Investors Create Lakeshore Fund
ZEELAND — Creative Byline is the first company to receive funding through a new $1 million seed fund established by Lakeshore Advantage to give engineering and technology startups in the lakeshore area more money to grow on.
The economic development organization for Holland-Zeeland secured financial commitments from local private investors to set up the Lakeshore Advantage Seed Capital Fund. The fund brings another resource — equity investment — to local entrepreneurs in addition to the services Lakeshore Advantage already offers to help foster the growth of high-tech companies.
“We’re looking to make investments in companies anywhere from $50,000 to $100,000 per company,” said Randy Thelen, president of Lakeshore Advantage. “The idea is to give them enough seed investment to test their product or business idea and get it proven so they can more easily go out and raise the next round of capital.”
The seed fund is designed to invest in high-growth, high-tech fields such as telematics, medical devices, consumer products, software and Web-based technologies, and recycled goods product development. When the group makes an investment in a startup, it’s set up as convertible debt, which means if and when that company raises a second or third round of capital and a valuation can be placed on the company, the investors’ initial loan can convert to equity. Entrepreneurs looking for seed money must apply and present their business plan for review by the fund’s investment committee. The committee, which includes private investors who created the fund, makes the funding decisions.
Several members of Grand Angels are part of the investor group and actually led the investment in Creative Byline, said founder and CEO Brad MacLean, a former Herman Miller executive. Grand Angel members invest individually rather than as a group. Grand Angels did all of the legwork and legal work, then allowed investors in the seed fund to invest under their umbrella, MacLean explained.
The Holland-based startup is an online manuscript filtering and sorting service that matches writers’ work with publishers’ criteria or genres. MacLean refers to it as “matchmaker.com for book publishers and authors.” According to MacLean, the service is a faster, less costly and more consistent way for publishers and editors to find the books they want to buy and for writers to find the right publishers.
MacLean said that for competitive reasons he could not disclose how much he received from the Lakeshore Advantage Seed Capital Fund to help finance Creative Byline, which will go live in late fall.
MacLean previously worked in product development at Herman Miller, where one of his roles was to figure out ways to develop products faster, get them to market quicker and basically make business processes better. His wife is a writer who had her first book published in 2002.
“We talked about the business and how antiquated it was in terms of the number of manuscripts a publisher receives every year — 4,000 to 6,000 in the mail — and how few of them actually fit the type of books they publish. We decided there had to be a better way,” MacLean recalled.
He has applied for a patent on the Creative Byline business model and expects to hear from the U.S. Patent Office in six months to three years.
Jody Vanderwel, president of Grand Angels, said the investor group was attracted to Creative Byline because it targets a significant but unmet market need.
“We also liked Brad’s considerable business experience,” Vanderwel stated. “This is the perfect blend of a great idea and a person who has the skills to implement it.”
McLean said Creative Byline has attracted a lot of interest from some of New York’s largest publishers, as well as smaller publishing houses. While researching the publishing industry, MacLean spent some time interviewing publishers by phone about the process of how manuscripts get screened and reviewed.
“When I told them I thought I had a better solution, they took a look at it and said they were interested in finding out more,” he said.
Thelen noted that the lakeshore area was identified this year by The Wall Street Journal as having one of the top 10 concentrations of engineering talent in the United States.
“We think that represents tremendous potential for new ideas and new businesses that can fuel our community’s culture of innovation,” he said.
Thelen said that “culture of innovation” is already evident in Lakeshore Advantage’s Business Garden, a full-service incubator facility that serves as a launch pad for early-stage companies. That’s where Creative Byline is going to be located for at least its first six months, MacLean said. In its two and a half years of operation, the Business Garden and has helped 17 new companies get up and running, and they, in turn, have collectively created about 55 new jobs in the lakeshore area. Thelen anticipates the availability of seed funding will accelerate that momentum.