Banking & Finance and Technology

Successful software veteran forms investment firm: Mark Hill's $5 million underwrites startup BlueLock

January 22, 2007

When local IT entrepreneur Mark Hill sold his banking software company in August 2005, he emphasized the potential upside for the area entrepreneurial community.

Now he's making good on his word.

Not content to bask on a beach somewhere, Hill has organized an Indianapolisbased private investment company called Collina Ventures. With $10 million under management-all provided by Hill-Collina already has made its first investment. This month, it risked $5 million in startup cash to organize Indianapolis-based Blue-Lock LLC, a computer-hosting firm.

And Hill has several more deals in the pipeline.

"I'm not a venture capitalist. I don't know how to be a venture capitalist. I know how to evaluate a business and help grow it," said Hill, 50. "To me, being a venture capitalist involves using other people's money. I don't want to do that."

Patience is clearly Hill's business motto. He founded Carmel-based Baker Hill in 1983 on a $50,000 investment from his friends and family, then spent the next two decades growing it.

When Hill finally sold his company to Los Angeles-based financial information services provider Experian, terms weren't disclosed. But Hill said Experian opened by offering three times Baker Hill's $25 million in annual revenue-$75 million.

Hill stayed on board for a year under Experian, but in August handed the Baker Hill division's reins to his former vice president of sales, Joe Kuntz.

"When you have a transition like that, it's better if the old leader doesn't hang around. It makes things hard for the new leader," Hill said. "The best thing is to get out of the way."

Baker Hill had never raised venture capital and held no bank debt, so its sale provided a huge payday for its 10 original investors. Another 50 longtime employees, who had earned stock options over the years, also reaped windfalls.

"All of a sudden, you look at the number and you say, 'Wow,'" Hill said. "You let yourself start to think about all the things you could do."

Things like back a series of pioneering IT firms in central Indiana. Hill had already dabbled as an angel investor, speculating early on local success stories like Performance Assessment Network, which last year was acquired for $75 million by St. Louisbased TALX Corp. Hill is also an investor in the fast-growing Indianapolis-based marketing software-maker Aprimo Inc., a firm on track for an initial public offering.

Now that he doesn't need to supervise a 180-employee company full time, Hill hopes to apply his IT expertise to a series of new startups. Software is what he knows best, Hill said. That's why Collina will concentrate exclusively on it.

"I played probably 50 rounds of golf last year, and if you look at the five years before that, I probably played 50 rounds total," he said. "Now I like to play golf, but I can't play every day of my life. I want to leverage what I know."

BlueLock is Hill's first test. Founded late last year, it's managed by CEO John Qualls, former vice president of sales and marketing for Indianapolis-based disaster recovery center n/Frame Inc. Hill is Blue-Lock's chairman.

Its clients, expected to be primarily midsize companies in the bank and pharmaceutical industries, can hand off their IT infrastructure for BlueLock to manage. In exchange for a monthly fee, BlueLock will take on the burden of buying and maintaining IT equipment. And customers will be able to add capacity at the flip of a switch.

Think of it as computer power available in much the same way as other everyday services, like water or electricity. Once IT is outsourced, companies can concentrate on their core businesses, like evaluating loan risk or developing new drugs.

"We absolutely understand [customers'] pain points," Qualls said. "They've been looking for someone who can take them away. It's 10 percent of their problem, but it's also 10 percent of their expertise."

Using the $5 million it raised from Collina, BlueLock has established its data center on the northwest side. The firm, with eight employees, plans a formal launch Jan. 22.

Jim Jay, CEO of Hoosier IT initiative Techpoint, said the demand for BlueLock is likely to be high.

And with the creation of Collina, Jay said, Hill is joining a growing circle of successful local IT entrepreneurs who use their gains to seed new crops of high-tech firms.

Hill's peers include PAN's David Pfenninger, First Internet Bank founder David Becker and Interactive Intelligence Inc. CEO Don Brown.

"Indiana is a great place to grow technology-based businesses," Jay said. "It's a great thing for the tech sector and the state of Indiana, that's for sure."
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