UMass students secure funding from local Angel Investors
It is a tired old clich -local kids done good, started a company on a shoe string budget, received mentoring from wise elders, became the youngest locals to secure angel financing, and are now building their company into something great. It's the story of Dexrex.
First, a little background: One of the toughest challenges for Internet services is the movement toward data mobility. Companies like Facebook and Google require data about their users to provide their services, track trends, improve their sites and, place advertisements. Of course, to stay competitive, these companies keep each user's information inside their "walled gardens", refusing to let users bring their profile information and records with them.
Dexrex, a local Internet start up, is a web service with a new twist. They have created a system for archiving, indexing, and managing text chat in real time across all Instant Messaging (IM) clients, protocols, and services as well as on Blackberry phones. Using this system, users can reclaim their IM and text messaging history from these walled gardens and bring their records wherever they like.
Some of the current IM platforms, such as Google's Gtalk, already provide basic recordkeeping. However, many people use multiple chat clients on more than one computer and message on their phones as well. Unfortunately, companies like Google do not let people take their records with them if they want to use a different chat service. Dexrex is now the first company to help people reclaim their information to keep a complete record across all their services at the same time, including Gtalk, AOL Instant Messenger, Skype, Yahoo Messenger, MSN Messenger, and mobile phones-just to name a few. They are also quite proud of the fact that they launched this type of service before Google, or anyone else, got around to it. CEO and co-founder Derek Lyman called this accomplishment a "small student victory".
If not a "small" victory, it certainly was a "student" victory. Lyman, along with his partner Richard Tortora, started Dexrex while they were still students at UMass Amherst. Like most college kids of their generation they used IM a lot and wanted to improve it. "Anything to avoid doing school work" Lyman said with true collegial spirit.
When Lyman and Tortora first hatched the idea, they decided to test it by creating a program to listen in on their own IM conversations over the school network. Once they had their program running, they were a bit surprised and concerned to see that every conversation in their dorm became entirely visible. Also, chat records seemed to be stored so that anyone with access to a person's computer can read their conversations. It became clear to the two that chat records needed to be kept in a much more secure and private place than the chat systems themselves. Eventually this idea evolved into the current Dexrex service.
It did not take long for Lyman and Tortora to realize that if they wanted to turn their idea into a real company they were going to need some coaching and mentoring on the business end of things as well as some all important capital to fund the company. They found all of the above through the UMass Entrepreneurship Initiative(EI) program, and The River Valley Investors (RVI), Springfield's angel investment group.
Paul Silva, an alumni of UMass Amherst, was the leader of EI when Lyman and Tortora went to the program for mentoring as well as to enter into their business plan competition. The competition provides mentoring as well as seed capital.
Silva's company, Angel Catalyst, manages RVI, a group of veteran entrepreneurs and investors who pool their talents, networks, and resources in order to find the best possible deals to invest in. RVI members often volunteer to serve as judges in EI's business plan competition. The mentoring and advice that these experienced investors can give to young entrepreneurs is priceless.
One of those investors, who agreed to serve as a judge for the EI business plan competition, was Glenn Hanson. Hanson is one of RVI's most active and effective members. Upon seeing the Dexrex presentation and meeting Lyman and Tortora, Hanson was impressed enough to not only invest his own money into the fledgling student-led company, but also recommend Dexrex to present to RVI for additional funding from other members. The presentation was a success and two other RVI members invested in Dexrex after completing the necessary due diligence.
"The EI program, Paul, and Glenn, all helped us out tremendously," Lyman said. "They allowed us to transition from running a dorm room operation into running a real company. It went from a student project into a real business venture."
"I am incredibly impressed with Glenn," Lyman remarked "he has been an absolute joy to work with". Lyman had similarly positive comments about Silva, as well as Paul Gelinas; another RVI member who invested in Dexrex and served on their board of advisors alongside Hanson.
Lyman is optimistic about the future of Dexrex, but not unrealistic or overly rigid in his plans. "This has the potential to be a huge play. Most people don't realize that it's their own records that let Google and other sites customize their services and place the advertisements that keep them in business. By putting people back in control of their own information, I think we can help them get more out it than companies let them today." Lyman noted.
"Google indexes the web's content; we help people index their own communications over online social networks. We're a little like a bank for your personal information. The tech savvy can often try to do this sort of thing for themselves with enough time, but we want to help everyone else get access to their own information." Lyman informed, "I know this is going to get done, and I want it to get done right. That's why we're doing it ourselves."
Lyman told me that Dexrex has received significant online press, both here in the US and internationally. Popular technology Web sites such as Lifehacker.com, DownloadSquad.com, Mashable.com, and Yahoo Messenger's own blog have each featured the Dexrex service. The company has since experienced significant growth.
The company is currently planning on raising another round of financing in the near future. They will be seeking out new investors as well as offering fresh opportunity for their existing investors. The money will be used to further expand the company as well as expand its services to more mobile phones and international users.
As far as exit strategies go, Lyman is confident but always open to new suggestions. While he would enjoy remaining the ultimate decision maker at Dexrex, he would not be opposed to a buy out from a larger company, such as Google, so long as he was confident they would run the company to his satisfaction. "I just want to make sure this is done right" Lyman reaffirmed.
What Dexrex is attempting here is tied into a technological shift much larger than themselves. They are, like Google or Facebook, part of the IT revolution that is defining their generation. At twenty-three, Lyman and his team are part of the first wave of the "millennial" generation, the first to grow up using the Internet, cell phones, and social networks. A generation that, for the most part, takes for granted the transformative nature of these new technologies and lacks adult memories of a time when they did not exist. They have only started to take advantage of the opportunities this new IT paradigm has created by offering a service that, en mass, older generations may still find a bit alien.
If they are successful they will be one of the standard bearers for this brave new world of IT. If not they will have given it the proverbial (and literal) college try. The latter seems unlikely though, as folks with this sort of intelligence, drive, and ambition usually end up not just attaining, but redefining the American dream, generation after generation.
Dexrex is about getting more out of instant messaging. They want to give people the tools they need to preserve their memories, understand their relationships, and enrich their social lives. They believe that if they can preserve, illustrate, and facilitate online conversations and relationships, they can make the online world personal again. They can be found online at www.dexrex.com
. Contact person: Derek Lyman (508-335-4321, or send an e-mail to dlyman@Dexrex.com
About the River Valley Investors:
River Valley Investors is a Western Massachusetts-based group of individual investors working in concert to find high quality private equity investment opportunities in both early stage companies with significant growth potential as well as later stage companies. They can be found online at www.rivervalleyinvestors.com