1Mby1M Virtual Accelerator Investor Forum: With Mark Hasebroock at Dundee Venture Capital (Part 4)

Sramana Mitra: What is the geographical distribution of these six companies that you have exited?

Mark Hasebroock: They’re all in the Midwest – from Texas to Kansas City and between the mountains.

Sramana Mitra: Have you sold anything from Omaha?

Mark Hasebroock: No, we haven’t.

Sramana Mitra: It’s interesting. I’ve known for a long time Greg Gianforte who ran for the Governor of Montana. His big hit >>>

1Mby1M Virtual Accelerator Investor Forum: With Alan Chiu at XSeed (Part 4)

Sramana Mitra: The question that I’m constantly intrigued by as I talk to many investors is that how can so many investors find unicorns. It’s just not mathematically viable if you’re obsessed with just investing in companies that have the potential of being unicorns. There aren’t that many of those.

Alan Chiu: That’s very true. That said, we’re seeing companies go international earlier in their life than perhaps previous generations of companies. While the absolute size of these markets are growing at the pace of GDPs, the ability for startups to reach these markets have increased over time. Growth has a direct correlation with valuation. That helps to create more highly-valued companies. That’s still rare. >>>

1Mby1M Virtual Accelerator Investor Forum: With Rami Elkhatib of Acero Capital (Part 4)

Sramana Mitra: What trends do you see? If you look back on the 2017 calendar year, what have you seen in your deal flow that you can synthesize as key trends?

Rami Elkhatib: I’ll answer this in two parts. As we are focused on enterprise software, we look at trends that have been persistent for five years and beyond. Since we began investing this fund, the combination of mobile, cloud, and data has completely reconfigured the enterprise IT market. That’s something that has persisted for a long time and will continue to persist for a long time. There is this side of the trends where there’s a lot of continuity in the enterprise market.

One day, something else will come along and reshape the landscape. We’re always trying to be on the lookout for that. Then within that, there are >>>

1Mby1M Virtual Accelerator Investor Forum: With Mark Hasebroock at Dundee Venture Capital (Part 3)

Sramana Mitra: At what stage did you encounter AddStructure and how did you encounter them?

Mark Hasebroock: We have an office in Chicago and I have a partner there. David is very plugged into what’s happening in Chicago. He heard about this at an event that he was at. He realized that it was something that could be a fit and just reached out.

Sramana Mitra: When you sold the company, what milestones had it gone through? How much money had you already put in? How much had the company raised in total?

Mark Hasebroock: I think they had raised $1.5 million in total. It wasn’t a huge amount. >>>

1Mby1M Virtual Accelerator Investor Forum: With Alan Chiu at XSeed (Part 3)

Sramana Mitra: You’re seeing more capital-efficient executions, which is good. In our philosophy, we strongly recommend that people bootstrap and be as capital-efficient as possible as long as possible before raising money. Even when they raise money, we prefer that they don’t raise huge amounts of capital, which is completely counter to the unicorn mania that has been running through Silicon Valley, which we’ll talk about in a moment.

I think the capital efficiency trend is a good thing from what you’re pointing out. Let me see if I understood what you’re trying to say here. You are saying that there have been a lot of seed investments in the last five years. The people who have invested are trying to get exits and not making a lot more seed investments.
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1Mby1M Virtual Accelerator Investor Forum: With Rami Elkhatib of Acero Capital (Part 3)

Sramana Mitra: What about geography? You are based in the Bay Area, right?

Rami Elkhatib: Yes, our office is in Menlo Park. The example I just gave you started out as an East Coast investment. The new CEO that we recruited is in the Bay Area. Then, the CEO built the management team around him in the Bay Area. The headquarters is in the Bay Area. I gave you Contrast by way of an example of how we are typically trying to find deep IP.

Another aspect of that is geography. If I were to pick another example from our portfolio where we’ve done that, there’s a company called Swrve in the mobile user engagement. That started as an Irish company. When I met the team, they had very deep and interesting real-time streaming >>>

1Mby1M Virtual Accelerator Investor Forum: With Mark Hasebroock at Dundee Venture Capital (Part 2)

Sramana Mitra: That philosophy of “operators do not make good investors” does not exist in Silicon Valley. In Silicon Valley, operators are highly-valued.

Mark Hasebroock: It’s really interesting. I hear it a lot. What you have is a mindset in the Midwest because of insurance, private equity, and hedge funds. They have a quantitative analysis approach to invest in.

Sramana Mitra: Early-stage venture capital is not about quantitative at all.

Mark Hasebroock: Not at all. There’s a big education that’s going underway- just getting money off the sidelines and teaching people what the >>>

1Mby1M Virtual Accelerator Investor Forum: With Alan Chiu at XSeed (Part 2)

Sramana Mitra: Talk a bit about your current portfolio. This is your second fund. How much was the first fund?

Alan Chiu: The first fund was $50 million and it was invested across FinTech and software.

Sramana Mitra: How many companies did you invest in from the first fund?

Alan Chiu: I wasn’t with XSeed then. That’s not a part that I can speak about.

Sramana Mitra: When did you raise this fund?
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