The Lincoln-based software investment fund has completed the capital raise portion of its Nebraska Global Investment Fund, bringing in an additional $17.7 million in what executives called “Round 1A” of fundraising — it wasn’t a follow-on round, they said, but a continuation of the first round — to boost total capital raised to date to $37.3 million.
Nebraska Global, which launched last year with $19.6 million in funding and the stated goal of creating two companies within 18 months and 10 within five years, had set out to raise an additional $10 million in Round 1A. The company went over that target in part to make room for investors it believes align well with its strategic goals.
“To get some of the folks that we wanted to have, we needed to raise the cap a bit so that we could fit them in,” said Steve Kiene, Nebraska Global’s managing principal, who founded the company with Doug Durham and Patrick Smith. “We feel we’ve got a really good mix of investors. There’s a lot of different expertise and perspectives and name brand that they bring. Same for the board. It was important to have the right money from the right groups as opposed to just whatever money came.”
Nebraska Global’s principals (from left): Kiene, Smith and Durham. Photos from nebraskaglobal.com.
Investors in the fund include Capricorn Investment Group, the investment arm of former eBay president Jeff Skoll; the University of Nebraska Foundation; Jeff Raikes, CEO of the Bill and Melinda Gates Foundation, Nelnet; and Kiene. All of the investors have Nebraska ties and have expressed a commitment to cultivating software businesses in the region. In total, six investors contributed to the $17.7 million raise. The first $19.6 million came from nine investors.
In nearly doubling its $10 million target for the most recent raise, Nebraska Global still turned away some $10 million in potential investments. Kiene, who has said that Nebraska Global provides “patient capital” rather than venture capital, attributed the decision to decline funding mostly to a desire for the company’s capital to not outstrip its needs.
“(We) could’ve gotten money from other places,” he said, “but it was important to have a consistent mindset from the investors that we’re doing something for the long haul, we’re trying to move the needle in the state and do it in a sustainable way which means doing it slower than a lot of other people do things, doing it more pragmatically to ensure that the change does stick.”
Nebraska Global can now shift the attention it had devoted to fundraising, which Kiene labeled a “distraction,” back to what Kiene said “we really love” — building software businesses.
Nebraska Global intends to invest its funds in multiple companies with target investments from $100,000 to $5 million. It already has invested in three companies: Don’t Panic Labs, Nebraska Global’s “people incubator” and the training ground for its in-house software development muscle; EC3H, which provides software solutions for processing deceased debtor accounts; and ICORA, a software vendor with a program that enhances Microsoft Dynamics.
Nebraska Global is currently working to finalize funding for three others companies that are at varying stages of development. The fund’s principals declined to discuss specifics of those three companies, but they confirmed that one is an outside deal and the other two are internal ideas.
The company has fielded more than funding 100 inquiries since its launch last August, and about 20 of those have progressed to what Kiene called “Silicon Valley pitches.” Nebraska Global’s principals say the quality of the deals they have seen isn’t where they hope it will be someday. But if the company’s latest round of funding proves anything, Kiene says, it’s that enough capital is available within Nebraska’s borders to allow promising startups to develop here.
“You know, it’s great that we’ve raised money and everybody can high five and whatever,” Kiene said. “But to me, it’s kind of like, ‘Big deal, we always knew there’s money in this state.’
“The bigger thing is breeding success, keeping people here, recruiting people to this state, etc. And so we don’t get too caught up in the fact that we said we were going to raise money and we did it. … But, that said, I think it’s important for those who don’t think there’s capital in this state. I think it’s important for those who have yet to raise their money to be reminded that there’s money here in this state. You know, we happened to raise some. They can raise some, too.”
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