While investment deals in startup companies are down signficantly among North American venture capital firms, one Utah company that specializes in early funding is on an arc of success that is showing no signs of slowing down.
Kickstart Seed Fund announced Wednesday the state’s largest ever seed-dedicated venture capital fund and, at $74 million, the company is poised to add considerably to the slate of 100-plus companies it’s helped.
Company CEO and founder Gavin Christensen said his firm has built its reputation and success through a committment to investing in entrepreneurs that distinguish themselves via a combination of fearlessness, dedication and prudence.
“We’re looking for founders that do a lot with a little,” Christensen said. “They’re gritty, have a deep conviction about what they’re doing and a passion to be successful.
“Our founders are also driven by radical self-belief, but on the flip-side are humble enough to want to change things when needed and to listen when necessary.”
Zeroing in on that character profile has helped Kickstart build an investment portfolio that reads like a who’s who of up-and-coming Utah companies and includes wavemakers like Cotopaxi, Podium, Lucid Software, Homie, Chatbooks, Blyncsy and numerous others.
While the company has earned its stripes with investment successes, the path it traveled while getting there was more typical than not for any startup effort, aka, full of challenges and unexpected curves.
The concept of specializing in seed-stage venture capital funding was hatched while Christensen was working on his MBA at Northwestern University’s Kellogg School of Management, but timing, and the Great Recession, would become one of the first obstacles to address.
“The financial crisis hit right in the middle of the effort to put our first fund together,” Christensen said. “We were able to build it to $8 million but it was a very hard $8 million.”
Christensen also faced unabashed cynicism from venture capital veterans who, when they heard back in 2008 that he was focusing on launching a seed-dedicated fund specifically aimed at ventures in Utah and the Mountain West, were something less than supportive.
“When we first started, nobody cared about it,” Christensen said. “People were like ‘Seed funding in Utah? Have fun with that.’”
But that was before the explosion of the state’s tech sector and the rise of the still-burgeoning Silicon Slopes. Now, the company is talking to 500-plus companies a year, making the odds of scoring a Kickstart Seed Fund investment contract a highly competitive undertaking. Company leaders embrace an approach that reflects what they’re looking for in a prospect, namely, basing the task of winnowing pitches on humility and optimism.
“One of things that’s been a hallmark of our culture is trying to maintain a very open door,” said Kickstart partner Curt Roberts. “If you are starting a company that is within the realm of reason a possible candidate for venture capital funding, you’ll get your day in the sun. You’ll have the opportunity to come in and meet our team and tell us about it.”
Christensen said making entrepreneurs the focus of the company has been an operating tenet from day one and remained at the heart of how the company conducts business.
“We were always going to be a different kind of fund,” Christensen said. “Treating entrepreneurs with respect and recognizing that it’s all about them was a pretty different way of approaching things in this arena.”
And that may be why the company has drawn its own investor interest from the font of Utah’s homegrown tech mega-companies. Aaron Skonnard of Pluralsight, Jeremy Andrus of Traeger Grills and Ryan Smith of Qualtrics are all investment participants in the new fund.
Andrus, who before taking over the 30-year-old Traeger Grills and quadrupling profits in just four years had turned Utah’s Skullcandy headphones into an industry giant, lauded Kickstart for both its success and its approach.
“Entrepreneurs in Utah are fortunate to have access to a fund like Kickstart,” Andrus said in a statement. “They not only have the ability to attract and scale seed-stage venture companies, but the firm has also become a platform for knowledge, relationships and community.”
Roberts noted one program the company launched, Kickstart Collective, is leveraging the “collective” knowledge of its large stable of companies in an education network that facilitates more mature ventures sharing knowledge with those new companies that have learned fewer lessons.
“We reached an inflection point with a critical number of companies in a tight geographic area,” Roberts said. “So we decided to creat an initiative…to recognize that these companies are going through very similar experiences. They can teach others what to anticipate and where to watch for mistakes so they can avoid them.”
Carine Clark, veteran entrepreneur and current CEO of Banyan, a Utah tech patient-experience platform company, said Kickstart has distinguished itself both for its business approach and what happens after an investment is made.
“Gavin was really the first guy doing seed funding for Utah companies,” Clark said. “He’s made it easy for companies to not have to go to ‘venture vultures.’ Kickstart helps companies by helping them do a lot with a little. The depth and breadth of their investments is amazing … 10 years and over 100 companies.”
Now, with a fund that is nearly double the value of its last round, Kickstart is poised to go build its investment portfolio even deeper and wider, and Christensen said the company will be doing more of what it’s been doing well and keep doing it in a style he says may be unique to the Beehive State.
“Kickstart and many other Utah companies have played a different game,” Christensen said. “Money has followed success but money has not driven the success, necessarily. Looking forward, we’re going to continue to back the best entrepreneurs in Utah and the Mountain West.”