Charitable giving startup Pinkaloo raised $1.25 million in a round led by Baltimore-based Squadra VC.
It marks the first investment in a Baltimore company by Squadra, which was launched this fall by RedOwl Analytics founder Guy Filippelli and Mike Leffer, an investor and entrepreneur who was formerly with Baltimore Angels. The two West Point alums are seeking to lead early-stage rounds for startups in enterprise technology, defense, cybersecurity and data analytics.
Pinkaloo’s white-label software allows organizations to offer tools to set up an account for charitable giving, find nonprofits and data about those charities and access tax receipts. It also has sharing and gamification features, similar to popular elements that make other fintech products fun.
The company, which previously raised $550,000 and has since graduated from accelerators outside Baltimore such as MassChallenge, looks to work with national and regional banks, companies seeking workplace giving options, and foundations. Its technology is also available via HR and payroll company ADP’s marketplace.
The new investment offers an early example of Squadra’s approach playing out. For one, it’s a fit with Squadra’s focus area of enterprise technology. But there’s more that goes into the decision to invest. With their experience as entrepreneurs — Filippelli is well known locally for leading Baltimore cybersecurity startup RedOwl to acquisition by Forcepoint — Leffer said he and Filippelli want to “roll up the sleeves” and work alongside the companies.
“What we’re doing now is investing in industry-agnostic enterprise software companies where the two most important factors are amazing teams, number one and, where we can make that significant impact beyond capital,” Leffer said.
Companies also vet investors, and getting backing from VCs who are local and willing to dig in was also a good sign for Pinkaloo.
While there's a bit of chicken and egg to whether capital or companies come first, Baltimore does have past successes to build on.
“We felt comfortable because they are able to give so much of their time,” Pinkaloo COO Daniel Gardner said.
Early-stage investments involve a bet on the people building a product along with the technology itself. In Pinkaloo’s case, Leffer said founder Gideon Taub brings a range of experience in many phases of a startup’s growth as a former executive with Baltimore adtech startup Videology, and shows a mix of passion and ability to hire and recruit. The company has also shown progress so far.
“Having the privilege to watch Pinkaloo go from minimum viable product and pre-revenue to almost truly at the point of product market fit and genuine actual sales — that was one of the inflection points I really needed to see to gain conviction about the company itself, and they hit their milestones all along the way,” said Leffer, who is originally from the area and returned in 2017.
It’s a seven-employee team that’s looking to grow as it continues to develop the product and expand its customer base. Gardner said two new team members recently moved to Baltimore from New York, including Colleen Breslin, who joined as director of sales and partnerships. The company will also be looking to add a frontend and backend developer soon.
In leading rounds, Squadra also had a role in bringing others to the table: “As a fund we have a philosophy of playing nice and working with other local investors in the community,” Leffer said.
It also provides connections to other investors with experience building and exiting companies. Participants in Pinkaloo’s funding round include: Bill Dunahoo, who previously led Annapolis Junction’s Praxis Engineering Technologies to acquisition by CSRA in 2017; Paul Palmieri, who led Millennial Media through IPO; and ArmadaGlobal founders Brian Rogers and Keith Sullivan, who led the health insurance company to a 2017 exit.
In launching Squadra, working with founders at the seed stage level is key for Leffer and Filippelli as they pursue an ambitious goal to become a top-tier venture fund on the East Coast. For one, they’re looking throughout the Mid-Atlantic, as Squadra led another investment in Arlington, Virginia-based cybersecurity company Shift5. Leffer said his team is looking to back companies across the country, as well — preferably from emerging tech communities.
But they’re interested in seeing Baltimore’s community develop, and being able to grow investments here. Leffer said there’s a need for more of a “flywheel” of successful companies that attract talent, exit and see that talent spawn new companies and investment.
While there’s a bit of “chicken and egg” to whether capital or companies come first, Baltimore does have past successes to build on. Leffer pointed out that Pinkaloo itself is a descendant of one of Baltimore’s best examples of that cycle, dating to the 2004 acquisition of Advertising.com by AOL. It led to a whole new generation of companies like Millennial Media and Videology, which is now resulting in another group of companies like Pinkaloo that are attracting investments from exited founders.
“It’s a clear example of an ecosystem being built by a win, which we just need more of,” he said.-30-