Welcome to the Innovator

Welcome to the Innovator, the monthly newsletter for iiM, LLC. What is iiM? We are a funding platform for early-stage companies in the animal health, agriculture and human health verticals. We’re based in the Kansas City metropolitan area but invest in innovative companies across the United States and Canada.

 

To date, we have invested in nine companies – some of them more than once – and are continually vetting new investment opportunities. In this newsletter, we hope to share with you, educational information, ideas and a perspective on the investments we are making. If you do not want to receive this publication, please let us know and we’ll remove you from the list of recipients.

 

Please enjoy this initial issue of the Innovator.

 

-Lydia Kinkade, iiM Managing Director

Why Do I Invest?

Why do I invest in early-stage companies in the animal health, agriculture and human health verticals? Like many investors, I have a certain portion of my investments in public securities. My professional career involves commercial real estate and apartments where I am heavily invested. Real estate is considered an alternative asset class in the investment world. And so are investments in early-stage private companies. I’m looking for investments that aren’t as closely correlated with the public securities markets. Doing so gives me the opportunity to generate some outsized returns regardless of what the public markets are doing.

 

I served for a time on the board of the Kansas Bioscience Authority (until it was liquidated by the state) which invested in the same verticals at a slightly later stage. From this experience I realized that there are very few funding options for companies in these fields that need capital at an earlier stage. From this realization has evolved iiM, LLC. iiM has been the perfect vehicle for me to make early-stage investments. It is rare to find such a professional venture capital-like approach to identifying and vetting companies in the angel world – but iiM does exactly that. I like the discipline that iiM brings to “staying in the lanes” and not chasing the latest “hot” trends.

 

It’s my belief that a portfolio of 30 to 40 companies will improve the probability of finding at least one or two companies that produce grand slam home runs. Along the way there will be some singles, doubles and maybe a few triples. Oh, and there will be a lot of strikeouts. I’m fine with the odds because of the diversification among the three verticals and the multitude of companies that will eventually comprise the portfolio.

 

Finally, I find it fascinating to explore the creative world of early-stage companies. There are some brilliant innovators that are developing new technologies and solving some big problems. And who knows – maybe we’ll be a part of a major discovery that makes a real difference in the world?

 

-R. Lee Harris, iiM Managing Member

Venture Investing Terminology

There are many terms in the venture capital world that can be confusing. As we look at various companies and meet with their founders, you may hear us use some of this terminology. Here are a few such terms and what they mean.

 

Series – startup companies typically utilize multiple rounds of funding to achieve scale. These various rounds are often referred to as “series level” funding. A “Seed” stage round is usually the first tranche followed by a Series A round, Series B, Series C and so on. With each round of funding comes dilution for the founders who are giving up a portion of their ownership with each new investment. Likewise, investors in each preceding round are also subject to a level of dilution. iiM invests at the Seed stage as well as at Series A and less frequently, at Series B.

  

Pro Rata Rights – when iiM invests in an early round of funding – Seed or Series A – we request what are called “Pro Rata Rights.” This means that we have the right to invest in a subsequent funding round a sum of money sufficient to maintain our ownership on a pro rata basis. If we previously owned 5% of a company, we would have the right to invest enough money in the next round (on whatever the terms and conditions for that round) to maintain that same 5% ownership, should we choose to do so.

 

Convertible Debt – often, it can be challenging with early-stage investing to arrive at an equitable value for a company that has little or no revenue. Rather than argue with a founder over what his or her company is worth at that stage, iiM sometimes will use a Convertible Note. In other words, we loan money to the founder for up to 18 months at an interest rate. After the term on the note expires, it is either paid off (rarely), or converts to preferred equity on terms and conditions favorable to iiM.

A Look at a Portfolio Company

We are pleased to currently have nine companies in the iiM portfolio with due diligence underway for additional investments. One such company is Green Dot Bioplastics.

  

Green Dot makes bioplastic and bio-composite pellets. These materials allow designers and manufacturers to lessen the environmental impact of the plastic products we use and love every day, without sacrificing quality or performance. This includes starch composites, wood-plastic composites, biodegradables and elastomers. This company has revenue and demand for their product exceeds their current capacity to produce it. The company secured $6.5 million in a 2019 Series A Preferred Round to expand its material portfolio and increase production capacity. iiM made its investment in that funding round.

  

Mark Remmert is the CEO of Green Dot and serves on its Board of Directors. He was formerly the CEO of Styron Corporation based in Horgen, Switzerland, from its inception in July 2009. Styron was a $5 billion wholly-owned subsidiary of the Dow Chemical Company, and the world leader in its top two products – polystyrene and S/B latex. Remmert had a 30-year career with Dow Chemical.

  

The company has its corporate office in Emporia, KS, with a product development lab in Ottawa, KS, and a manufacturing plant in Onaga, KS. The photo below shows a piece of equipment in the Onaga plant.

 

http://www.greendotbioplastics.com