Sherpa Partners in the News:

Article: Steering Young Firms to the Next Plateau

(Reproduced from Profits Journal, June 1999, by permission)

Mac Lewis has experienced most sides of developing a business, with stints as a high-tech executive and as a managing partner of a Twin Cities-area venture capital fund.  And his wisdom at this point tells him that, while the Upper Midwest financial community generally has been supportive of emerging enterprises, it could do better with start-ups.

Which is exactly where Lewis and Sherpa Partners LLC enter the picture.

The Edina MN-based consulting firm launched last year to serve intermediaries providing introductions between early stage business owners and the venture capitalists who can finance their journey to the next level.  In addition to helping entrepreneurs polish their pitches for funding, Sherpa also works with a number of area startups to fine tune business strategies, expand operations and assemble the underpinnings that will attract more investors in the future.

"Early-stage companies require and infrastructure-- money is only part of that," explains Lewis, whose experience includes nine years as CEO of Plymouth-based Computer Network Technology Corp. (CMNT), which he grew into a $80 million concern.  "Starting a business means building a team, focusing on an idea and learning what it takes to compete in the marketplace.  And as a (venture capitalist), if you're just investing money and nothing else, all you eventually have is a house of cards." 

Similar "venture catalyst" firms are popping up elsewhere in the region, including Teutonic Partners LLC in St. Paul.  Formed by Spence Morley, another veteran venture capitalist who guided St. Paul Growth Capital for several years-- Teutonic earlier this year coordinated a $500,000 financing for Minnetonka MN-based TeeMaster, Inc., an online golf reservation service.  Morley also had a hand in a $1.1 million round for Lambsoft, Inc., a just-completed deal that drew a $265,000 stake by the Gideon Hixon Fund, a Minneapolis venture firm.

Sherpa's current clients include Cognicity, a Bloomington MN start-up developing advanced technology to embed signals in software programs, and Worldtrak Corp., also of Bloomington, which currently is seeking $5 million to expand its line of customer relationship software.

Sherpa, meanwhile, is beginning work on capitalizing a modest seed capital fund, which would allow its partners to participate in some of the deals they facilitate.  Lewis says he and his partners-- Philip Ankeny, Richard Brimacomb and Steve Pederson-- intend to focus exclusively on  high-tech plays, adding that "the amount of money we can raise will determine the type of investing we will do."

In the end, Lewis envisions a wide network of successful Sherpa-backed entrepreneurs reinvesting in the next generation of start-ups.  "That's how they're doing it in Silicon Valley."

-- Dave Price