When Martin Renkis was raising money for Smartvue, he had a very specific idea of who he wanted as an investor.
He needed outside capital because Smartvue had a hardware component, unlike his former venture, Trainersoft Corp., a cloud SaaS and software authoring platform for commercial e-learning,
“Building cameras and building recording devices and designing circuit boards and having them manufactured, all of this is really a very costly endeavor,” Renkis says. “So as I went to market, I had to raise more capital because they were more expensive.”
But Renkis was looking for more than just financial backing. He wanted investors who saw more than just short-term returns. He wanted people who got the big-picture vision.
“This isn't a three-year thing or two year thing or a one year thing,” Renkis says. “And as soon as I sit in investor meeting and someone's just deep-diving into the numbers and looking at exactly when their return is — I respect that, I admire them, I totally understand it — but that's not the investor I was looking for. I was looking for more somebody who's come along for the ride and we're going to try to build something really big.”
Smart Business Dealmakers spoke with Renkis about raising capital for Smartvue and how long-term thinking ultimately landed put him in the best position to succeed — culminating in a sale to Johnson Controls in 2018.
Martin Renkis is one of more than 40 host committee members who has helped shape the upcoming Smart Business Dealmakers Conference on Feb. 27 at the Westin Nashville. Use code DEAL100 to save $100 off tickets.
Super angels
Because he wanted investors who understood his vision, Renkis ended up with mostly super angels — the founder of Scott Trade, Roger Riney and former Chairman and CEO of AT&T David Dorman, to name two — who we well-positioned both financially and in their thinking to support the venture.
“What I was looking for were people who could see the vision, not the, ‘Hey, what's in this in two years or three years, but people that can understand the vision — that surveillance will be connected to the internet and people will be remotely monitoring homes and businesses someday, and that this is what we're building,” Renkis says. “And that's a big picture. That's not a, I’m building this little device. I think I can sell 10,000 of them. I can make $100 profit on each one. And that wasn't the conversation. The conversation was, this is what I'm trying to build and those people like Roger got that, people like David Dorman got it.”
Renkis had never raised capital before and he says it wasn’t something anyone taught him. He talked with friends and colleagues and people he knew through professional organizations, but otherwise raising capital was something he just jumped into. Saying “jumped into,” however, doesn’t mean he leapt without a plan.
Capital call
“I'd like to think that it was very well thought out, meaning when I went to raise capital from all of these people, I really mapped out that, here's the vision, here’s the future and this is where it's going. This is why people are buying this. I did have numbers behind it. And I said, ‘Look, here's where I'm spending the money. Here's what the revenues will be. Here’s how we go to market. Here’s where the channels are.’ So I did build a pretty intricate business model and plan, but it all centered around, ‘Do you understand what we're trying to do at a very high level?’”
That vision and future-oriented plan was well-supported by the super angels Renkis found to support his venture. They were investors, he says, that aligned with his vision and had the patience, as well as the capital to be patient and stay the course as the company hit the inevitable bumps in the road.
“Those were the investors I was attracted to because I was building something that was really big and those were the investors that were interested in me because these guys are not going invest $25,000 and hopefully try to five-X their money in three years,” Renkis says. “They're investing a quarter million or a half a million or a hundred thousand and looking for 10x, 20x on their money. And if it takes five to 10 years they’re like, ‘OK, so be it.’”
The sale of his company to Johnson Controls in 2018 was because the capital need was so great that finding the right strategic to acquire Smartvue, rather than more VC or PE money, was the right move in Renkis’ mind — a move that would set his company and his team up for a strong future.
“When I plan for a company, I don't think in a short time — three year, five year — I don't. I’m a 10-year thinker. That’s just how I am,” Renkis, who is now general manager, Cloud Solutions Global Security Products, at Johnson Controls, says. “And when you think 10 years out, it helps an entrepreneur focus on things like the ‘why.’ Why are you doing this? What's really behind everything? Nietzsche used to say a man with a ‘why’ can live through any ‘how.’”
