{{featured_button_text}}

Paul Jarrett believes there are a number of reasons start-up companies in Lincoln are starting to see more investment.

But there's one in particular that may explain why local companies have seen an 18-fold increase in publicly reported venture capital this year.

"People are looking for the next Hudl," said Jarrett, who co-founded online nutrition supplement sampling company Bulu Box with his wife, Stephanie.

Hudl, which makes video-editing software for football and a number of other sports, received a $72.5 million venture capital investment earlier this year. That is thought to be the largest-ever single investment in a Nebraska-based technology company.

"You get another Hudl by investing in 20 startups, and then statistically you get another Hudl," Jarrett said.

So far this year, there seem to be more investors chasing the next Hudl.

While no other local startup has come close to Hudl's haul, several have received seven-figure investments this year, led by Bulu Box's $3.6 million.

Total publicly reported venture capital investments in Lincoln companies through the first six months of the year have topped $80 million.

In all of 2014, start-up companies in the Lincoln area brought in less than $4.6 million in venture capital investments, according to data compiled by PricewaterhouseCoopers LLP and the National Venture Capital Association.

That ranked Lincoln 118th out of 160 metro areas that had companies that got venture capital deals.

The year-to-date investment number this year would have ranked 45th on last year's list, ahead of Miami, Las Vegas, Indianapolis and many other much larger cities. It's also more than double what Omaha companies brought in last year.

And it's also more venture capital than has been raised in the entire state over the past five years, according to SSTI, a non-profit organization that focuses on technology-based economic development.

Those figures are highly influenced by Hudl's massive deal, but even if you exclude it, publicly reported local investment totals are well ahead of last year.

In addition to Bulu Box, this year's venture capital investments include $1.8 million for Travefy, $1.75 million for Opendorse and $700,000 for Nobl.

While Lincoln is likely benefiting along with many cities in an overall increase in venture capital investment -- $48.3 billion nationally in 2014, up more than 60 percent from 2013 and the highest amount since 2000, according to SSTI -- there are some local conditions that are helping.

Brian Ardinger says the increase in investment is to some degree a result of the work that's been put in by entrepreneurs, investors and others over the past few years.

"In general, a lot of it has been a result of the past couple of years, with the ecosystem growing and building on itself," said Ardinger, managing director of the NMotion startup accelerator program in Lincoln.

He said government efforts such as Invest Nebraska and the Nebraska Angel Investment Tax Credit also have helped attract more investors.

And Ardinger agreed with Jarrett, too, that success by companies such as Hudl has enticed more investors to put more capital into the venture system.

"Compared to the coasts it's still very conservative, but (investors) are more willing to look at software deals they wouldn't before," he said.

Ardinger said venture investment is not necessarily the best measurement of how startup companies are doing because it is "lumpy," meaning it can come in waves. A better measurement, he said, is job growth.

By that metric, companies seem to be doing well.

Hudl has more than tripled its workforce in the past three years and plans to use a big chunk of its recent investment to hire 300 new employees over the next three years.

Opendorse has gone from eight employees to around 20 in less than a year.

And Bulu Box has grown from eight employees last year to 11 this year.

Despite the numbers, not everyone is convinced there's been a huge local influx in venture capital this year.

Steve Kiene, co-founder and managing principal of venture capital fund Nebraska Global, said many deals are not publicly announced or registered with the Securities and Exchange Commission.

Outside of the Hudl deal, Kiene said he's not sure there's really been more venture capital spending this year.

Whatever the short-term situation, however, Kiene said he's confident in the long-term outlook for tech investment in Lincoln.

Jarrett, too, likes the outlook for the long term.

The Lincoln native started Bulu Box in San Francisco with his wife before moving back to Lincoln in 2012.

He said venture capital was easy to find in San Francisco, but that wasn't necessarily a good thing. Lincoln's much more conservative environment means only companies with proven business models get money.

That's been the case with Bulu Box. As it has grown its sales into seven-figure territory, investors have noticed. First came a more than $2 million venture capital investment last year, which was an extension of an earlier investment, and then the $3.6 million this year.

"We want to do it the Lincoln, Nebraska, way," Jarrett said of raising venture capital. "We don't want to do it the Silicon Valley way."

Be the first to know - Sign up for Breaking News

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.

Reach the writer at 402-473-2647 or molberding@journalstar.com. On Twitter @LincolnBizBuzz.

0
0
0
0
0

Business editor/reporter

Matt Olberding is a Lincoln native and University of Nebraska-Lincoln graduate who has been covering business for the Journal Star since 2005.

Load comments