Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Darshan Vyas, LOUD Capital was recorded in September 2017.
Darshan Vyas, Co-Founder Managing Director, LOUD Capital, discusses seed investing in the startup eco-system in the Mid-West from Ohio.
Sramana Mitra: Tell us about LOUD Capital. What is the focus of the firm? How big is your fund? What size investments do you make?
Darshan Vyas: LOUD Capital is an early stage venture organization that was started two years ago by my co-founder Navin Goyal and myself. The Mid-West is an up and coming area for technology and innovation. I believe that in Central Ohio alone, there are around 40 VCs compared to the West Coast where you have over 800 VCs. We felt like focusing on Ohio. There’s a lot more opportunity.
150 of the Fortune 500 are in the Mid-West area. That says a lot as far as talent is concerned. This is a hotbed of talent. What we don’t necessarily have is the resources to help that talent get to success. Columbus, Ohio is seeing that renaissance in entrepreneurship. We’re trying to ride that wave now and help as many entrepreneurs as possible.
Sramana Mitra: Your focus is technology entrepreneurship right?
Darshan Vyas: Exactly. When we invest in companies, we are not silent or passive. We are active investors. When we invest in companies, we become that business development arm for that company. My background has been in technology. We like to focus on technology innovations.
Sramana Mitra: How big is the fund?
Darshan Vyas: This is an angel fund. It’s a $2 million fund where we do average check sizes of $50,000 to $100,000. The closest colleague that we work with is Rev1 Ventures. They’re a state-funded organization that is here in Columbus. Sometimes if the entrepreneur doesn’t fit Rev1’s box, they might come to us.
We tend to do things a little bit differently. We’re very personable and we like to work with entrepreneurs. We like to be very involved with entrepreneurs. Rev1 is more of an organized institution. We roll up our sleeves and get dirty with the entrepreneurs and help them grow their business.
Sramana Mitra: It sounds like you work almost like a feeder to Rev1 who comes as a follow-on after you have done the very early stage work.
Darshan Vyas: Absolutely. Rev1 and LOUD Capital are the only angel investors. Sometimes, we do feed into Rev1 Ventures our deal flow. We actually had a gathering yesterday where 50 different venture capitalists from the Mid-West region – Illinois, Indiana, Kentucky, Ohio and Pennsylvania all gathered to talk about deal flow and see how we can get more resources.
Sramana Mitra: Talk about the deal flow. What trends do you see in your deal flow?
Darshan Vyas: There’s a huge manufacturing sector in the Mid-West. One of our portfolio companies is a hydrogen car company. They’re actually based in California but the entrepreneur is here in Ohio. We seeded that company. There’s a lot of aerospace manufacturing that’s going on.
Sramana Mitra: Our audience is all IT and IT-enabled services entrepreneurs. If you could focus this on that, it would be more appropriate.
Darshan Vyas: Right. As far as IT related deal flow is concerned, we’re seeing energy platforms as a service. There are different platforms that add value to different types of industries. What they are lacking is the resources and the guidance on how to build their business.
Sramana Mitra: Are you seeing SaaS companies that pertain to the manufacturing concentration of the Mid-West?
Darshan Vyas: I’ve personally seen nothing in manufacturing-related SaaS. We are heavily involved in artificial intelligence. I’m seeing a lot of companies incorporating artificial intelligence into streamlining business processes.
Sramana Mitra: In what verticals?
Darshan Vyas: In energy, education, B2B sales, B2C sales, healthcare, and private assistance. There’s a lot of AI that’s incorporated into streamlining these different business processes in different industries. One of our portfolio companies, Genetesis just won an award for incorporating artificial intelligence in the diagnosis of heart issues. It’s able to detect any abnormalities in the heart in a non-invasive way. AI is a trend across the board.