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Startup venture looking for the right investor

Bryan Daddio, of Smithtown, the founder and owner

Bryan Daddio, of Smithtown, the founder and owner of DMT Web Ventures, is seeking investors for the online site he created. (July 12, 2012) Credit: Steve Pfost

Many times, Bryan Daddio would drive from his Smithtown home to play in lacrosse games on the other side of Long Island -- only to learn that they were canceled.

Channeling his disappointments into a business, Daddio launched an online registration service that incorporates an array of amenities, including sending messages to members about team or class schedule changes.

Called DMT Web Ventures Inc., the Smithtown-based firm charges its accounts $50 to $200 a month, depending on the features they sign up for, and it operates two online systems: for fitness facilities and school districts and universities, and for youth and adult sport leagues.

Armed with a Web developer and two part-timers, the 3-year-old company has scored 75 accounts, including the Suffolk County Police Athletic League, World Gym in East Setauket and Rok Health & Fitness Club in East Rockaway, as well as a fitness facility as far away as Newport, Calif.

Seeking a capital infusion

Eager to accelerate the firm's development, Daddio, 32, now seeks a capital infusion of at least $500,000, which would allow him to hire four more employees to help with sales and programming.

And therein lies his challenge: securing capital to grow.

Although Daddio has had discussions with angel investors, venture capitalists and a bank, nothing has panned out -- in part because of his own reservations.

He is averse to bank loans that require him to use his house as collateral, and he prefers investors who have connections in the fitness, health and wellness industries. They "can introduce us to the right people and help scale the company," Daddio said.

Business owners who refuse to provide collateral are mistaken to think they can secure a bank loan without it, said Steve Davies, president of Edge Initiatives Llc, a Huntington-based consulting group.

"If you're not going to take a risk with your personal assets," he said, "then why should someone else take the risk?"

Nationwide, 11 percent of small business owners with fewer than 250 employees use their homes as collateral, while about an equal percentage have taken out a home mortgage to finance their business, according to William Dennis Jr., director and senior research fellow at the National Federation of Independent Business Research Foundation in Washington, D.C.

Still, Davies acknowledged that some entrepreneurs are not cut out for "the level of stress" a bank loan can trigger. "The anxiety of putting up their home for collateral can stifle their creativity and ability to run the business," he said.

Equity financing can also induce stress. "It could turn into a much less friendly, collegial atmosphere if you are not meeting your numbers," Davies said.

Even worse, investors, said Daddio, "can remove an owner from the board and the company" -- which is why he is seeking those with an understanding of how the fitness and health industries work.

Gloria Glowacki, associate regional director at the Small Business Development Center of Stony Brook University, referred to such extreme investor tactics as "bogeyman stories."

"That's why God invented attorneys -- so you can make sure there isn't a situation where you can get kicked off your board and out of your company," said Glowacki.

Growth opportunities

She suggested that Daddio contact the Long Island Angel Network Inc., which provides access to early-stage funding for local companies, including businesses with a focus on software and information technology.

A fitness enthusiast with tech skills honed as an employee and consultant in the network infrastructure field, Daddio founded DMT with an initial investment of more than $100,000, courtesy of his own savings and a round of funding from friends and family.

Last year the firm generated "six-figure revenues" and logged more than 28,000 individual registrations. By year's end, Daddio expects revenues to grow by 25 percent and registrations to exceed 75,000.

In his pursuit of capital, Daddio also has checked out crowd-funding websites.


Name: DMT Web Ventures Inc.

Founder and chief executive: Bryan Daddio

Established: 2009

Employees: Three

Revenues: "Six figures"

Number of accounts: 75

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