and Mid-Atlantic. Mark got
better and better looking during the "dating" period
[laughs]. Seeing the dramatic growth in Ryla's top line, and expansion
of gross margin, was one of those magic moments. He has no sales
force and has grown from zero to $14 million in revenue pretty
quickly. Entrepreneur: Now that Ryla and Frontier have teamed up, how will your relationship work going forward? Lindner: We
look to be a valuable confidant to Mark as he grows his business.
We hope to help from a strategic standpoint, figuring out how to
scale [Ryla] into a bigger business, and to provide tactical support
and coaching [on] all the day-to-day things required. Sotto Wireless & Ignition Partners Bellevue, Washington-based Sotto Wireless closed an $8 million Series A venture-funding round in August 2005 from Ignition Partners, also of Bellevue, and VantagePoint Venture Partners in San Bruno, California. Company co-founders are CEO Rod Nelson, 47; COO Bob Johnson, 52; and product-management vice president Clayton Foster, 42. Sotto offers a single mobile device that integrates landline, cell phone and BlackBerry-like features. Since October 2006, Sotto has launched its small-business-focused service in two markets: Charlotte, North Carolina, and Seattle. Nelson expects 2007 revenue to top $3 million as the company expands. In March, Sotto was in the process of raising a B round of between $10 million and $15 million; Ignition plans to participate, says partner Adrian Smith. Entrepreneur: Rod, how did you initially make contact with Ignition? Rod Nelson: Before
this, I was the CTO at AT&T Wireless. One thing I did there was
maintain relations with the venture community. That left me with
some good relationships in the industry, and Adrian [Smith] and Steve
Hooper at Ignition were on that list. When I called them, we discovered
we shared an interest in providing better [telecom] services to small
and midsize businesses. They invited me to participate in their entrepreneur-in-residence
program. We agreed on a schedule of four months, by which we should
[gather market data and] make a decision to [go forward with the
business idea or not]. Entrepreneur: What made Ignition decide to fund Sotto? Smith: We have
a pretty rigorous funding process. It involves the portfolio mix
we want to have at Ignition, and [the company] has to meet the business
criteria we're looking for. [With Sotto,] we were very comfortable
that we had a great team going after a large market. We were also
able to agree on terms. There's a lot to negotiate: the amount being
raised, options and vesting of those options, liquidation preferences.
It's all part of the dating that goes on before the marriage [laughs]. Entrepreneur: Rod, how has Ignition helped Sotto so far? Nelson: They've brought us some [good] candidates for the management team. Also, Ignition hosts a couple of events a year where they bring their portfolio companies together, and that's helped us get connected with other management teams in the Seattle market. That's been great. © 2007, Entrepreneur.
All rights reserved. Reprinted with permission.
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