Sometimes it pays to keep in touch with your hometown friends.
Lightbank has invested in yet another growing tech company, this time financial: Benzinga.com, a Michigan-based financial news site. Lightbank, the seed fund created by Eric Lefkofsky and Brad Keywell, is investing $1.5 million in the site, which includes trading tips and content from other financial sites.
Benzinga was founded by Jason Raznick in his suburban Detroit basement, and grew to a staff of 20 in Bingham Farms, Mich. offices they are now outgrowing. This month, they expanded to include an office in downtown Chicago, and expect to be up to 35 employees by year-end.
Lefkofsky and Keywell grew up in Detroit. However, Lightbank didn't invest in Benzinga to do something nice for the place where Lefkofsky and Keywell grew up, Raznick said. They did it to make money.
"We like the proposition of an actionable trading information network, and we like the entrepreneurs behind Benzinga,” said Lightbank partner Paul Lee, who joined the fund earlier this year, in an article in the Wall Street Journal. "We think there has to be a certain brand connotation with these kinds of sites and we see that in Benzinga’s founder."
Benzinga will use its new investment funds to add personnel and to fund initiatives to accommodate its increasing readership demands, including media technology tools and exclusive company access.
"Lightbank realized the potential of what we're trying to do. They understand our vision. We've accomplished a lot in a short period of time -- but with Lightbank's participation, we'll be able to expand much more quickly," said Raznick.
The Lightbank fund, which Lefkofsky and Keywell formed in the spring of 2010 following the success of daily deals site Groupon, has committed to invest $100 million over 10 years. Lee says the group has invested in 18 start-ups to date.