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Seed Capital: Mark Solon, Co-Founder And Managing Partner, Highway 12 Ventures — Boise, Idaho (Part 1)

Posted on Saturday, Mar 19th 2011

By guest authors Irina Patterson and Candice Arnold

I am talking to Mark Solon, co-founder and managing partner of Highway 12 Ventures, which is a $75 million venture fund in Boise, Idaho. Highway 12 invests in high-growth start-up companies in the Intermountain West.

Irina: Hi, Mark. Why don’t you briefly start with your background and how you arrived at this point?

Mark: My route to Boise and venture capital was not a traditional one. It was really based upon my desire to live and raise my family in Idaho. It’s a spectacular place. It was a personal decision, not a business decision, to come here.

Once I got here, it was clear that not only Idaho but the entire Rocky Mountain region was a fertile landscape for early-stage ventures. There were, in my view, more companies to invest in than capital available to fund them. I think there was and still is a supply-demand imbalance in the market.

The Rocky Mountain region is by far the fastest-growing region in the country, from a population perspective. We see great engineering and business talent moving here on a daily basis from places like Silicon Valley, Seattle, Boston, Los Angeles and other tech areas, for the same reasons …quality of life reasons. We believe that will [be] to our benefit over the next couple of decades.

Irina: Where did you go to school?

Mark: I went to Lehigh University in Pennsylvania, where I was a liberal arts major. I got into finance right out of school. I started my career at Putnam Investment Company in Boston in 1987. Then I went to work in the public markets. I was working at Paine Webber for a number of years. In 1995, I joined a boutique private equity firm called Atlantic Capital Group in Boston.

Irina: How is your fund structured?

Mark: There are four partners. Our first fund, which we closed in 2001, was a $25 million fund. Our second fund, which we began investing out of in 2007, is a $75 million fund. We are geographically focused.

We are focused on the most promising, emerging growth companies in the Rocky Mountain region. Our area of focus is Idaho, Montana, Colorado, and Utah. We’ve recently begun [to expand] into the southern Rocky [and nearby] states, including New Mexico and Arizona. It’s where we spend all our time.

We don’t make any investments in the Pacific Northwest, California, Texas, or anywhere back East. We invest only in the Rockies. Because we’re geographically focused, we’re not vertically focused or theme based. We do not invest solely in any particular group of sectors.

Our strategy is to find the most promising high-growth entrepreneurs and bring in syndicate partners with a vertical focus to help us build great companies here in the region.

Irina: What are your sources of deal flow?

Mark: My partners and I all spend a tremendous amount of time in places like Salt Lake City, Boulder, Denver, Bozeman, Santa Fe, and Phoenix.

We’ve been in the region for 10 years. I think we’ve built a reputation as the leading venture capital firm in the region because we’ve built relationships with entrepreneurs and service providers, accountants, and lawyers.

We have a great relationship with TechStars in Boulder. We have a great relationship with the other VCs in the region. We have a really strong relationship with BoomStartup, another accelerator in Salt Lake City. We’re seeing hundreds and hundreds of opportunities every year now.

It was much harder our first couple of years. But I believe that we see a vast majority of the promising opportunities now in the region.

Irina: From all sources, how many pitches do you receive each month?

Mark: I think we review somewhere in the neighborhood of 500 or 600 a year. So, two a day. I think we average three to five investments a year.

Irina: When you see a promising deal, what is your next step of engagement?

Mark: To spend a lot of time with management. Early-stage investing is as much about the team as it is about the opportunity. Eighteen months into the business, rarely does the business look like what the founders had dreamed up in their business plan. So, we spend an inordinate amount of time with the management team trying to ascertain whether the team has the capabilities to handle the inevitable ups and downs of a startup.

This segment is part 1 in the series : Seed Capital: Mark Solon, Co-Founder And Managing Partner, Highway 12 Ventures -- Boise, Idaho
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