By Rod Spaw –
Chris Jensen is a venture capitalist by profession, the managing principal of a Chicago investment firm that specializes in telecommunications, media and software industries.
So when he began looking for a partner to develop a product idea of his own, he was surprised by one name that kept popping up in social media and in conversations about business incubators in the Midwest: Bloomington’s Sproutbox.
“I said, ‘Who are these guys and why don’t I know them?’” said Jensen, a 2004 graduate of Indiana University in Bloomington, where he earned a degree in finance.
He found out that Sproutbox is the creation of three guys who met in college and subsequently came up with an online platform for apartment leasing called Resite Information Technology, which later was purchased by a national company. Now, those same guys — Brad Wisler, Mike Trotzke and Marc Guyer — are helping other people turn their ideas into businesses, in exchange for a stake in the new companies.
In a little more than three years since its creation, Sproutbox has done 18 deals with entrepreneurs, Jensen among them. Vaultworthy, his idea for a virtual safety deposit box for secure storage of important personal documents, launched May 1. For $12.95 a month, users can store up to 50 files in their online vault, which is encrypted and accessible only to the account holder and up to five “trustees” the customer designates.
“I’m an entrepreneur. It’s in my heart,” Jensen said. “I’m not a developer. I’m not an engineer. I don’t think I could have pulled something like this off without hiring a few employees.”
Sproutbox took care of all the computer coding for Vaultworthy, turning Jensen’s vision into software. Sproutbox’s staff will provide technical and development support until Vaultworthy gets big enough to need its own dedicated staff. That’s the Sproutbox model for growing businesses, said co-founder Wisler.
“Each of the companies in our portfolio has its own budget, bank account and ability to create jobs,” he said.
Sproutbox isn’t far removed from a startup itself. It was pitched as a concept at the first Bloomington Startup Weekend in 2008 and became a company the next year. Startup weekends are held around the country as an informal way to bring together people with ideas and people with skills to create businesses. Bloomington has had three startup weekend events; a fourth is planned for this fall.
Wisler said the Sproutbox company has about 10 employees, but there may be close to 30 people working out of its offices in part of a former RCA/Thomson warehouse next to the B-Line Trail off Madison Street. Wisler said some of the extra folks are employees of its spinoff companies — or “sprouts” as they are called. A few are free-lance computer coders that are called on for support when needed.
Wisler said he and his partners try to approach business development from the prospective of the entrepreneur. He said Sproutbox’s mission is to eliminate obstacles that prevent entrepreneurs from starting businesses.
“We’re trying to create an environment to say, ‘Take that risk, and there are other people who will stand beside you,’” Wisler said. “We view ourselves as founders, and we try to act that way.”
Wisler said building a “culture of risk” is vital to creating a thriving entrepreneurial community.
“When you don’t have a risk culture, the economy is very traditional,” he said. “Everybody expects to be paid up front for the things they do. In a culture of risk, people are willing to invest more up front.”
At the same time, Wisler said, risks should be calculated. Sproutbox chooses business ideas to develop through a formal selection process that involves presenting a small group of finalists to an advisory committee of investors and partner companies. Ideas are rated on six investment criteria, and offers are made. According to the Sproutbox website, the company usually seeks 20 to 40 percent equity in new businesses. The website says Sproutbox’s goal is to launch one new company every three months.
In exchange, Sproutbox offers a range of business services, technical support and just enough cash to keep company founders on task for creating and marketing their product. The goal is to develop a new company to where it can operate profitably or attract new investment capital within a 10-month period.
“We insist you do validate the market before we get involved,” Wisler said. “It’s not just a new idea, but a pretty well baked idea.”
Sproutbox specializes in Web-based applications. Its current “sprouts” include TeamMash, a daily email for sports fan that tells them everything that happened with their favorite teams in the previous 24 hours; Cause.It, a mobile application that provides ways for businesses and charitable groups to help one another; StoryAmp, an online platform for musicians and music journalists; and CheddarGetter, an online subscription management and billing service that recently was one of 10 startup companies chosen to ring the closing bell on the New York Stock Exchange.
“Sproutbox is developing a great reputation for creating good products,” said Jensen, whose own new product rated a mention recently in a Wall Street Journal article about online document storage. “I think Sproutbox is doing it right — starting companies lean and getting them up and going.”
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