Meritus Ventures, the Nation's First Rural Business Investment Company, Hits the (Rural) Ground Running
Monday November 05, 2007
Meritus Ventures announced today that it has made three investments in rural central and southern Appalachia in the past five months. The first of the three investments was made in June
OAK RIDGE, TN (November 5, 2007) - Meritus Ventures announced today that it has made three investments in rural central and southern Appalachia in the past five months. The first of the three investments was made in June, outside of Greenville, South Carolina, in Zipit Wireless, Inc. The second investment closed at the end of September, when Meritus invested in Aldis, Inc. in Oak Ridge, Tennessee. The third investment closed in early October, in SinglePipe Communications, Inc., located outside Louisville, Kentucky.
Meritus was formed in response to the U.S. Department of Agriculture's (USDA) Rural Business Investment Program (RBIP), to make equity investments in rural areas of central and southern Appalachia. The objective of the RBIP is to create sources of venture capital in rural America, which historically has received almost none of the $25+ billion of venture capital invested in the United States annually. In September 2006, Meritus was approved by the U.S. Small Business Administration (SBA) and the USDA as the first Rural Business Investment Company (RBIC) in the United States.
The three investments demonstrate a breadth of industry interest, with technology as a theme. For each investment, Meritus co-invested with other venture capital funds. For the investment in Zipit, Meritus co-invested with Windspeed Ventures of Boston and SunBridge Partners, which has offices in Palo Alto, CA and Cleveland, OH. For the Aldis investment, Meritus co-invested with Battelle Ventures of Princeton, N.J., and its affiliate fund, Innovation Valley Partners, of Knoxville, TN. Meritus co-invested with Chrysalis Ventures of Louisville, KY for the SinglePipe deal.
"We want everyone to recognize that high-tech businesses can be created and flourish in rural areas," said L. Ray Moncrief, one of two Meritus Ventures Fund Managers. "As the first and only Rural Business Investment Company in the United States, Meritus is proving that quality, private equity transactions can be done in non-traditional areas, as evidenced by our investments in Zipit, Aldis, and SinglePipe." Moncrief continued, "By working with private companies, venture funds, and government entities such as the USDA's Rural Business Programs, we can bring new economy investments and jobs to Kentucky, Tennessee, and Arkansas, and the Appalachian counties of Ohio, West Virginia, Virginia, North Carolina, South Carolina, Georgia, Alabama, and Mississippi."
Summary of Recent Investments
Zipit Wireless, Inc., founded in 2007, is the maker of the Z2, a portable instant messaging (IM) device with a built-in audio player and photo viewer. With an existing IM account and access to a wireless network, either at home or at a public hotspot, a user can IM with anyone on AOL/AIM, Yahoo and MSN. The Z2 frees up the personal computer and eliminates the need for monthly or per-message fees.
"Windspeed Ventures, SunBridge Partners, and Meritus Ventures have invested together in an early-stage, high technology company that has developed a handheld device that allows tweens to communicate via instant messaging with buddies wirelessly and without using the family PC," said Daniel Bathon, Jr., General Partner and Chairman of Windspeed Ventures. "Zipit Wireless recently launched the Zipit Wireless Messenger 2 at the Digital Life conference in New York City to many accolades, including winning Best In Show in the Portable Gear category." Bathon continued, "From the very beginning and throughout the due diligence process and thus far in the building of Zipit Wireless, Meritus Ventures has proven to be an integral and valuable part of the team that has brought such an exciting product to market. Their vision of the potential for Zipit Wireless and their drive to grow dynamic new companies in the rural areas of South Carolina make them an ideal investment partner."
SinglePipe Communications, Inc., formed in 2007, provides residential and business VoIP services through wholesale and channel customers to clients across the United States, with points of presence throughout the Southeast. The company delivers private-branded, turnkey, wholesale VoIP solutions to a large provider universe that includes Cable Operators, Competitive Local Exchange Carriers (CLEC's), Internet Service Providers (ISP's), Wireless ISP's, VoIP Providers, and Value Added Resellers (VAR's). SinglePipe offers turnkey solutions for residential VoIP, Hosted PBX, and SIP Trunking/Line Replacement over its own highly reliable network and in conjunction with partners nationwide.
Early in 2007, SinglePipe raised a $4.0 million Series A equity investment, led by Chrysalis Ventures. According to Wright Steenrod, Chrysalis Ventures Principal and member of SinglePipe's board of directors, "SinglePipe fills a unique niche in the Southeast by offering its partners a turnkey, wholesale VoIP solution which they can then sell to consumers and small and medium sized business customers located in smaller markets throughout the region. We are delighted to partner with Meritus Ventures in this financing to leverage their investment experience and overall business expertise in this region."
Aldis, Inc. is a cleantech company formed in 2007 focusing on the transportation logistics and advanced infrastructure management markets. Aldis develops, commercializes and sells patent-pending, efficient traffic and energy management technology and services to municipal partners.
"Aldis is growing by bringing real value through creative, technology-enabled solutions to the communities that need us most," said Aldis CEO and serial entrepreneur, Vig Sherrill. "Meritus Ventures, with its strong presence in, understanding of, and focus on southern and central Appalachia, is an ideal investor to help Aldis deliver cost-effective, cleantech traffic management solutions to our customers in the Southeast." Bill Malkes, who is CFO of Aldis and has worked with Sherrill on two prior successful technology-based start-ups, added, "With its strong connections to our strategic partner, Oak Ridge National Laboratory, and firm standing in communities across the Southeast, Meritus brings valuable expertise, helping to drive Aldis cleantech solutions."
Noting that Meritus is the only venture capital fund in the country that targets investments specifically and explicitly at companies located in rural southern and central Appalachia and Arkansas, Grady Vanderhoofven, co-manager of Meritus said, "Some people might think, because of the rural context of our investment strategy, we're investing in farms or agricultural products. The reality of our investment activity, however, is that we are investing in some of the most promising, fastest growing, and technologically exciting companies in the country." Vanderhoofven continued, "Rural venture capital investing may be, frankly, part art and part science, but it's nevertheless all about entrepreneurs with vision, strong management teams, big and fast-growing markets, and differentiated products and services, and it's nonetheless about a fund's ability to add value to the companies in which it invests."
Vanderhoofven continued, "Our roster of investors includes institutions and individuals from Phoenix to Washington, D.C. and New York City and from Puerto Rico to Chicago, which seems to indicate that a variety of investors are interested in the opportunities to be found in rural areas. In some respects, we have a broad focus, when you think in terms of the number of technology generators in our targeted geography and the number of communities in this region interested in business creation and growth. From another perspective, this is a narrow niche, requiring specialized expertise, experience, and knowledge because investing venture capital in rural southern and central Appalachia is not the same as investing venture capital in traditional venture capital markets. It's our job to fully realize the opportunities to be found in this niche, for the benefit of our investors, as well as the entrepreneurs and communities in this region."
About Meritus Ventures
Meritus Ventures is currently the only Rural Business Investment Company (RBIC) in the United States. The $36.5M venture capital fund was formed to generate attractive returns for the fund's investors while creating wealth and jobs in rural areas of central and southern Appalachia and Arkansas. In addition to providing equity capital, the fund may provide operational assistance to its portfolio companies. For more details, visit www.meritusventures.com.
About Zipit Wireless
Zipit Wireless is a developer of consumer electronics headquartered in Greenville, S.C. The company focuses on wireless communication and entertainment devices that allow consumers to stay tapped into their world. The Zipit Wireless Messenger is a low-cost, portable IM device that connects to Wi-Fi wireless home networks and free "hotspots" and enables teens and pre-teens to chat away and enjoy their music collections with no service or per message fees, while eliminating the dependency on the family PC. For more information about Zipit Wireless and the Zipit Wireless Messenger, visit www.zipitwireless.com.
About SinglePipe Communications
SinglePipe Communications is a facilities-based VoIP provider focused on delivering residential and business services to the wholesale and channel markets (including Cable Operators, CLEC's, Internet Service Providers, Wireless ISP's, VoIP Providers, ASR's and VAR's). SinglePipe offers turnkey solutions for residential VoIP, hosted PBX, and SIP Trunking/Line Replacement over its own highly reliable network and in conjunction with partners nationwide. Headquartered outside Louisville, KY, SinglePipe has offices in Lexington, KY, Charlotte, NC, and Atlanta, GA. For more information, please visit www.singlepipecom.com.
Aldis is a national cleantech solutions provider of traffic safety and management products and services to municipal partners. Aldis solutions such as the Aldis AdvantageTM program reduce total cost of ownership while promoting environmental stewardship and public safety. Municipalities can simply calculate their potential energy savings at www.AldisCorp.com.
About Windspeed Ventures
Windspeed Ventures is an early-stage venture investment firm that actively helps build high technology companies in the communications, security, media and internet services industries. The Windspeed team consists of former entrepreneurs whose goal is to share their relevant operating experience in building value in early stage businesses. For more information about Windspeed Ventures, visit www.windspeed.com.
About SunBridge Partners
SunBridge Partners is a U.S.-based venture capital firm pursuing a targeted, research-based approach to identifying and investing in private U.S. technology companies pioneering innovations based on advanced technologies in computing, communications and manufacturing, including materials, semiconductors, components, equipment and software. For more information about SunBridge Partners, visit sunbridgepartners.com.
About Chrysalis Ventures
Founded in 1993, Chrysalis Ventures is a leading source of equity capital for young, growth companies in the Midwest and South. Chrysalis invests primarily in early-stage and expansion-stage companies in healthcare services and technology, media and communications, and business services. Based in Louisville, Kentucky, Chrysalis has more than $300 million under management and has made investments in over 50 companies. For more information, please visit www.chrysalisventures.com.
About Battelle Ventures/Innovation Valley Partners
Battelle Ventures is a $220-million national fund that invests in technology companies at many stages of development in energy & environment, security and health care & life sciences. Battelle Ventures' affiliate fund, Knoxville, Tenn.-based Innovation Valley Partners, is a $35-million fund that has a proportionate interest in each Battelle Ventures' portfolio companies. For more information, please visit www.battelleventures.com.
About the Rural Business Investment Program
The U.S. Congress authorized the Rural Business Investment Program (RBIP) in the 2002 Farm Bill. The purpose of the RBIP is to promote economic development and to create wealth and job opportunities in rural areas by encouraging developmental venture capital investments primarily in small companies and by meeting the unmet equity capital needs of such businesses. The program is similar to existing SBA-sponsored venture capital programs - specifically, the Small Business Investment Company (SBIC) and New Markets Venture Capital (NMVC) programs - and is intended to license Rural Business Investment Companies (RBICs) through a competitive process. The U.S. Congress is currently considering the reauthorization of the RBIP as part of the 2007 Farm Bill. While a new authorization, like the original authorization in the 2002 Farm Bill, would not directly provide capital for investment by venture funds, it would provide the availability of federally-guaranteed debentures that can be used to supplement the capital that must be raised by private venture capital funds operating as RBICs. For more information, visit www.sba.gov/aboutsba/sbaprograms/inv/inv_new_rural_business_program.html.
L. Ray Moncrief
Grady S. Vanderhoofven
Meritus Ventures, L.P.
Meritus Ventures, L.P