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Startup capital
New fund frees up more money for tech companies

06/01/17
By Ryan Lessard news@hippopress.com



 On May 23, a handful of startup founders took the stage at Oracle Dyn in Manchester in front of a crowd of about 300 people. One after another, they pitched their solutions for problems you didn’t know existed, usually with software.

The event, called Startup Shindig 2017, was the culmination of the current Accelerate NH program at Alpha Loft, a tech startup incubator. After each presentation, three companies were selected for major investments. Organizers were careful not to use the terms “winners” and “losers” because they said those that weren’t selected were still good companies worthy of investment.
But those who were selected undoubtedly felt like winners; they each walked away with $100,000.
The companies were Pulse, which offers a new way of online public opinion polling that engages participants and gets more accurate results; Addaptation, a company that makes micro-apps to order for a company’s cloud platform; and Thunderbolt Innovation, a project management software program for construction companies.
The investments awarded to the three companies are the first to come from a new investment fund designed to target New Hampshire-based startups that promise to grow the local tech ecosystem. The fund, Millworks II, is the sequel to Millworks I, which awarded a total of $100,000 per year to the winners of the fall TechOut competition. Millworks II is a big jump in funding.
“We doubled the number of limited partners … from 20 to 40 and then brought on a strategic investor to bring the total investment per year for the three years of the fund from $100,000 in fund 1 to $600,000 a year in fund 2,” said the funds co-general partner Gray Chynoweth. 
He is managing the fund with Liz Hitchcock, wife of Dyn founder Jeremy Hitchcock. Chynoweth said the new fund will award $300,000 in investments to select companies that come out of the Accelerate NH program and another $300,000 to the top companies in the TechOut.
The larger size and scope of the new fund is a sign of confidence in the future of southern New Hampshire’s burgeoning tech scene, according to Chynoweth.
“I think that anytime you go from investing $100,000 a year to investing $600,000 a year in New Hampshire startups, it’s a big deal. It’s the biggest seed fund in New Hampshire history and I think that says a lot about people’s optimism in the New Hampshire tech startup ecosystem,” Chynoweth said.
He said it’s a very New Hampshire feature that the fund is co-run by a woman, since women are underrepresented in venture capitalism while the state has a history of female leaders.
The growth from the first fund to the second also reflects the success of Dyn, which was recently acquired by Oracle. 
Chynoweth said $400,000 of the $600,000 in annual investments will be coming from the New Hampshire Business Finance Authority, which enjoyed a windfall from its own early investment in Dyn. Similarly, four of the original limited partners were part of the so-called “Dyn Mafia,” a tight-knit group of current and former Dyn employees. The new fund has about a dozen Dyn-affiliated investors.
Mark Kaplan, the executive director of Alpha Loft, said the increased investments not only mean more money for companies just getting started, to help them scale up and improve their products, but could also lower barriers for small investments from other sources like angel investors who see the initial investment as a vote of confidence and might prefer using the terms set by the Millworks fund. 
 





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