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June 6, 2023  BACK

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This month, after a brief summary of the companies presenting on Wednesday, we have two profiles: RealKey and Stender Sweeney.

Presenting This Month:

  • Honest Game, with Joyce Anderson, Co-Founder/COO & Kim Michelson, Co-Founder/CEO
  • NuvOx Therapeutics Inc., with Rong Wang, COO/CFO & Evan Unger, Co-Founder/CEO

Featured in this issue:

  • RealKey Profile, with Christopher Hussain 
  • Stender Sweeney of the Pasadena Angels 
 
Startups Presenting Wednesday, June 7th

COMPANY:   Honest Game

CEO/Founder:    Joyce Anderson, Co-Founder/COO & Kim Michelson,
Co-Founder/CEO

Location:              Chicago, IL

Honest Game is the industry-leading academic compliance software that drives high school student learning outcomes, mitigates risk for schools, and increases student access and opportunity to college. The individualized guidance software tracks every course and grade earned for each student and provides a detailed online report that is provided to the parent/guardians, school staff, and students. This encourages proactive guidance and harnesses a student's passion for sport with their motivation in the classroom. Short-term achievable goals and an expanded understanding of the College Athletic Pathway increases student learning outcomes and expands students' post-secondary opportunities.

COMPANY:   NuvOx Therapeutics Inc.

CEO/Founder:      Rong Wang, COO/CFO & Evan Unger, Co-Founder/CEO

Location:               Tucson, AZ

Phase IIb oxygen therapeutics bio company with 7+ indications, we have a de-risked execution pathway to 20bn+ revenue and 10x return in 2-3 yr time frame. NuvOx focuses on diseases where hypoxia (lack of oxygen) plays critical roles. Hypoxia weakens effectiveness for cancer treatments and causes brain death in stroke. Our product is the first material to reverse tissue hypoxia. Carrying ∼ 1,000 x as much oxygen as liquids, it is injected IV and is fully synergistic with Standard of Care.

RealKey - Unlocking the Hockey Stick

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Simplified and automated mortgage processing platform.

Going six years between major funding rounds is the startup equivalent of spending 40 years wandering through the desert. RealKey hasn’t just survived the ordeal, they’re currently thriving in a very difficult market, with their ARR of $4 million running 4.4x ahead of 2021.

How did they do the almost impossible?

A combination of good ol' fashioned grit, an amazing culture, and an executive team of thought leaders with subject matter expertise who knew, after a major process-oriented pivot, they would have product-market fit. Founded by Christopher Hussain, 2-time top mortgage loan originator turned serial entrepreneur, with previous successful exits, RealKey began as a better, more collaborative way to take a mortgage loan application.

That’s the basis on which several members of Pasadena Angels invested in the Seed round back in 2017. Seeking to build the best possible product, Christopher recruited Intuit Principal Design Strategist Alan Tifford. If you or someone you know has ever used the TurboTax app to file your taxes - well, Alan had a major hand in its creation.

Alan was willing to build what Christopher wanted. However, in order to fully commit to a long term future, he wanted to put the product through his detailed process for determining the right fit. His findings led to the pivot, creating something entirely different, and far more useful.

RealKey is not a Loan Origination System (LOS), Point-of-Sale (POS), or Customer Relationship Management (CRM). It is a new approach to the processing/underwriting/operations side of the mortgage business, an area long neglected through the refi boom of the late 2010s and Covid Era. Now that originations have slowed dramatically, lending institutions are looking for ways to reduce expenses, improve efficiency, and take advantage of the downturn to implement new tools. As Christopher points out, you don’t re-pave roads in the daylight, nor stick your hand into a shark tank until the feeding frenzy subsides.

The RealKey platform utilizes the data from a loan application to create the industry's most complete needs list, including for third parties and not just the borrower and lender. Inviting each party to upload documents and provide data, RealKey uses simplified but thorough instructions, which increase the first time success rate. All parties are assigned roles and access the most up-to-date data and documents. RealKey provides the industry's first centralized chat for each transaction, avoiding the “lost-in-the-spam-folder” problem. Once documents are uploaded, RealKey provides clear guidance to determine next steps, including whether a letter of explanation and supporting documentation is needed, the application needs updating, or a whole new requirement is necessary. All documents are organized and exportable to any other platform in a way that makes them easier to digest by other users, like underwriters, closers, and secondary market departments, integrating seamlessly with any lender or broker, regardless of their POS, LOS, and CRM tech stack.

Though RealKey is laser-focused on mortgage right now, Christopher sees a huge opportunity in the adjacent Escrow, Title, Appraisal, and Insurance markets, along with eventual use in other forms of lending such as auto and student finance. The architecture is robust enough that it could provide the backbone for future spin-offs and/or use as the backend for third-party apps, the way Salesforce is now.

If that sounds like a leap, consider what the group has accomplished over the last few years. With a skeleton team, they had to build a new product while continuing to service the original one, barely out of beta. Though there were revenues, they couldn’t expand the user base for a product that was going away. When seeking additional funding, they were burdened by a flat revenue graph, which reflected an accomplishment under the circumstances but didn't impress investors.

As the transition continued, COVID hit. Despite a burn rate of less than $50,000 per month for the past several years, RealKey was running out of money. It was the ultimate gut check for Christopher and his highly committed team of thought leaders. If there was ever a time to back down or jump ship it was then. Startups often talk about being gritty, but this was proof. Nobody left. Work continued.

By the second half of 2021, the current product was ready for launch. The majority of existing users moved over. RealKey began adding new ones. Their churn rate has never exceeded 3%.

For the past 18 months, they’ve built up to a user base now approaching 4,000. They accomplished this with a concentration on brokers and non-bank lenders, the growth driven by all of 2.5 salespeople. With dramatically improved metrics, RealKey launched their $10 million Series A round with a pre-money valuation of $33 million. That’s at least 5x the level of the Seed round, making for some nice appreciation for those early investors.

RealKey has already received a $2 million wire from round lead Zulu Assets, a Dallas-based family office who had participated in previous fundings. There’s room for a VC to join as a co-lead, and RealKey is taking investment from other sources with a $250,000 minimum.

Money is being used on a 40/40/20 split between the product/engineering side, sales/marketing, and legal/operations. Some of the initial distribution was used to hire a new Head of Engineering and new Head of Product, both with distinguished and relevant pedigrees.

As they continue to improve the product, RealKey is making a major push on the enterprise side to enable them to add some of the largest lenders in the country. The first one up is Flagstar Bank, a core component for almost every broker in the U.S.

Anyone who has ever seen a pitch deck is familiar with the hockey stick growth shown at the far right of the financial projections. It’s always just around the corner. Except in this case, RealKey has already shown dramatic growth since launch. Finishing off the round will position them to take advantage of new availability in the tech labor market and once-in-a-decade receptiveness from targeted customers.

It was a very long time in the desert, but RealKey is homing in on the promised land. Reach out to Christopher if you’d like to connect.

Stender Sweeney: Matching Place,
Time and Tools

Most of us can’t say we came within inches of being booted off a 9th floor balcony by an ex-President of the United States. But Stender Sweeney can. It was sometime in the early 1970s, and a dying Lyndon Johnson was in a hurry to liquidate his holdings. He didn’t trust one of his sons-in-law and needed to sell a TV station in Austin, TX to get the cash into Lady Bird’s trust.

Transferring a TV station isn’t just a matter of sending a wire. Several approvals are required, including the FCC license transfer. But LBJ and Richard Nixon weren’t getting along and Nixon’s people were slow-walking the sign-off. The always demonstrative Johnson thought Stender should be moving things along faster and after a few drinks, tried to dropkick him from Austin to D.C. with the admonition to, “Get the job done pronto!!!”

You may ask how Stender found himself in such a position. He’ll tell you that such interesting experiences are a matter of being in the right (or wrong) place, at the right time, with the right people & tools.

Most important in his mind was his ability to “marry up”, when he won the hand of his wife of 55 years (and counting) Polly. Besides bearing and raising three now very accomplished children, Polly, a national champion equestrian, has also performed as a concert violinist around the world and in the most coveted of places, the Hollywood studios. Over her 35 year career she recorded 750 motion picture soundtracks, including her favorite Titanic.

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Stender Sweeney - once a marine, always a marine.

Stender was born in Long Beach, CA on the eve of World War II into a community covered with camouflage netting to protect all the defense-related local industries from Japanese subs. A few years later, his family moved to Pasadena, where he would grow up before leaving to attend Stanford University in the fall of 1957.

Taking advantage of every possible opportunity, he spent his next several summers interning at the Pacific Stock Exchange, Bank of America, Price Waterhouse, First National City Bank (today’s Citibank), and the hallowed private Wall St. investment bank Brown Brothers Harriman, where as late as 1963, partners still worked in a single open room with roll-top desks.

This tour of the finance world, plus a stint in the Marine Corps that resulted from him being in Berlin the very day the wall was going up, combined with a Harvard MBA and a few years working with regional New England businesses for Citibank, made Stender, still not yet 30, a candidate for corporate finance at The Times Mirror Company in LA.

Times Mirror, then mostly just the LA Times, was looking to diversify their then prodigious cash flow. Over the next two plus decades, they ended up with 45 operating companies: 7 TV stations (including LBJ’s), 8 newspapers, multiple consumer magazines, professional book publishers and other information services, plus the 4th largest cable system in the country. Stender started in acquisition analysis and graduated through the ranks to treasurer, then VP Finance.  In the course of growing his diverse responsibilities, he saw the need for a better command of accounting intricacies and returned to the classroom for a second MBA. His favorite role was working with the CFOs & CEOs of the operating units, helping them manage their cash flows and capital allocations.

As an officer of LA’s premier communications company, Stender was recruited for a number of community outreach activities. He served on several community development boards (restoring Pershing Square, building a new Wholesale Produce Market, and initiating a cleanup of Skid Row), and through the chairs to the chairmanship of Townhall. He was elected a trustee of Stanford and served as overseer of the Hoover Institution. Among other activities, he served 3 terms on the board of Polytechnic School in Pasadena. 

By the mid-1990s, serious change was afoot. Stender sensed that the internet held tremendous potential, but the question was how to exploit it and defend Times Mirror’s newspapers from threats. He was looking at the acquisition of a nascent online classified advertising company called Vehicle Information Network, a precursor to and training ground for companies like AutoTrader and Cars.com. Given how that story turned out for newspapers, Times Mirror clearly should have gone forward. Instead they balked, and Stender wound up as CEO of VIN.

His time as a tech CEO launched him on his next career as an investor in early stage companies and independent board member of 2 public companies (Avis Budget Group, Payden Funds) plus multiple startups, including various Pasadena Angel investments. He joined PA in 2002 and has played an integral role ever since, serving as Vice Chairman and then Chairman.

You wouldn’t think this grandfather of eight would have time to do much more, but Stender has traveled extensively, from a helicopter tour of the 8 peaks over 25,000 feet in Nepal to visiting the Korean DMZ, going on a trade mission to Albania, the Newport to Ensenada yacht race, and numerous other high adventures.

He’s witnessed the rise of China, spending time in Shanghai, Hong Kong, and Singapore where he participated in funding a startup incubator. In a Forrest Gump-sorta way, Stender has had a front row seat at many important events over the last 60+ years. Truly in the right place at the right time with the right tools.

Past Issues:

  • May '23: Terry Kay 

  • April: Irrigreen (Shane Dyer) and Mandy Wang 

  • March: EventHub (Michael Bleau) and Don Hall

  • Feb: Everyset (EB, Ebrahim Bhaiji) and Richard Chino

  • Nov '22: Cactivate (Wentao Xiao) and Gene Stein 

  • Oct: C360 Technologies (Evan Wimer) and Kenji Funahashi

  • Sep: Woody Sears (Autio) and Mike Krebs

  • Jul: Open Sesame (Steve Lyons) and James Schaefer 

  • Jun: HavenLock (Alex Bertelli) and Anil Jha

  • May: Discotech (Ian Chen) and Gary Awad

  • Apr: Sashee Chandran, Seatrec and Susan Marki

  • Mar: Yezin Taha, Spine Align and Jamie Bennett

  • Feb: Phoenix Gonzalez, Repurpose and Marcus Filipovich 

  • Jan: Ksenia Yudina, BeTheBeast and Larry Uhl 

  • Nov '21: Roy LaManna, TotSquad and John Keatley

  • Oct: Dr. Chorom Pak of LynxBio and former president Al Schneider

  • Sep: Luk Network, Brandon Cavalier and Nancy Dandridge

  • Jul: Electrum, Jose Gomez and Julie Pantiskas

  • Jun: Ready, Set, Food, Dr. Mirianas Chachisvilis and Joseph Pitruzzelli

  • May: MagicLinks, Christopher Hussain and Janice Orlando

Thanks...

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We hope you enjoyed this edition of the Pasadena Angels Monthly Newsletter. Any suggestions for future pieces, questions or comments? Please email me at dave@veritasri.com

Dave de Csepel
Chairman, Pasadena Angels

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