Last week, Meda, the growing business adviser and lender to minority-owned firms, named a new CEO.
It is fitting that John Stout, the Minneapolis business lawyer and a founder of Meda 50 years ago, also last week was working with a young colleague at the Fredrikson & Byron law firm and a client who was brought to Fredrikson by Meda.
The client is a three-year-old retail-software firm called ASDAL, led by a 25-year-old entrepreneur named Darrin Levine.
Stout, 79, who also has an international practice in corporate governance that doesn’t include many 25-year-olds, was holding his own with a 25-year-old entrepreneur, a 28-year-old Fredrikson colleague and a 30-year-old banker in a meeting one morning last week.
A half-century of board-and-client work for Meda must be part of the secret sauce that keeps Stout trim and youthful.
“This is flat-out fun,” said Stout, chuckling about several wee-hours telephone calls with Levine this year. “I will sometimes call him at night from home. I know he’s usually going to be working at his [northeast Minneapolis] office or sleeping on the office couch.”
A couple of years ago, Stout, who with several other Fredrikson lawyers have long done pro bono work for nonprofit-Meda and some of its clients, formed the Accel Group, as in business accelerator. A dozen Fredrikson lawyers from different practices work with early-stage businesses such as ASDAL on issues such as intellectual property, advisory boards, ownership, finance and governance.
The Accel group works for nothing-to-little during the formative years. That’s a formalization of Fredrikson’s long-standing commitment to Meda and the growing minority business community that Stout long has championed.
And, if Meda and Fredrikson are right, more of these fledgling businesses will grow and prosper to the point where they will become full-pay commercial clients.
Good legal and business advice early can save a young firm a lot of time and money – and maybe even keep the firm going — in the formative years.
“I feel like I’ve gotten a degree in startup law, intellectual property and forming a board,” said Levine, a tech-oriented entrepreneur who studied computer science in college and worked in IT for Target.
This endeavor also is important for Meda, Fredrikson and this town because minorities, including immigrants, are the fastest-growing component of the economy and disproportionately start new businesses. They often are vexed by lack of capital and connections.
ASDAL offers smaller retailers a software solution, complete with four dashboards that track everything from sales to inventory and analytics, for use on commercial websites such as Amazon and Walmart.com.
ASDAL was one of 10 finalists in this fall’s Meda Million Dollar challenge that drew 500 applicants. The nine-employee firm has several significant customers, posted several hundred thousand dollars in revenue and is looking for more equity investment.
Darnell Cage, a 28-year-old Fredrikson attorney, has been working with Levine on several aspects of the business.
“First, we had to get Darrin to just slow down a little,” Cage said. “He’s got a lot of energy.
“One thing is that he, initially, didn’t think he could patent any of the [software logic] used for his customer dashboards.
“But we sat down and drew out the logic … and he has one software tool that influences all the other tools that feed into the dashboards. We changed the software-development strategy to ‘scoot this’ and develop the tool further so that it will result in a better service for clients who hop on a dashboard. We’re also evaluating a possible patent.”
Cage and the Accel team also helped Levine negotiate a better deal with a venture capital firm.
“Darrin was willing to give too much of a percentage of his company for the money and the contract terms were murky,” Cage said.
“He got the money, the terms were clearer and he had to give up less ownership. He felt more comfortable with the improved relationship.”
Levine was introduced to Fredrikson by Samuel Ndely, a business adviser from Meda, which also loaned about $75,000 to ASDAL.
“We’re not looking to make 10 times our money,” Ndely. “We want to help [Levine] with debt-equity gap financing as he gets into more [permanent] equity financing.”
ASDAL is on a stronger footing thanks to Meda and Fredrikson. And better prepared to negotiate another round of equity capital that should enable several-employee ASDAL to scale up to a $3 million-plus in annual revenue in 2021.
“Our subscription-based software is user friendly and robust,” asserted Levine, who has been fascinated by programming since high school. “We tested the hypothesis with [trial] companies as we built the software.’’
And it fires up Stout to hang with these young guys.
“Entrepreneurs are a special breed,” he said. “They go way beyond what is normal for the rest of us.
Neal St. Anthony has been a Star Tribune business columnist and reporter since 1984. He can be contacted at firstname.lastname@example.org.