Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Ira Weiss of Hyde Park Venture Partners was recorded in January 2018.
Ira Weiss, General Partner at Hyde Park Venture Partners based in Chicago, talks about venture activity in the Midwest.
Sramana Mitra: Tell us about Hyde Park. What is your investment focus? How big is the fund? What sized investments do you like to make?
Ira Weiss: We are a fund based out of Chicago and Indianapolis. We focus on the mid-continent, primarily the MidWest including geographies up to Toronto. We’ve made some investments in Atlanta. We primarily get involved in early stage companies occasionally pre-launch up to about $3 million to $4 million in revenue. Primarily seed and Series A.
We’re more of a B2B investor. We’re on our second fund. The first fund was a $25 million fund. The second fund is a $65 million fund. I’m a professor at the University of Chicago Booth School of Business. There’s an angel group called Hyde Park Angels that I ran for a while partially because there were some big successes that came out of the University of Chicago. One was Grubhub and the other was Braintree. We ran the angel group and then spun out of the angel group.
Sramana Mitra: Got it. I would like to double-click down on the stage that you said. You said you do seed and Series A. Help us understand how you define seed. In particular, what are you looking for in terms of the progression of a venture? What level of validation are you looking for? Are there metrics that you are looking for in terms of monthly revenue run rate for example? What are the specifics of how you are looking at seed?
Ira Weiss: I did say seed and Series A. Because we are a MidWest-focused fund, the size of a Series A investment in the MidWest is a bit smaller than the coast. I would say the bulk of our initial investments occur when a company is either at the seed stage or the post-seed, which is between seed and Series A. Occasionally, we will make investments in companies even in pre-launch if we really like the entrepreneur.
Ideally, we get involved when a company has launched and has some kind of engagement. It could be some initial customers that are either in pilot or some signed contracts or with some sort of initial evidence that someone’s interested. We get involved anywhere between that point up to $3 million in revenue. Our sweet spot would be companies doing $250,000 a year up to about $2.5 million. We’ve done stuff that’s pre-revenue and occasionally, larger than $3 million.
Sramana Mitra: Talk about your current portfolio. What have you invested in? How do you decide what to invest in? If you pick out some examples from your current portfolio, help us think through how you analyze those ventures and what is it that attracted you to those ventures?
Ira Weiss: Why don’t I start with a few of our better known investments? One is a company called G2 Crowd. If you think of the way that people make software buying decisions, especially medium to bigger sized companies, many people rely on Gartner. Many companies want to be rated number one on Gartner. Gartner is a public company. I haven’t checked today, but they’re probably worth $11 billion. Maybe more.
If you’re an earlier stage company, it takes a while to really get noticed by Gartner. Gartner lives in a little bit of a world that is like a walled-off garden. If you buy toaster, you can go online to Amazon and get a hundred reviews. If you want to go to a restaurant, you can get a hundred fifty reviews. When you go to buy a software system, you need to go to a Gartner report and read a report written by an analyst who may have fooled around, but is not an actual user.
G2 Crowd is the leading site for software reviews. It has over 300,000 reviews of all major software categories. The idea is people would go to that site that would help make their software buying decisions. They do work with the software vendors to market via G2 Crowd.