The Startup Funding Web

Josh Holstein, the CEO, chairman and founder of technology startup CellARide LLC, has had a busy year.

In 2014, his company went from being a one-man show to a funded and staffed business well on its way to putting its product, CarInfoToGo, in the hands of car dealers and buyers.

CarInfoToGo, and its for-sale-by-owner counterpart CellARide, are text-based services using Ridetag window stickers Holstein said allow shoppers to find out more about a vehicle on their own terms.

To help solve the marketplace problem Holstein identified, last spring, he completed a 12-week program with St. Louis tech accelerator Capital Innovators Accelerator LLC. In August, his company received $100,000 in funding from investment group St. Louis Arch Angels, allowing him to hire three key positions. One hire, in August, is CellARide’s St. Louis-based director of operations, Matt Fagin. Fagin also is a lead mentor in the Capital Innovators program.

He said the goals of an accelerator program and those of a startup company are similar: to create a plan and execute it.

“What’s different about the startup world, especially tech startup, is there’s a whole lot of effort being put into development and not necessarily a ton of thought given to creating a real business out of it,” Fagin said, adding the key to a successful transition is bringing strategy and organization into the process. “How do you do that with limited resources, no infrastructure and limited capital?”

Time to accelerate
For Holstein, the answer was the business accelerator.

“I had never worked a day of my life in a dealership, so trying to understand how this all works was foreign,” Holstein said, adding CellARide was still in the proof of concept phase when he began the course last February.

“Going in helped me streamline my approach and structure the company. I couldn’t do that by myself.”

Holstein’s hometown has a few business incubators in the area, but an accelerator program is a missing component in the Springfield startup scene.

Rachel Anderson, entrepreneurial specialist with The eFactory, said officials with the downtown business incubator are discussing an accelerator-type program.

“An accelerator is usually a shorter time period, maybe three to four months, to quickly help grow a company to the next stage. There is usually some sort of equity piece or investment that comes with an accelerator,” she said. “Our [incubator] model’s over a long period of time, three to five years is typical, where companies can really eliminate some of the risk that you might have with other leases or being out on your own so you can grow your business.”

Anderson said the motivation for an accelerator platform is to keep startups in Springfield.

“We want companies to continue to do well and stay here within the Springfield region,” she said. “We also want to attract people from outside to come to Springfield. I think additional programming with something like an accelerator can serve as another facet to attract people.”

Anderson said The eFactory is raising money for a seed capital initiative to provide investment and additional funds for startups, while also making referrals to individual angel investors in the area.

Anderson has her own tech startup, Alumni Spaces, a website template and platform for university alumni chapters. She and her business partners currently are participating in the New York-based Entrepreneur’s Roundtable Accelerator.

“I’m trying to take a lot of the learning that we’re seeing through their accelerator program, what works, what doesn’t, also learning from Josh’s experience, and from there that’s how we’re going to build our accelerator program,” she said.

More to come
The challenge of early-stage capital may soon be a thing of the past for Holstein and his team.

At the end of March, CellARide received its second tranche of funding that includes a $50,000 fund from Capital Innovators and separate investments of $75,000 from Springfield-based startup developer Mayhem Development LLC and $125,000 from a group of St. Louis investors. Holstein said CellARide’s valuation in this second tranche, a total of $250,000, is $3.5 million. Throw in last year’s contribution from Arch Angels, and the company has secured $350,000 worth of funding over the last eight months.

“[That’s] 12 to potentially 18 months worth of runway, depending on some of the factors that we’re working on in the pipeline right now,” Holstein said.

Mayhem founder and President Jim Carr said his company, CellARide’s across-the-hall neighbor at The eFactory, looks for several things when considering project investments.

“Our strategy is to create ideas internally to support those that create ideas, either through consulting or funding or other methods,” said Carr, who formed Mayhem in 2012 after selling his Lebanon-based electrical connector manufacturer Carr Industries Inc.

As its name suggests, one criterion that Mayhem evaluates startups on is the level of disruption a product causes, or the way in which it dramatically and positively changes its niche.

“CellARide really hits on both of those because it changes the way that someone shops for cars and it changes the way that people sell cars,” Carr said. “It’s not a one-sided equation.”

Mayhem’s investment translates to a little more than 2 percent ownership in
CellARide LLC.

Mayhem is actively investing in another eFactory tech startup, Sprocket LLC, which creates GPS technology for emergency medical services. The firm also has eight new startups under consideration that are being evaluated for investment and has passed on seven others Carr said didn’t have either a significant level of inherent disruption or total commitment from their creators.

“We really don’t have any limit in the scope of what we look at. We know there are some areas where we have strengths, but the indication that I got from the fact that our first two investments were tech-based investments, indicates that’s where the growth is and the activity,” said Carr. “The software and technology to utilize cellphones and things of that nature is where it seems very easy to grow, and there’s a lot of disruption happening there.”[[In-content Ad]]