This month in our Leaders & Influencers series, we talk with Matt Storms, President & Attorney of AlphaTech Counsel, S.C., a Madison-based law firm that represents emerging companies, primarily in technology-enabled industries.
Tell us a bit about your background and what made you decide to start AlphaTech.
I was a partner in a large corporate law firm where I worked for 13 years. While I was there, I got an offer out of the blue to be CEO for a medical technology client, which initiated a midlife crisis of what I wanted to be when I grew up! I ultimately turned down the offer and decided that I wanted to continue practice law. But, I wanted to do it differently. I wanted to be more focused on what I liked doing—working exclusively with emerging tech companies. I also wanted to rely more on technology, which is why I spent the first six months after I left the corporate law firm doing some amateur coding and building automated tools to facilitate working with emerging technology companies. After I emerged from my programming cave, I started hiring for AlphaTech. That was seven years ago.
Why don’t law firms use technology like document automation more often?
Many professional service firms, such as accounting and law firms, have traditionally relied on an hourly payment model for services, which doesn’t give those professions a lot of incentive for developing technology, such as document automation. Under a time and materials model, the more efficient an accountant or lawyer is, the lower his or her revenue. Conversely, the more money spent to improve technology, the lower the margins become. What often happens is that professional service firms are not eager to adopt these systems unless they feel as if they need to do so to keep with market. So, many professional service firms have been slow to adopt new technologies, such as document automation in the legal field.
Why did you choose to invest in technology?
First, it is overdue in the legal industry. I want to be a part of the forces that cause law firms to evolve and use technology to become more efficient. While our use of technology is not the centerpiece of what we offer, it is symbolic of the common sense way we approach working with companies.
Second, use of automation can be a great knowledge management tool. For example, we built our system so that when producing routine documents, it provides prompts and information to enable the person creating the document to make informed decisions around common variables. If a company is setting up a stock option plan, for example, one variable or question is, “How many shares are available under the option plan?” The system will provide the range for what is most common and the instances of when to deviate from what is typical. In doing so, it takes information from those who are experienced on a matter to enable others the benefit of that information when preparing the documents.
And third, after developing and now using the technology, it actually frees up time for our team so that we can spend more time on things like assisting with strategy, negotiating, and structuring complex transactions rather than on routine matters. As a result, our attorneys and paralegals spend most of our time on matters that have higher value, which clients appreciate.
What trends have you seen in tech companies over the years, and what is the biggest barrier for Madison tech companies right now?
When I started working with tech companies in the mid-‘90s in Madison, there were some medical device, therapeutic, and scientific tool companies and some software and Internet companies. Not many of them made it far past the initial start gate. Most medical device and therapeutic companies relied primarily on SBIR funding. Gradually, more investment capital started coming in, and we started to see more software companies popping up. Fast forward to 2010-2012 (post-recession), we had more people launching their second startup company. These people originally came out of Epic, TomoTherapy, Third Wave, GE Medical, Promega, and the UW. Some were successful with their first startup; some weren’t. What was good to see is that even though people may not have been successful with their first startup, they were sticking around and trying it again.
In the last 4 years, investment capital has not been the issue it was 10 or 20 years ago, at least not for early-stage startup companies. You find more folks here who are now on their third or fourth startup, and former CTOs, CFOs, and heads of sales who are now starting their own companies. We’re also seeing a lot more talent flow between Chicago and Madison and even a number of people commuting between the cities.
Currently, we have several companies that we are working with who are struggling to raise between $3-$10M in investment capital—that’s both here in Madison and in the upper Midwest generally. These companies frequently have experienced management and a validated product generating revenue, and are now trying to scale nationally or internationally. In many cases, they need both more capital and talent. There are limited sources of investment in the Midwest that can deploy several millions of dollars in capital in these types of companies. Plus, we have a finite pool of people who have scaled a technology-enabled company to more than 100 people. So, raising $3-$10M will likely be a continuing challenge for Midwest companies in coming years.
What’s interesting to you about the legal sphere right now?
I’m curious about how law firms are changing. There’s been more consolidation in the last 8-10 years than ever. Law firms that have between 50 and 500 attorneys are facing a lot of pressure in terms of pricing, demographics, increasing client law department sizes, outside counsel policies, and outsourcing. With increasing specialization and use of technology, it will be very difficult in coming years for a general practice firm, such as one with 50 to 500 attorneys, to stay on top of the various legal practice areas while investing and paying for the infrastructure that will be required to keep with market.
In coming years, I’m anticipating a combination of more consolidation and breakups of these firms. So, we’ll end up seeing more huge firms with thousands of attorneys on one end of the size spectrum and then niche firms like ours that are specializing in a particular area that can compete with the megafirms in that area. The megafirms will have both depth and breadth of experience and knowledge, but will likely be very expensive because of high overhead and less competition. The niche firms, on the other hand, will focus on a particular industry or area of law—intellectual property, estate planning, insurance, healthcare, employment law, emerging tech companies—which enables them to deliver the depth in that area with a better product and service at a lower price. I look forward to seeing how this unfolds.
Visit Fine Point Consulting to learn more about how our outsourced accounting and CFO services can help your business succeed.
“Fine Point Consulting was very helpful in assessing the needs of our business after we separated from our parent company. They identified opportunities for us to improve efficiency in our accounting systems, a transition that also resulted in cost savings for our business.”
– Christopher Kelly, CEO, TitanTV, Inc.
It’s not uncommon when a company is acquired, merged, or sold, that it continues to use the same software programs it’s always used. It’s a decision that often helps smooth the transition from one owner to the next and keep staff moving forward with business as usual. Such was the case for broadcast provider TitanTV, Inc. when they separated from parent company Broadcast Interactive Media (BIM) in 2016. BIM was using accounting software Intacct, a powerful program that’s particularly convenient for its integration with Salesforce. But Intacct was a more robust system than the newly independent TitanTV needed—and it came at an annual cost of more than $15,000.
Enter Fine Point Consulting, which quickly determined that converting to QuickBooks accounting software would not only save TitanTV a bundle, but would also provide the right-size software for their business. Fine Point staff also researched and tested a tool for syncing Salesforce with QuickBooks, an important feature of Intacct the company wanted to maintain. Accountants at Fine Point then managed the software conversion from start to finish. TitanTV’s new accounting system not only saves the business big money, but it does exactly what company leaders need in a way that’s more intuitive and transparent than before. And that’s a success worth broadcasting.
Visit Fine Point Consulting for more information about the great tools and services we use to help businesses like TitanTV, Inc. succeed.
In our continuing series on Madison Leaders & Influencers, we chat with Buckley Brinkman, Executive Director & CEO of The Wisconsin Center for Manufacturing and Productivity (WCMP), which collaborates with the UW Stout Manufacturing Outreach Center (MOC) and the Wisconsin Manufacturing Extension Partnership (WMEP) to help Wisconsin manufacturers grow their businesses and become more profitable.
Tell us how The Wisconsin Center for Manufacturing and Productivity (WCMP) was formed and what it does today.
The WCMP was formed in 1996, operating as the Wisconsin Manufacturing Extension Partnership (WMEP). At the time, Wisconsin was one of the states with multiple Manufacturing Extension Partnership (MEP) centers: the WMEP covered the southeast portion of the state and the UW-Stout Manufacturing Outreach Center (MOC) covered the northwest half. In 2015, the National Institute of Standards and Technology (NIST), an agency within the U.S. Department of Commerce, put our contract back up for bid. One of the conditions of the new contract was that there be one MEP center for the state.
The WCMP became the holder of the new NIST MEP cooperative agreement for Wisconsin, and we now facilitate collaboration between the MOC and the WMEP. It’s our job to align their services, programs, and activities to create and attract more opportunities for the state’s manufacturers. The WCMP handles all the contracting with the Wisconsin Economic Development Corporation and the Department of Commerce. We administer grant funding, coordinate advocacy and education efforts, and connect resources throughout the state.
One thing that’s a little unique to us is that we focus our efforts across five manufacturing industry clusters in Wisconsin: water; power generation and control; food and beverage; biotechnology; and aerospace. In cooperation with the state, we did a study to identify these strategic clusters, which were defined based on what was here and where Wisconsin has a competitive advantage. We support these clusters, help small and medium manufacturers grow and become more competitive, and expand Wisconsin’s influence in national manufacturing.
What’s one misconception people often have about manufacturing in Wisconsin?
One of the most widely held misconceptions is that most manufacturers are large. In fact, 99% of manufacturers in Wisconsin are small- to mid-size—and 80% employ 20 people or less. Fewer than 200 manufacturers in Wisconsin are what we consider large, defined as companies with 500 or more employees. The WCMP spends a good deal of time interfacing with those smaller manufacturers to help them locate and develop the resources they need to grow.
How do you describe the overall health of manufacturing in Wisconsin, and how is it changing?
It’s in a really strong position. There are a number of people in key roles around the state who understand how important manufacturing is to our economy. It’s very easy—especially in Madison—to talk about being an innovation center. But innovation is not limited to Madison—the numbers have never supported that. Manufacturing funds two-thirds of R&D in the country. Most scientists and engineers work in manufacturing.
Manufacturing today is not the same as the manufacturing environment of 20 years ago. A strong back and a good alarm clock no longer ensure success in manufacturing. The requirements for manufacturing in today’s environment are greater than just showing up and being able to read, write, and add. Most of those types of manufacturing jobs have been exported, and U.S. manufacturers can’t compete with these countries in products with higher labor content with lower skills.
Manufacturing in the U.S. today requires more training than a high school diploma. It doesn’t necessarily require a four-year degree, and manufacturing can be an exciting option for people entering the workforce as it allows you to keep your options open. Starting off in manufacturing is a great way to start a career: it requires minimal training but can take your career in many directions. Skills like marketing, sales, and technology can be developed within manufacturing but also translate to careers outside of manufacturing. The strong technical college system in Wisconsin—and now four-year programs—are starting to think about ways they can engage with manufacturing and help students get the skills they need in other ways than just a traditional classroom setting.
What do you see as the greatest challenge for Wisconsin manufacturers going forward?
One ongoing challenge is that it appears a large percentage of manufacturers are asleep at the switch in terms of observing the changes that are coming their way. The big change is the body gap that’s coming. We simply aren’t going to have enough people to fill all the positions necessary to continue to grow the industry. And if manufacturers try to use skills gap solutions to solve the body gap problem, they’ll be putting their companies in jeopardy. More manufacturers need to start informing themselves of key trends and how these trends will affect their businesses—because they will.
It’s a great time to be a manufacturer in Wisconsin, and to be a business in Wisconsin. People are thinking about new ways to do things. Working in the public sector, I see a lot more cooperation between organizations in the state, which makes me very hopeful.
Visit Fine Point Consulting to learn more about how our outsourced accounting and CFO services can help your business succeed.
In this series, we review and share accounting, HR, and other software that we think would be of interest to our clients and colleagues. Check it out! You might just learn about a great new tool for your business.
This month we’re spreading the word about fundpnb, a new app-based product allowing business owners to get short-term cash flow based on their invoices, similar to factoring, but much easier, with less weight on a business owner’s personal finances. We were fortunate to get a demo of the product from fundpnb’s founder & CEO, Satish Palvai, who told us more about the product and the ways it can help businesses succeed.
Tell us why you decided to start fundpnb.
In my previous ventures as a small business owner using a variety of products and services, I found the cycle of receiving payment from my customers and then paying my own bills left me with uneven cash flow. I decided to talk to business owners from a variety of industries to determine if this was a common problem for other small and start-up businesses and found that, typically, the answer was yes. One problem businesses cited was that it often took too long for their customers to pay them. Net 30 terms regularly turned into net 45 or 50 days. At the same time, these start-ups and small businesses were reluctant to ask clients to pay sooner for fear of pressuring customers and/or changing the dynamic of the business relationship.
Because of these late payments from customers, cash needed for day-to-day operations and growth wasn’t always on hand. Many had already tapped into credit limits with banks, and getting additional funds from banks was either not an option or too timely a process, taking anywhere from 8-16 weeks of meetings, paperwork, and an owner’s time before they received this much-needed money. Some business owners would tap into their own personal finances to support their businesses, which is also not an ideal situation. I thought there should be a better way to solve this problem.
I decided to start fundpnb to offer start-ups and small businesses access to cost-effective funds to fill cash flow gaps. Financing is a long and tedious process, with many hours of paperwork and detailed personal information required. We launched fundpnb to reinvent invoice financing and to provide a better experience for micro and small business owners.
So how does fundpnb work?
Users just sign up through our app and connect their business accounting software (e.g., QuickBooks) to take an advance on outstanding invoices. Our technology evaluates key data points about the business and advises on if the business can be funded. If so, we automatically initiate a credit to your linked bank account. The fee is a fixed fee of 2% of the advanced amount every 30 days, with automatic repayments every 30 days for up to 90 days.
If, for example, a business was to request an advance on invoices totaling $3,000, and they paid it off in equal amounts every 30 days, the schedule and fees would look like this:
Advance amount: $3000.00
|Principal + Fees
|$1000.00 + $60.00
|$1000.00 + $60.00
|$1000.00 + $60.00
Businesses can choose to repay the amount borrowed whenever they want, and fees would then be adjusted to reflect the 2% fee according to the number of days the borrowed amount was outstanding. There are no loan origination fees, no underwriting fees, no prepayment penalty, and no hidden fees.
When companies sign up, we only look at business information; we don’t ask for personal information. The process—including fund deposits and notifications—is entirely electronic. There are no manual interventions at any point.
What has response been like so far, and what kinds of clients do you work with?
Response has been wonderful. We’ve purposely worked with customers from a variety of industries, including high-tech IT, hospitality, and professional services. It’s given us a good understanding of how these businesses operate and ensured that our software is compatible.
We currently support a variety of businesses with varying levels of revenue, but our sweet spot are those businesses with a few million dollars in revenue. We can work with businesses that have less revenue or those that go up to tens of millions in revenue, but that few million-dollar range tends to be most common for us.
Visit Fine Point Consulting for more information about the great tools and services we use to help businesses succeed.
“Fine Point is a fantastic partner for small- to mid-sized businesses as they integrate exceptionally well with our operations. Fine Point allows us to execute as if we had a much larger team to help to handle the unexpected as it occurs, which is critical for our business.”
– David Hubanks, VP of Operations, Propeller Health
It’s never easy to switch from one employee benefits provider to another. This was particularly true for Propeller Health when, mid-transition, the company’s HR manager responsible for communicating the new benefits program was offered a position elsewhere and left the company. That’s when Propeller Health called on Fine Point Consulting, who was already acting as its outsourced accounting department, to step in and help troubleshoot questions and concerns from employees about the new provider. Using Slack, a team communication software program already in place at Propeller, Fine Point was able to communicate directly with employees about the new benefits system, address concerns, and respond to questions as they came up. Today, payroll and benefits are running in a way that gives the company peace of mind, and employees know that Fine Point is there to respond right away should questions or concerns arise.
Visit Fine Point Consulting for more information about the great tools and services we use to help businesses like Propeller Health succeed.