Mike Binko is president/CEO of and a member of the board of directors for kloudtrack, an Annapolis-based provider of cloud-based governance, risk and compliance (GRC) data, and process management technologies and solution services. He is also an organizing board member for the Startup Maryland region of the Startup America Partnership.
Prior to joining kloudtrack, Binko founded (and still serves as managing general partner of) Gemini Venture Partners, an early-stage private equity and venture capital firm concentrating on technology companies in the software, SaaS|Cloud, mobile computing, communications, Internet, social networking, enterprise data management, new media and related information technology sectors.
Throughout his career, Binko’s job and board affiliations have been numerous. Prior to founding Gemini, Binko was with XRiver Technologies, where he served as vice president of corporate and business development; before joining his previous employer, Xybernaut, Binko co-founded and served as chief marketing officer for LaunchFuel, a Reston, Va.-based venture accelerator; he also directed corporate ventures and business development for PSINet, which held the first naming rights to what is now known as M&T Bank Stadium.
Early in his career, Binko served in a variety of management functions at Stackig Inc., which offered him connections to technology clients in various sectors.
Binko earned dual Bachelor of Science degrees (with honors) in Business Communications and English from James Madison University, and is a graduate of the Innovation Management program offered jointly by the University of Maryland’s Smith School of Business and A. James Clark School of Engineering.
What were your plans as you completed your education and contemplated your career?
I double-majored in English and Business/Finance at James Madison University, which usually points graduates to Wall Street, where they become market analysts or get involved in fund management. However, I found a job in Washington, D.C., at its largest tech policy, legislative and marketing consulting firm. There, I was exposed to the lawmakers and tech executives that pointed me toward my current field. I enjoyed working on the edge between the technology venture building and public policy.
Around that time, the Northern Virginia tech corridor began to explode, and I met William Schrader, founder/CEO of PSINet, then one of the fastest growing commercial Internet companies, and started working there before its initial public offering (IPO). I learned entrepreneurship from watching and absorbing all I could from Bill. Wearing as many hats as possible gave me a broad perspective on what’s needed to establish and inflect a successful startup.
Quickly, PSINet moved to raise more money for dark fiber optics (meaning not yet active) which would allow the company to lower its cost-basis for Internet connectivity. I was on the team that raised more than $1.2 billion two years after the IPO. I ended up in Corporate Ventures, where we were acquiring Internet companies and data centers at an incredible pace.
What came next?
During my time with PSINet, I met many peers from AOL, UUNet, (the then Annapolis-based) U.S. Internetworking, Digex, etc., and a few of us formed LaunchFuel in Reston, Va. LaunchFuel was set up as a for-profit venture accelerator to help startups get funded. But with the dotcom era bubble burst around 2001–02, the LaunchFuel model could not survive given that we took equity as primary compensation. We did, however, meet every venture capital firm in the mid-Atlantic and numerous angel investors.
With the tightening of venture investment dollars, many of us who were involved in venture acceleration pooled our money to start an angel group called GeminiVenture. We made that move because we found a widening gap between founder funding and first institutional funding, a trend that has worsened in the last couple of years since the credit crunch and recession between 2009–12.
On one side, the fortitude of angels has been tested, given the credit crunch and anemic IPO market. On the other side, the cost to launch a tech startup (particularly software or apps business) has dropped significantly. On average, it takes about $250,000–$500,000 — instead of up to $5 million — to do so, given the advent of lean-agile development and virtual Internet hosting (IaaS, PaaS and SaaS).
This trend has made entrepreneurship for techies much more attainable and also presents an opportunity for more angel investors to get off the sidelines. Combined with the JOBS Act legislation related to equity crowdfunding, we are approaching a rare era in venture development history.
How did you get involved with kloudtrack?
My angel activities, via Gemini, led me to various companies, including what is now kloudtrack. That was also an interesting opportunity for me, because I wanted to move back from Northern Virginia to Maryland. kloudtrack was based in Rockville, but we moved to establish a satellite office in the Chesapeake Innovation Center (CIC) in Annapolis.
What were some of the challenges you encountered during the company’s early days?
kloudtrack presented an interesting opportunity. The technology, which fuses cybersecurity with cloud simplicity, offers a suite of SaaS applications for GRC related to sensitive data and process management. The technology was very mature when I met founder and CTO Jan Levine. Jan and the original engineering team were building the first version of kloudtrack for Arthur Andersen (AA), one of the original Big 5 accounting/CPA firms.
The technologies that were going to be used by AA tax audit teams and beta customers were to include Enron. When the Enron scandal happened, AA was holding the smoking gun — but Levine was holding a very compelling approach to compliance in the cloud.
Levine spun the technology out before AA collapsed and introduced it to a whole new class of middle-market financial businesses, most of which were broker-dealers and banks. I joined Levine and the original angels when the company was ready to move forward in 2010, becoming a follow-on angel and taking the operational role as president and CEO.
I knew the company had several critical “pivots” ahead. The board and management team agreed to take the technology outside of the financial world: pivot one. We developed a strategy to diversify kloudtrack by adding government/public sector and health/medical as new industries. Similar to financial markets, data in these sectors also needs to be protected and operators are often under active regulatory scrutiny.
Another pivot was to shift from direct sales to a channel model, which essentially means selling jointly with and through third-party organizations. So we went from having only in-house sales teams to a multi-tiered channel model. That strategic move allowed the company to bootstrap, yet also kept the company healthy and moving forward during the difficult periods.
The last major pivot was rebranding the company as kloudtrack, a brand that more closely aligns with our technologies and opportunities.
What are your eventual plans for the company?
kloudtrack is in a very interesting position. We are one of only a few companies actually delivering certified GRC technologies in multiple industries, and we have a unique channel approach which we have now branded as the Innovation Sandbox. We completed a teaming partnership with Cisco Systems as our anchor partner and are attracting numerous other innovation leaders to join the effort.
This success, with a stalwart brand like Cisco, has increased our brand visibility as a leader in the cloud evolution. We are in a strong position that we are now parleying into more (and bigger) deals. Strategically, we are recognized as a “unique tech mammal” by many leading players looking for sophisticated cloud offerings.
How did you become founder of Startup Maryland?
A group of serial entrepreneurs and angels were assembled to help shape Startup Maryland, which was formed as a regional initiative out of the Startup America Partnership. It was launched by Steve Case, the founder/CEO of AmericaOnline, under a teaming relationship with the Kauffman Foundation for Entrepreneurship.
What were your feelings after the recent Startup Maryland tour concluded?
Now in our third year, the results of the Pitch Across Maryland tour and other programs have far surpassed any goals we set. We launched in 2012, and we hoped to have 100 companies involved by the end of three years — but we now have more than 800.
That explosion in interest is part of my point about doing business in Maryland. While the regulatory and tax environments could certainly be improved, they are not the only factors a startup team should consider. Startup founders, and investors alike should look at educational opportunities, access to great health care, workforce/economic development, resources and quality of life.
While Maryland has historically been a leader in “feds, eds and meds” through Startup Maryland, I have discovered a much richer diversity of industry sectors. From oyster aquaculture to autonomous systems to cybersecurity to manufacturing to environmental research, Maryland is relatively unmatched around the U.S.
We need to celebrate what we have and who’s making things happen. So Startup Maryland focuses our efforts on retention.
What are your plans for Startup Maryland?
Startup Maryland is really a movement, a community. We hang our hats on Celebration, Coaching, Connections and Capital.
We also claim the role as trusted resource for the entrepreneur community as their peers. We’ve been there; we know building a successful startup is challenging, and we want to give back, including establishing connections and investments as angels.
Maryland breeds talented people, but we also realize that it can be tough to get these people to leap into starting their own businesses. Investors in this region are also quite risk-averse, for many reasons.
We believe most economic and social challenges can be improved if we can retain the best entrepreneurs, startups and early-stage investors. Helping these communities breed more high-growth companies is priority No. 1 for Startup Maryland, yet we cannot do it alone. We work jointly with other stakeholders to ensure success for all.
Do you think startups will have an easier time getting venture capital in 2015?
Fundraising will still be difficult, but yes. That’s because more startups have access to services like Angel List, Onevest, Kickstarter or Indiegogo and, in general, more options for reaching co-founders, employees, investors and mentors.
While there certainly is money available now, we also believe a ton of money is sitting on the sidelines — meaning people who have the net worth and the expertise to fund a startup, but are not confident to do so. We want to educate those potential angels as to how they can become angel investors, starting with serial entrepreneurs and then reaching out to executives and mid-level management at large, successful corporations.
What are your feelings about the regulatory environment in Maryland as it relates to tech startups?
Regulation and tax code are definitely areas for improvement and the biggest opportunity that the legislators can help with. Know that the situation is not terrible now, no matter what you read, due to Maryland’s vast resources and active support structure for early stage ventures.
As we cultivate and nurture success of startup ventures and entrepreneurs, we want to take as many objections off the table that might push them to seek funding or economic support elsewhere.
Could the state be more competitive with others regarding tax code and business regulations? Yes. But changes on the legislative front alone will not drive the next 50 years of Maryland innovation and entrepreneur prowess. Rather, a strong, committed community of business, political, economic, academic and social leaders that choose to lay deep roots in Maryland will take us there.