E115: Rimas Buinevicius, EVP and Principal at M Barc Investment Group – Interview

June 14, 2017


This interview is with Rimas Buinevicius. Rimas is a principal at the M Barc Investment Group and Chairman of the Board of Rowheels. He’s also located in the Madison area, so this interview is in person.

So Rimas has quite a background. He was CEO of Sonic Foundry in Madison from 1997 to 2011. Since then he’s invested in and served on boards and co-Founded companies.

Rimas also has quite an interesting perspective on Madison’s tech community.

Here are some other things we talk about:

-How much was Sonic Foundry worth at one point during the bubble? It’s a lot.
-How much revenue did Sonic Foundry have when it went public in the late 90’s?
-How does M Barc help companies find funding? How do they screen their potential investments?
-What type of investors does M Barc reach out to?
-How does M Barc know if an investment is fundable?



Dave Kruse: Hey everyone. Welcome to another episode of Flyover Labs and today we get to talk to Rimus Buinevicius. Rimus is a Principal of the Enbark Investment Group and Chairman of the Board of Growth Wheels, which we’ll hear more about. So he is also located in Madison area, so this interview we’re going to do in person. So Rimus has quite a background. He was the CEO of Sonic Foundry in Madison for a long time, until about 2011 and since then he’s invested in boards and co-founded different companies, which we’ll hear more about. So I’m definitely excited to hear more about his background, what he’s learned and what he’s up to now. So Rimus, thanks for joining us today.

Rimus Buinevicius: Yeah, thanks Dave.

Dave Kruse: So yeah, before we get into what you’re doing now, which I’m especially curious about, you know can you tell us little about your background, how you landed at Sonic Foundry and what you were doing before that?

Rimus Buinevicius: Yeah, I spent a good chunk of my early career being an engineer and doing a lot of interesting projects across multiple industries. I ended up in amongst other things NASA, working SPIR projects in a small consulting firm and then moved into medical devices, which is what I was trained in.

Dave Kruse: Wait, what were you doing for NASA? You can’t say NASA and then…

Rimus Buinevicius: There was a 3D accelerometer based system that measured astronauts’ motion in 0G environments back in 1987; so way before anybody even knew what a 3D accelerometer was.

Dave Kruse: Were they large at that point?

Rimus Buinevicius: No, those are very first silicon based accelerometers.

Dave Kruse: Wow! Are they more expensive?

Rimus Buinevicius: Yeah, they are definitely and they were larger in terms of silicon, but they were the first silicon grade accelerometer.

Dave Kruse: So why did NASA care. They wanted to know if some of this turned upside down or…

Rimus Buinevicius: Yeah, basically they would track motion and…

Dave Kruse: All right, interesting, all right keep going.

Rimus Buinevicius: And then I got into a bunch of healthcare related things. I was trained in the biomedical engineering department. I was an electrical engineer, but the biomed was a subspecialty when I came here for grad school for at UW Madison, so yeah, I was in cardiac PC equipment. I worked for a company in Chicago that basically did transesophageal pacing. So if you had a bariatric or a heavier patient or what have you, someone that couldn’t use a treadmill, you would basically have an electrode injected in your esophagus and it would pace the heart, so you’ll be able to detect stress in patients. So that was a rather interesting company. Ultimately I ended up in industrial processing, industrial controls and food processing. I designed a control system for the world’s largest beef jerky line. So GoodMark Foods and SlimJims that was partly my degrees along with my other fellow employees.

Dave Kruse: So like I always wanted to know, how do they [Cross Talk] I was not expecting this, but this is – I’ve always wondered like how do they make pig you know go from meat to that, so…

Rimus Buinevicius: It’s an ugly process, you don’t want to know.

Dave Kruse: Don’t want to know, all right, because I do like those. All right, so yes.

Rimus Buinevicius: And by the way, the best hotdog you’ll ever have is covering right off of an Oscar Meyer hotdog line right in the factory, there is nothing better.

Dave Kruse: Really?

Rimus Buinevicius: Yeah.

Dave Kruse: Interesting. So you did that too?

Rimus Buinevicius: Yep. So then that all preceded a whole business path that I was taking and I ended up getting my MBA in the University of Chicago doing the weekly grind and the executive program running down from Madison to Chicago and I did that for two years and I ended up simultaneously as I was about to graduate, hooking up with Monty Schmidt over at Sonic Foundry. He was a long time buddy of mine and he had gotten the company going along with his partner Kurt and so this was about 1995 and I decided to take the leap and jump into the start up scene with the boy and we proceeded to start building up that entity.

Dave Kruse: So what were you doing at Sonic when you first joined?

Rimus Buinevicius: Pretty much everything that wasn’t engineering. So I had actually – I don’t want to lay claim to this, but I actually did write some code initially back in the early 90’s to help Monty, but ultimately they were looking for someone to help negotiate their business deals and do marketing and sales and finance and all the stuff you know. I was the fourth person, fifth person, so almost all of their stuff was development of today’s state. Yeah, so we came in and started in January 1, 1995.

Dave Kruse: Wow! Okay. And how soon was it before you started getting traction and some clients?

Rimus Buinevicius: Actually it happened very quickly and simultaneous, really my rival, because at that time we cut a deal with – or we negotiated a deal I should say with MacroMedia, which ultimately was bought by Adobe and so they were looking for an audio editing tool to round out their windows platform. They had the Mac side locked down, so they needed an audio editor for Windows and they had heard about us and knew that this was the best audio editor in the market even though it was under the radar and we ended up cutting a licensing deal. So MacroMedia originally wanted a – actually approached us to buy the company and we spurned the money and instead made more money off the OEM licensing with them and you know they were heavy duty distribution in those days, I mean worldwide. So we sold a lot of products through them. We also then subsequently licensed with Microsoft. Sold probably the first Mp3 player for Microsoft, so they licensed that from us.

Dave Kruse: Did you guys develop the Mp3 player, like a software?

Rimus Buinevicius: Yeah, exactly, a real software player that they distributed and this goes back now to like 1990 or so and this all kind of preceded mp3.com and Napster and all that stuff. We were – we created the whole world of sound editing and stuff. We were right in the thick of it and we were making a move towards video based on the other Co-Founder Kurt Palmer who came out of Microsoft. He was convinced that really there wasn’t a sufficient video editor on the Windows platform and we needed another tool to round out our editing suite and so we pulled our resources into doing that, developing it and ultimately anticipating the world of streaming audio and video and online and so we were really the, one of the first companies providing tools to accomplish that.

Dave Kruse: And what did – if you remember, what did some of those licensing deals look like, like MacroMedia?

Rimus Buinevicius: Well, they looked better back then than they do now probably. I mean the whole world flip flopped. Back then you actually couldn’t drive a dollar a copy or something like that. Now I think a lot of the software providers actually pay the OEMs to sell their product like you’d get on a laptop or something, because the assumption is people will upgrade and they will make their money that way. So you know getting real estate on a laptop is a big deal, but back then you actually got paid for it, so it was a good deal.

Dave Kruse: Got you, okay. And what was one of the best learning experiences there or what did you enjoy doing or what was the top lesson you learned or…

Rimus Buinevicius: Now you’re asking too many questions.

Dave Kruse: Yeah, I know, all right, soo many yeah.

Rimus Buinevicius: You know the most interesting thing was probably just cutting our teeth and learning the whole management process. Running a fast grow situation is not something that anybody could really be ready for. Its learning like on the job training if you will and a lot of high paced type – high paced environment in a city like Madison which probably wasn’t your east coast, west coast environment, so that was kind of cool. We were you know moving at the pace of those folks even though we’re here at Madison having to recruit people and grow the business. A lot of people couldn’t believe that we were in Wisconsin at that time. Now it’s probably not as surprising because we’ve had a lot more start up activity here than back then. There really wasn’t much to seek out.

Dave Kruse: Yeah, was there anything else going on?

Rimus Buinevicius: No, maybe I was more like Epic where they had like school around 10 employees or so.

Dave Kruse: They have more now; a thousand times that.

Rimus Buinevicius: Exactly. So yeah, no it was a lot of university research, a lot of professors that would like some technologies that sort of thing and that’s not really – it didn’t have like a big push in terms of management that could run companies like this and similarly Wisconsin back then was very conservative on capital raising. So you wouldn’t find a lot of people putting risk capital in play to fund a start up. So we ended up finding our investor out of state, pretty much exclusively until the IPO in 1998 and…

Dave Kruse: Quiet a gap you know, three years.

Rimus Buinevicius: Yeah, we were with an IPO on a little over $3 million of revenue.

Dave Kruse: Really? You don’t do that anymore, you don’t see that anymore.

Rimus Buinevicius: No, you don’t see that anymore. But that was a very special time for a lot of companies that were actually going public, so…

Dave Kruse: Do you know when they went public?

Rimus Buinevicius: Well, yeah absolutely, it was an interesting experience. If for no other reason than that and the fact that the capital is available to do stuff and a lot of us could do stuff that otherwise we wouldn’t have been able to do, and it was an interesting niche product that resonated with end users. You know for example when we market our IPO we got to one of the guys in ZZ Top who evaluated the product. So you know you just running into people like Joe Walsh and Nick Fleetwood and people like that, that sort of understood what we were doing and we were indirect ways supporters of our company through the ways we licensed our software and you know through the asset loops and things like this that we would contractually have agreements with them. So it was cool to be exposed to that world and I think maybe that’s sort of a message there that there’s an opportunity to raise capital when you go to the user base itself and that’s – I think where there’s a lot of future opportunities its well for some of the companies that we’re involved in.

Dave Kruse: Really? To raise money from the users. Did you guys raise money from the artists or…

Rimus Buinevicius: Yeah, basically it would be maybe through a money manager from artists.

Dave Kruse: Okay, okay, interesting, okay. Yeah, and would you ever – looking back would you have – well, you probably have done different things differently, but anything major that you are like ‘Oh! We really messed that up and I would never do that again.’

Rimus Buinevicius: Hindsight is always 20/20, so yeah I think if there was something you would – if you have the ability to foresee April of 2000 when the market imploded, you probably wouldn’t have been – we wouldn’t have been as aggressive with the ramp up of employees, acquisitions, things like that, but it was also the market momentum that was happening. At that time there was a little bit of amusing or being amusing is a more appropriate word that the big companies were really tweaked off at our small start up having the valuations we had. Companies that revenue wise would be maybe ten times bigger than us would be trading at a quarter of our market value.

Dave Kruse: What was your highest market value of?

Rimus Buinevicius: We, so on a $25 million run rate, so we went from $3 million to $25 million or so in a couple of years. We had a $2 billion market cap and because of the growth and we weren’t certainly the only company. You know there were a thousand companies like us at the time. The companies being rewarded were the ones that actually put forward the most aggressive business plan and the biggest vision for what the future in our case of audio and video would be and we weren’t wrong. I mean we were absolutely right.

Dave Kruse: That’s true, you were right.

Rimus Buinevicius: Now if you look at like how our world is being impacted you know, everybody – you are creating this off of a phone. I clearly remember discussing exactly this concept of was it available in 2000, that this would be the future way of recording. So yeah, the day is come.

Dave Kruse: And how – and this is the last question on Sonic Foundry. Well, I think there’s another one, but what did it look like pre-meltdown, financial meltdown versus opposed to like a number of employees and…

Rimus Buinevicius: Yeah, we had about 500 at our peak. We had I think seven locations including Europe and we were burning probably $7 million a quarter, and we had a significant capital raise lined up. As a matter of fact I was in New York trying to raise capital when the market started imploding and suddenly the doors weren’t being opened. They weren’t very receptable let’s just say. But maybe contrary to what a lot of companies did, we did a lot of tough cutting. There were a lot of tears shed, but we didn’t completely bail out and a lot of companies just had – they just completely bailed bankrupt to their companies and they went away. We actually preserved the equity of the stock. We did some things financing wise in terms of selling our assets, which made some people unhappy, but it allowed the company to survive and we pivoted into what we thought would be a more lucrative market. So you mentioned earlier the margins on OEMs, its offer and stuff like that coming down. We were identifying that business steaming application and specifically online education and a video management platform and things like this would be much more lucrative and so we really banked on that and went from – back down to zero revenue, 25 employees and had sold two divisions of our company to survive and then basically ramped it back up. So now I think the company is doing about – I left five years ago, but the company is doing maybe $40 million of revenue. So it was a nice recovery, but a lot of people and situations, they would have bailed on the tough times they had.

Dave Kruse: All right. Yeah I mean, do you think it will be more helpful if the IPO market was more accessible by the small companies. I mean obviously you were a small name with the IPO back then. Do you think that would be helpful to have it now, you know you have to – I don’t know, you know better than me, but hundreds of millions released, tens of millions and they have fast growth in order to access the – or the new IPO, do you think it will be helpful to go back to the – well they were like magnets when it was easier. I’m not saying like must say the valuations, but…

Rimus Buinevicius: Yeah. No, I think the – there are maybe hybrids of that solution starting to show up and specifically, specific ways that you can do general solicitation and crowd funding and raise equity through a more of a broader distribution platform, but not necessarily be burdened with the quarterly duties of reporting, which is a real handicap for micro cap companies. The other being is that unless you have enough of a shareholder base, it’s really hard to get liquidity and proper trading in stocks like that, which is problematic if you want to be public. So the combination – what really killed it was sarbanes oxley because there is way too many rules and regulations now in public companies and it’s not really fair to the small companies who don’t have thousands of employees and all of the procedures that they have under Sarbox, don’t really work very well for small companies. So small companies have gone down the private equity path more often, you know venture capital, private equity investors and that’s likely a more efficient market. In a lot of ways it maybe a benefitting those companies better, because they are – if they have the IPO wind or market block from them, they really going the strategic path to look at their strategic investors. So you could argue that they are probably maximizing their value and finding exits faster than they would have if they were a public company.

Dave Kruse: Got you. Okay, all right. So you can tell us a little bit of, what you have going on now?

Rimus Buinevicius: Yeah, so I’m a principal in a group called Embark Investment Group. We are headquartered in Tampa, Florida, but I am working the Mid-west market and developing Embark’s presence. What it is, is it’s a boutique investment bank that’s able to do the private placements I described and specifically under the new regulation that came out in the past last year after the jobs build pass in 2012 and allows for what’s called a Reg D 506(c) offering. And the uniqueness of that sort of an offering is it allows for companies to generally solicit investors as long as they meet the accredited investor rules. So literally you could put a billboard out in the street and say Acme Software is looking to raise $5 million, call 1800 you know or send in your email requests here. The beauty of that is that prior to that most offerings have been under the Reg D regulation or 506(b) offerings and that literally acquired you to know who your investors were and therefore it truly limited the scope of the people you wanted to reach. So this is a really powerful distribution tool that they opened up at the SEC level to allow for a much more broad distribution and it maybe addresses the question you asked about, why don’t companies do more IPO’s or should they? This is perhaps the middle round that the regulators felt would help companies enough to raise capital that they need. So there’s no limits really on the amount you can raise. There are certain criteria you have to deal with that we haven’t found very onerous, but initially some people had a little need here. If you participate in a 506c offering, the one difference in the rule now is that you have to verify that that accredited investor is indeed accredited. So you can go and get the affidavit from a lawyer, an accountant, money manager, the person themselves if they provided tax return or an investment statement, but that hasn’t been a big issue for the offers we’ve put out and its worked pretty effectively. So we think it’s a really powerful tool going forward and so we’re in the process, probably of about six to 12 different companies right now, betting them for this particular kind of a process. There is no pure industry play. We’ve got an offering on the real estate side and we’ve done a pharmaceutical deal. We’re looking at a fixed income product and then we’ve got a couple – a number of things going on in the internet of things side of the business and then also working with a couple of other investment banks on syndicating deals. So sharing ideas and being able to cross sell and cross promote the offering. So it’s an interesting market. The reason that we also think it’s an eye-opener for entrepreneurs is because prior to this the only gospel that anybody heard was you have to go find venture capitalists, you have to go find venture capitalists. You know 2% of companies maybe get venture capital. So what do you do when you’re looking for series A money or series B and nobody in C wants to look at your deal. There are some really great businesses out there and you know sorry I am not the next Facebook, but I might be able to create a $100 million or $200 million business. So why shouldn’t those businesses get funded and we think that this is a great way to do it.

Dave Kruse: Interesting. And so who is in your network as far as investors. Like who do you – what type of people do you reach out or entities do you reach out to?

Rimus Buinevicius: Yeah, typically these offers are interesting to high net worth individuals and then family offices. There are certain funds – in some cases there’s actually venture funds that will participate because they are similarly looking at themes and what have you and they don’t necessarily want to carve up the deal entirely for themselves. So the typical group of candidates you can find.

Dave Kruse: Got you, okay. And so how do you – tell me, do you approach this almost as like – you know almost like a VC. Like you know you have to do lots of due diligence and make sure that you trust that your clients before you go out and pitch them. So what’s your process like; find the client and then bring them in?

Rimus Buinevicius: Yeah, I mean a lot of it is – so we’re a lot further along than maybe what you’d see at the incubator stage where there’s a lot more risk involved and you know raising $500,000, everyone is doing that all day long. When you start raising say $2 million to $5 million, presumably the company has a greater track record, they brought in people, they’ve established a presence and so you have at least more data to go on. There is also a little bit of a character check you know. It’s just like anything. You want to work with people that you are comfortable working with, that seem to be honest and trust worthy, that have you know sincere interest in growing your business. So you know it’s like we’re able to get companies along those lines, along the other traditional lines of due diligence you know audited, financials and everything else that is available. So it really depends on where the companies are at in their development stage, but there is quite a bit of that whole upfront process that goes into it as well, just like in a VC deal.

Dave Kruse: So do you have – you know you mentioned that there might be raising $2 million to $5 million. Is that kind of a sweet spot for you?

Rimus Buinevicius: Yeah, usually you get between $1 million or $20 million on offerings.

Dave Kruse: Okay, and are they mostly companies that have been round you a lot, of revenue, probably got cash flow positive necessarily or what’s kind of the atypical or can you give an example of one of your portfolio companies where you’re looking at it. You have to give like…

Rimus Buinevicius: Yeah, we recently did a pharmaceutical deal with a company called volterthera [ph] and you know that’s a company that’s developing a portfolio of orphan drugs that either off brand or underutilized or what have you and so you know that’s a situation where it’s a potentially high growth scenario. There is immediate revenue there, so they are already realizing.

Dave Kruse: Really, immediate revenue?

Rimus Buinevicius: Yeah, because their strategy is actually marketing and selling drugs that are already gone beyond FDA approval. So that allows for them to actually realize revenue quicker and sooner and ultimately be a good strategic fit. So that sort of a company is a good example on the software IT side of things. Usually it’s a scale up process where some company needs to build out maybe you know double or triple staff in the next year or really blow out marketing and they are entering a fairly hot sector. I mentioned IOT. Well that’s a pretty hot sector right now, so there is good comparables out there in terms of the value that people have attached to these companies. They have to have a big enough footprint or vision for what they are attacking, but ultimately the structure there would be to help give them enough runway for at least a couple of years and perhaps then find a strategic investor, perhaps they would be ready for an acquisition at that stage or they would be looking for follow-on capital, because they would successfully continue to grow during that time period. I mean the key to all of this is growth. You have to be able to demonstrate growth, otherwise you are just dead in the water.

Dave Kruse: Makes sense. So how do you find potential investments? Do they find you or are you meeting them?

Rimus Buinevicius: Yeah, they actually find me.

Dave Kruse: Probably more than you need sometimes.

Rimus Buinevicius: Yeah, we have our own – we have a pretty broad network of deal flow and I mentioned also that our partners on our investment banks are showing us opportunities as well, so – and then of course I mentioned that we’re not really – we’re not really – the door is not open for the typical incubator. That’s you know got to prove themselves out for the next year. So that really filters the list quickly for the people that can escape that process and successfully move to the next stage. So when they move to that next stage that’s when we become interested in an idea that we think our investors would like, then maybe ask for the marriage to happen. It’s not so much for even me liking the idea. I have to know that my investors will.

Dave Kruse: Yeah, like when you see a company, how do you know that they are going to be fundable? Like do you kind of run it by some of your investors saying, hey, okay before you…

Rimus Buinevicius: Yeah, we do kind of a – in a sense I wouldn’t say we have a process, a fixed process for it, but we will put companies in front of investors and start doing the kicking the tire steps and seeing if there is interest and if they like the idea and likewise we’ll bring in industry advisors who can see what the other guys are playing, because often, you know here in Madison maybe we have more of blinders on than other parts. Like San Francisco, you will find out you know there are 10 companies running the same exact thing. So it’s good to know what everyone else in the industry is trying to do or who has attempted it before.

Dave Kruse: Got you, okay. I always here, like how do you find those advisors, because like one of it’s – I guess the pharmaceutical one is probably somebody who might know how to do orphan drugs or the spacing of it after, but IOT is so broad. Like I said they are going after let’s say the manufacturing makers, people you know – people in your network that you know.

Rimus Buinevicius: Yeah, well there is a lot of people in the professional – usually industry conferences speaking towards it, there’s a lot of folks that have that sort of built up expertise, so they can be brought into these situations. A lot of them, it’s how they earned a separate portion of their income. They actually consulted the companies and helped them along.

Dave Kruse: So by the time you sign up a company, you have a pretty strong feeling your willing to fund them, but your kind of doing pre due diligence, okay. And how do you guys make money? Do you just charge fees based on…

Rimus Buinevicius: Yeah, so the difference is that you know it’s sort of the devil and the details with the VC deal right, because you will end up with participation and liquidation rights and things like this which nobody can really rationally calculate. So it’s a way to sort of disguise the real cost of doing a VC deal, but they don’t want to talk about it. It’s like very hush, hush, quiet, quiet don’t talk about it around the QT. In our case we actually have just like a company that will go public. It’s all straight forward. It’s the fees and usually a warrant component, so we have some upside in the companies, but that’s the full extent of our compensation. So there is no cram down process, things like that that we’re taking as an entity when we bring it; however, we will do offerings that might be preferred and they might have similar terms like VC deals and things but that’s on a case by case basis. Generally we like to keep the Cap table as clean as possible, meaning we don’t like to see – preferred CE, preferred DE, onerous terms you know, three times type of liquidation preferences etcetera. So it’s one of those things where it’s a deal by deal basis and whether the entrepreneur has been smart enough to keep their balance sheet clean.

Dave Kruse: What about you know the kind of follow-on round? Like how do you – if the company is raising a fund there’s a chance they might have to raise you know let’s say 10, 20 or something down the road. Like would you hire that worth individual that’s just been around or how do you?

Rimus Buinevicius: Well, it probably starts moving towards a little bit more of the institutional and strategic investors who can easily do that and at that point you know the growth component probably implies the strategics are getting interested. So whether you want to partner up with one entity who might own 20% of the market and it might limit you with the remainder of the market, but at least you sort of get an idea of the playing field and who is interested in what you’re developing.

Dave Kruse: Got you. And how long has Enbark been around for?

Rimus Buinevicius: We started in 2012.

Dave Kruse: Really? And how many deals have you done?

Rimus Buinevicius: We really weren’t getting active until last year, so we’ve done six.

Dave Kruse: Wow! You guys are pretty active then. That’s a lot in a year, okay. And how do you guys, after you help raise money, do you stay involved with the company now or do you just kind of do you take board seat or anything?

Rimus Buinevicius: Yeah, well it’s not necessarily something that we will – you know for example, if we brought in a bigger, larger investor, perhaps that person would take a board seat. We would be offered the ability to assign the board seat to someone within our discretion. So yes, in similar ways it’s like you know kind of a VC deal. You like demand that depending on the situation.

Dave Kruse: And you also said you want to keep a clean Cap table. So do you – like you’re given like 10 high net worth individuals, like when you crave an entity and everyone invested one, would they invest like as an Enbark like an investment fund or do they all invest in the individual on the cap table or how do they show up?

Rimus Buinevicius: It can be both. You can take literally a partnership and you know that allows for people to pool our capital like smaller dollar amounts and the entity itself comes in and is considered the larger one entity with the larger dollar amount and then there are other high networks that will maybe be equal to them, because they have more capacity.

Dave Kruse: Okay. So – and this is a general broader question, but you know how do you see start ups messing up financing? I know it’s kind of a broad question, very broad. You know is there – yeah, if you were going to have the similar – write a short book. We might not have time for it all, but…

Rimus Buinevicius: Well, let me just put it this way; my venture capital friends won’t like me saying this, but when we went – when we did Sonic Foundry, the only people that have preferred were the three founders and everybody else was common stock and that was through several multiple rounds and so in theory, this is like the fact. VC’s don’t like this, but a lot of people say this, but why should a later stage round have preference over the people that took the earlier risk and why shouldn’t you just keep offering common, its [inaudible] all the way through and that’s the biggest mistake that entrepreneurs make because right now the way the markets move, everybody thinks that that’s the only way you can do it. But if you have a strong enough company, a strong enough story, you can dictate terms and say, all my offers are going to be common share you know. I’ll just – if I was – and this probably would – it sort of relates to me and what’s happened with Facebook and Snapchat and things like that where those guys have been able to dictate the terms at an IPO point and that gets more into the control issues, board control issues and voting rights and things like that, but it’s because they had a strong hand at play and so it really depends on how strong your hand is and you don’t necessarily need to bend over on the term sheet just because the first guy shows up and says I’m going to give you series A, but I’m going to need all these extra voting rights and protections and things like that on the downside. So that’s the sort of dirty secret that’s out there that entrepreneurs probably aren’t as aware of as they should be.

Dave Kruse: And can you kind of describe what you mean by preferred shares for the Founders out there. You mentioned like voting rights and stuff, but can you describe what you mean. I mean it could be different things.

Rimus Buinevicius: Yeah, let’s say you price your leader’s stock rate at around $5 million or the company is worth $5 million and let’s say $1 million of that was preferred. So common was the head of that, the Founders were the first initial investors and now you’ve brought in some preferred. Well, if the proverbial, you know what hits the fan and you know the value of the company goes down and you’re looking to raise additional capital, guess who gets blocked out of the deal. All those initial investors and preference is superior to the common. So the preference basically owns the company at that stage. So all those common shareholders can be wiped out and then those preference shareholders can then continue to keep moving the company forward, except they are basically the only stock holder to the company.

Dave Kruse: Yes, that’s good, thank you. So all right – and so we’ll only talk a little about some of your other investments, but like probably it will spark. But where do you want to take Enbark, I mean the company as a whole, do you want to continue to be more financing, do you want to get into the larger financing or just kind of keep doing what you’re doing. I know you’ve only been doing it heavily for a year now, but yeah.

Rimus Buinevicius: Yeah, I think right now we’re just focused on getting more activity deal flow out. We’re actually in the process of recruiting other financial, licensed financial professionals. So you need to have basically securities licenses to do what we’re doing and so there are a number of people that – Wall Street has been squeezed you know from the standpoint of less IPOs, so they are experts in capital markets and fund raising and things like that might be interested in joining a boutique. Ultimately what we’ve seen historically is a “Boutique Investment Bank” is you sort of outgrow your initial market. So the reason we’re planning in this market, the one with $20 million is because the good guy will never come to a market this size. But if we’re successful, our deals will get bigger and bigger and ultimately we’ll outgrow ourselves and it’s because it probably takes as much effort to due diligence of a $1 million deal to a $20 million deal and so it’s just obvious, where would you put your resources. You’re going to make more money on the $20 million.

Dave Kruse: The fees, they’ll necessarily go down a lot, $20 million to the rest of the $200 million.

Rimus Buinevicius: Correct, you get a little bit of a discount, but not that much.

Dave Kruse: Yeah, yeah okay interesting. All right so let me talk about some of the – well I know Growth Wheels. It’s so hard for me to say; it’s like a tongue twister. But can you talk about that and do you have some other stuff going on besides that and rotors is a pretty cool company.

Rimus Buinevicius: Yeah, we’re – what’s interesting about it is that the wheel chair industry has been around for what, 5000 years, I don’t know how long people have used wheel chairs and there hasn’t been a lot of innovation with the exception of light weight materials. So in the last 10 or 20 years what we’ve seen is the use of aluminum, titanium, carbon fiber reducing the weight of manual wheel chairs. Notice there’s been some attempt to change the propulsion system and really we’ve come up with probably the smallest, lightest form factor for allowing a wheel chair user to propel themselves more efficiently throughout the day. And so why is this important? Well, we have a massive problem with obesity and hypo kinetic disease and diabetes and so many wheelchair users you’re never going to see; they will just struggle in terms of their day to day getting in – just getting to and from a living room and a kitchen and so rotors helps address that problem. It is a product that’s expanding now along the product line, the high end and low end. The most exciting thing there is that 90% of the wheel chair users are buying product at less than $1000, therefore they are buying a very inadequate product in our opinion and so we’re going at the market thinking almost like the exercise equipment guys. So one of our Sales and Marketing Head is formally from both Flex and Audotrack and so think about a wheelchair that’s related somehow to that kind of a concept, more of a mass consumer product, high quality, but something that can break that $1,000 price barrier and get more higher quality wheelchair mobility in the hands of people around the world. That’s really the overall strategy for Rotor’s and we just brought in our new CEO. I was the CEO for a good four years or so and so Fred Minnerman has just took over a couple of weeks ago. He is a med device guy and has been around the world in other industries selling products in the medical devices, so we’re excited to have him onboard.

Dave Kruse: Got you. What is the price point? You talked about different models, but…

Rimus Buinevicius: Yeah, we’re going to be angled from say $500 to $3,000 for a set of wheels and ultimately our strategy starting in 2018 is going to include selling undoubtedly some sort of complete system. So far we have been just a retrofit system. So if you had a wheelchair frame, you get real wheels and you can roll with them, but that’s not an easy market entry point, because people don’t necessarily don’t want to take their wrenches out and equip them. So coming next year hopefully we’ll have some solutions for people that just want to buy a complete chair out of the box and have rollers on it.

Dave Kruse: Are you guys raising money at all or are you guys…

Rimus Buinevicius: Yeah, we can’t really talk about details on it. You know all the R’s…

Dave Kruse: All the literals and rights. All right, and so how many people work at Rotors now?

Rimus Buinevicius: There’s 10 folks and we expect that by in a couple of years we should be up around a little over 30.

Dave Kruse: Wow! Okay, and the idea was that you have – you pull right instead of push. Like that’s my understanding that the latter way, it’s just a lot easier being mobile.

Rimus Buinevicius: The biggest thing is that when you pull your using eight of nine muscle groups and so you got a lot more power and the oxygen consumption is much more efficient because your spreading oxygen throughout all those big muscles instead of the small muscles here and so it just allows the body to be much more efficient.

Dave Kruse: Interesting, interesting, okay. Any other companies you’re working on or one you mentioned [inaudible] you still are with I’m sure.

Rimus Buinevicius: Well there’s a couple of other companies that are probably not as interesting to you’re, let’s say your thing. One is in the real estate market or doing a multi pronged project in Illinois, 280 unit apartment project and so there is a huge demand right now for multifamily. The demographic is such that people from 20 to 35 are maybe seeking apartments and staying more in apartments than taking a house and then you have this baby boomer world that’s selling off houses in one area in apartments, and then of course you have construction charge in terms of just labor. So there is a real, actually a strong nationwide demand for multifamily right now. So we’re getting pulled into some financing opportunities on that front and then we’re doing some interesting financing fixed income types of product in financing related to deals.

Dave Kruse: Interesting. You probably can’t share. I’m curious how that works.

Rimus Buinevicius: I’ll be giving too much detail.

Dave Kruse: Yeah, that sounds good; fair enough. So we’re almost done, but I was curious, you know we’ve been in Madison for a long time, the tech community and you kind of talked about how there weren’t many other tech companies in the area back in ’95, ’96, ’97, but yeah I was curious you may adopt a policy change or how you – where you hoped Madison goes as far as the tech community. You’ve been heavily involved for many years.

Rimus Buinevicius: Yeah, the good news is I think you know when you compare notes from people that are seeing other pockets of activity around the country, we are getting very favorable reviews about the support infrastructure we have here, whether it’s on the government side. The QNVV tax credits are phenomenal. I can say this from the stand point of investors who absolutely love them and the benefit it provides to the companies that actually apply. It’s done a phenomenal job of getting companies off the ground. And then just sort of your – all this sort of gatherings and things, literally is probably you know a happy hour network even every night of the week here if you wanted to find one and so it’s very easy to connect into this community to get stuff going and I think that now there’s a little bit of a dynamic starting to brew between Madison and Milwaukee, Madison and Chicago and that triangle, virtuous triangle of technology. So hopefully there’s a lot more cross exchange over the years in companies and the capital seems to be flowing across the board correspondingly.

Dave Kruse: No, that’s great, okay. And so on a personal level, outside of work what do you like to do? What you like to do to get away from work and stop thinking about it for a few moments.

Rimus Buinevicius: Golfing.

Dave Kruse: Nice, you like to golf.

Rimus Buinevicius: I’m a member of the Black Hawk. So I play there with my buddies. Other than that you probably will find me walking my dog a lot.

Dave Kruse: Nice. What kind of a dog do you have?

Rimus Buinevicius: We have a Shiba Inu. So he’s a great dog, seven years old, its Japanese breed.

Dave Kruse: Nice. Well yeah, I think that just about does it. I think this is a long one, so I really appreciate your time and loved to hear your stories about Sonic and what you’re doing now at Enbark, it’s pretty interesting. So thanks for joining us today.

Rimus Buinevicius: Thanks Dave.

Dave Kruse: And thanks everyone for listening to another episode of Flyover Labs. As always I greatly appreciate it and I’ll see you next time. Thanks everyone; thanks Rimus. Bye.