Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Mark Hasebroock of Dundee Venture Capital was recorded in February 2018.
Mark Hasebroock is Founder at Dundee Venture Capital, based in Omaha, Nebraska. The firm invests in the Midwest, likes small, capital-efficient deals and is open to early exits.
Sramana Mitra: Tell us about Dundee. What is your focus? What do you like to invest in?
Mark Hasebroock: We started Dundee Venture Capital in 2010 with the idea from Omaha, Nebraska that there was probably some really good early-stage companies that needed some funding. How did I know this? I had started a company in Omaha called Hayneedle. Hayneedle was an online retailer for stuff meant for your house.
When we needed some capital, we went out to the market locally to raise half a million dollars. Nobody really cared. It was a pat-on-the-head, go-away thing. We ended up getting funding from Silicon Valley and from New York City. The seed for this started with that. There are good companies. There are talented people. Why don’t we try and maybe educate this area a little bit further and begin to help founders realize their dreams. We started Dundee Venture Capital with that in mind in 2010.
Sramana Mitra: Talk to us a little bit about the Omaha ecosystem. What is there? What still needs to be built? What sized community do you have in terms of startups? Give us a little bit of a view into Omaha.
Mark Hasebroock: Omaha is evolving pretty rapidly. It’s maybe like Kansas City was about five years ago or Chicago 10 to 15 years ago. There’s a realization that, first of all, you can build good companies anywhere. We do have a good talent and access to talent through universities, other startups, and also through corporate innovation programs where there has been a lot of graduates from larger companies that go on to start businesses. The hurdle of, “Can I do it here?”, gets jumped over pretty quickly.
Number two is, the cost to do business in a market like this. While it should never really be a deciding factor, it truly is pretty cheap. A dollar goes a lot farther in the Midwest. Then, number three is, we see our graduates from some of these other startup companies going on to realize, “I have an idea. I just need a couple of people I want to test it on.”
In the last five years, there’s probably been a couple of hundred new startups that have just blossomed. We also spent a lot of time in Minneapolis, Chicago, Kansas, Denver, and Boulder. We actually have offices in Minneapolis and Chicago for that reason. It seems as though those markets needed our help.
Sramana Mitra: You invest beyond Omaha. You also invest in other parts of the Midwest ecosystem.
Mark Hasebroock: Right. We started with a $2 million fund in 2010 to just test the market. We learned that there was potential, so we raised a second fund for $18.5 million. Then, we just closed our third fund last year, which is $31 million. We typically like to invest, on average, $250,000 to $750,000 in a seed round. It’s right after friends and family round maybe and when credit cards are exhausted.
More importantly, all of us are operators. There’s a lot of people who say, “An operator never makes a good investor.” That’s absolutely not true. The empathy, particularly in those starting days is critical. On how to hit those key performance indicators, hold their hand, and then let them run.