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$35 million invested in McCandless start-up |

$35 million invested in McCandless start-up

Local entrepreneur Jeffrey Mullen’s Dynamics Inc. has drawn a $35 million investment from Bain Capital Ventures, Boston, to develop further its virtually fraud-proof credit and debit cards.

The investment is the largest, single equity deal won by a Pittsburgh-area start-up in many years, if ever, said area venture capital experts.

“That’s awesome. I’m thrilled to hear this,” said Kelly Szejko, president of the Pittsburgh Venture Capital Association. “We can use that type of investing in this region.”

By comparison, Precision Therapeutics Inc., a South Side developer of cancer tests, landed $43 million in venture capital in 2008, but the money came from six venture firms, including three from Pittsburgh.

Dynamics, based in McCandless, intends to use the money to double its current work force of 30 people to about 60 by the end of the year, Mullen said on Tuesday.

“We want to help make Pittsburgh the entrepreneurial center for start-ups that it was under Andrew Carnegie,” he said.

“Most companies would die to have people the caliber of Bain as an investor,” said Joel Adams, founder and general partner of Adams Capital Management Inc. The Sewickley firm invested $5.7 million in Dynamics in late 2009 in the company’s initial round of financing.

Bain Capital Ventures operates four funds with a total of $1.5 billion of invested capital. It is the venture and growth fund arm of Bain Capital LLC.

Parent Bain Capital was co-founded in 1984 by Mitt Romney, the Republic presidential candidate and former Massachusetts governor. Romney left Bain in 1999 to start organizing the 2002 Winter Olympic Games in Salt Lake City.

“We think Jeff is a brilliant guy, and we see a lot of CEOs,” said Jeff Schwartz, founder and managing partner of Bain Capital Ventures. He joins Mullen and Adams on Dynamics’ board of directors.

“We solicited him; he didn’t come to us,” Schwartz said. Bain Capital Ventures concentrates in financial technology and contacted Mullen in the fall after monitoring Dynamics’ exposure at high-tech and consumer electronics trade shows.

Dynamics’ technology could reshape how credit and debit cards are used and secured, and do so without altering the 60 million or so magnetic-stripe card readers used to process the 1 billion credit and debit cards in the United States.

“The credit and debit card market is very large, and a larger percentage of which have the ability to use Dynamics’ technology,” Adams said.

The card’s technology makes it fraud-proof, Mullen said. In place of a card number, it is equipped with five buttons for entering an activation code. The card’s number is displayed, once activated. After a transaction, the card number display turns off and the magnetic strip erases itself. If the card is lost, it’s useless.

The technology also allows card holders to switch between accounts with the touch of a card button. Plus, it does not require merchants to acquire new or different card-reading equipment, which should speed adoption in the marketplace, Schwartz said.

Citibank agreed in November to pilot Dynamics’ technology in two of the giant bank’s rewards cards.

Dynamics is talking about deals with “multiple, top card issuers,” said Mullen, declining to name them.

Mullen earned an undergraduate degree in electrical and computer engineering from Carnegie Mellon University in 2001. He started Dynamics in 2007 while pursuing a master’s degree from CMU’s Tepper School of Business. By the time he graduated in May 2009, Dynamics employed seven people

“We passed on several rounds of funding that would have required us to move to Silicon Valley,” Mullen said. “We want to find success in Pittsburgh.”

Other technology companies have been founded here and shuttled away. Most notably, Lycos Inc., the Internet search engine company launched from CMU, uprooted itself for Boston in 1995.

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