Madison Development Corporation, a local non-profit development company helping hard-to-finance small businesses with loans, started a Venture Debt Fund to help technology businesses stretch scarce local venture capital dollars. Since inception, the MDC Venture Debt Fund has made about 40 loans totaling $11.5 million to local tech businesses. Four loans were just closed to Intuitive Biosciences Inc., SOLOMO Technology Inc., Veridt , Inc., and Wellbe Inc.
The loan to Intuitive Biosciences will help the company develop and market veterinary diagnostic tests for research and production animals. Intuitive’s proprietary technology allows faster and easier testing for multiple diseases and conditions in one test. MDC’s Venture Debt Fund provided Intuitive with $250,000 to help launch widespread distribution of several new diagnostic tests. The funds help complete a financing that included equity investments from an international investor, a regional investment network, and local venture and angel investors. Intuitive Biosciences is located at 5500 Nobel Drive, Fitchburg.
MDC recently committed $500,000 to SOLOMO Technology Inc. SOLOMO is an early stage mobile products company that offers permissioned personal identity and location information to large companies seeking to better connect with their customers through mobile phones and devices. The Venture Debt funds will complement investments by locally based, Venture Management LLC, and angel network, Wisconsin Investment Partners. MDC’s funds will help SOLOMO market their Location-Based Services solutions and install the platform product with large business clients. SOLOMO is located at 222 W. Washington Ave.
Located in Middleton, Veridt, Inc. designs and manufactures advanced technology for identity verification and credential authentication for physical access control in military, government and private sector facilities: landmark customers include international airports, port terminal operations, and military installations. Venture Debt loaned Veridt $250,000 to complete the development of the next generation reader terminals with state-of-the-art design features for operation in varied security settings including high-assurance access control mandated by the Government. These solutions bind the cardholder to the credential using biometrics and digital certificates confirm the credentials’ authenticity for the highest security standard available. The new readers are very compact, and can operate in very harsh environments while maintaining esthetic appeal.
Wellbe, Inc. in Madison has perfected a web platform to improve the patient experience in episodic care. Their cloud-based solution helps hospitals to engage high volumes of patients through their treatment procedures, such as joint replacements or bariatric surgery. The online program allows patients, with their families, to navigate through the entire continuum of care as they work through decision-making, education, record keeping, feedback, and support. Wellbe’s “TotalCare” branded solution has already been installed in several large hospitals, including UW Hospital. MDC’s Venture Debt financing provided $300,000 to complete a recent angel equity fund round. The funds will be used to accelerate marketing, sales and delivery, as well as product development for additional medical procedures.
The MDC Venture Debt Fund makes loans at rates from 2.5 percent to 5 percent over prime depending on risk. The Fund also takes a small percentage of the loan amount, ranging from 5 percent to 5 percent to 25 percent, in warrants or conversion rights for equity at a later date. The fund complements other equity venture money, and despite the interest rate, is cheaper for companies than giving up more precious ownership in the company. The fund has worked cooperatively to supplement other sources of financing for local businesses, including local venture capital and angel funds and the state’s WEDC technology funds.
Money for the loans comes from participating lenders: WHEDA, MGE Energy, The City of Madison, The City of Fitchburg, The City of Middleton and participating financial institutions including Associated Bank, State Bank of Cross Plains, Capitol Bank, First Business Bank, Settlers Bank, Town Bank, Starion Bank and Monona State Bank. MDC uses an expert Advisory Group to review the technology and business plans, and funding decisions are made by the participants.
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