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Meet the VC

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Meet Michael Collins, Managing Partner at Green D Ventures

Green D Ventures is a Dartmouth alumni venture fund investing in Dartmouth alum-led companies

Innovation series by Steven Loeb
September 22, 2017
Short URL: http://vator.tv/n/4a2a

Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh how times have changed. While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.

But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?

We're highlighting key members of the community to find out.

Michael Collins is Managing Partner at Green D Ventures.

Collins is a serial entrepreneur, with a long career in investing and building companies. From his initial years at TA Associates sourcing and vetting deals to his creation of numerous startups, the CEO of venture incubator Big Idea Group, and founder of alumni venture fund firm Launch Angels, he has been heavily involved in monetizing innovation for thirty years. He brings that experience to his role as Managing Partner of the Green D, overseeing the deal funnel and portfolio management for all Green D funds.

Collins is a Dartmouth graduate (’86) and has an MBA from Harvard Business School.

VatorNews: What is your investment philosophy or methodology?

Michael Collins: We believe that there is a combination of factors that make for successful investments.

First is the idea. We are looking for big ideas that have the opportunity to disrupt an industry -- for example, is the product or service an order of magnitude better, cheaper, or simpler than existing alternatives? If you can bring something to a large population that didn’t have access before, then you’re onto something.

Secondly, we believe the team is very important. We want people who have domain expertise, entrepreneurial experience, and a blend of personal leadership and collaborative skills.

And lastly, the deal and financing structure are critical pieces of what we’re looking for. The investment needs to be designed so everyone is aligned and with the right level of financing to comfortably get to the next milestones. We like a strong lead investor and a helpful Board of Directors.

VN: What do you like to invest in? What are your categories of interest?

MC: Compared to a lot of investors, Green D is relatively agnostic about sectors. We’re co-investors and follow strong lead investors, so we can invest in a broad variety of business models. Just a few examples: Today  there are amazing things being done with Artificial Intelligence (AI), and blockchain holds a lot of promise. There are also great innovations taking place in medicine, agriculture, transportation, energy—and much more. It’s exciting that we can explore innovations across all these emerging areas.

From a personal perspective, I’m most interested in blockchain as a foundational technology that can disrupt and create new business; it reminds me of the early days of the Internet.

VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?

MC: In the beginning of my career when I was at TA Associates, even though I was a junior guy, I was involved with investments in Intuit and Quickbooks. I met Scott Cook (Intuit Co-founder)--a unique opportunity. I also had the chance to learn from a really great set of investors at TA Associates, including CEO Kevin Landry. The experience had a huge influence on me as an investor.

In our current Green D portfolio, there are a number of investments that I’m incredibly excited about. To name just a few, I’d point to Zagster, Group, and Compass Therapeutics—disruptive, smart businesses making an impact on society.

VN: What do you look for in companies that you put money in? What are the most important qualities?

MC: As I discussed before, I’m looking to invest in companies that have three qualities: big ideas, strong teams, and can offer a good investment thesis. We spend a lot of time thinking about the problem that a company is addressing. It needs to be a problem that’s worth solving--where people are really crying for a solution. A company can evolve its offering, but it has to be in pursuit of a real problem.

VN: What kind of traction do you look for in your startups? And can you be specific? Are you looking for a number of customers or order volume?

MC: Specific numbers depend on the industry, stage of development and other factors. More generally speaking, we want to see progress with actual customers in terms of both the numbers and depth of that relationship with early customers. Sticky relationships, where customers are really pleased with an offering, are critical. One of the biggest indicators of a venture’s success is its rate of improvement.

We also look for traction within the company and the team. We want to see that they’re working together and making progress. It’s inevitable that you will encounter problems when building a business, so we want indications that the team can come together, solve problems and overcome hurdles.

VN: How long does it take before you meet a startup and make an investment and how do you conduct your due diligence?

MC: Our model depends on co-investing, meaning we only invest when there’s a strong lead so negotiations and due diligence are already done by the time we get involved. We do not lead rounds, set valuations, or take Board seats. Our Investment Committee (IC) is composed of 10 – 15 experienced business leaders (generally alums) with long careers in investment and entrepreneurial ecosystems. We make decisions very quickly.

Each of Green D’s annual funds has an IC. Our deal team will write an independent report, and then the company presents to IC. It’s a fairly transparent and streamlined process, so the transaction takes place quickly -- weeks instead of months.

VN: These days a seed round is yesterday's Series A, meaning today a company raises a $3M seed and no one blinks. But 10 years ago, $3M was a Series A. How has that changed where a company needs to be to get their Series A round?

MC: These VC terms are tossed around in inconsistent ways and can vary based on the industry, firm or region. For example, a seed round in biotech is very different from a seed for a software app. It’s not black and white, but we tend to view things as follows.

To us, seed rounds are less about the amount of money. We see them as a time when companies are still figuring out their business. The company/team is in the early stages of identifying a problem and a solution and is still in the process of getting the solution off the ground. This might take several seed rounds and time. Seed rounds are often in convertible notes or SAFES.

We view a Series A round as when a company is transitioning into growth phase. While not everything is figured out at that point, a lot is, and the company is starting to think about scaling the business. This is usually where professional institutional investors get involved.

VN: Tell me a bit about your background. Where did you go to school? What led you to the venture capital world? What do you like best about being a VC? What makes you excited?

MC: I earned my undergraduate degree at Dartmouth, majoring in Engineering Science, and got my first job at a VC firm (TA Associates) in 1986. In 1990, I went to Harvard Business School for my MBA. That’s where I met Clayton Christensen and really got  the “entrepreneur bug.” Over the past 30 years, I’ve worn most of the hats: entrepreneur, investor, Board member, etc.

From a personality standpoint, I am impatient and don’t like bureaucracy. I knew early on that Corporate America wasn’t for me. I like building things. I’m a little nerdy and love technology and new innovations. VC is a way to always be learning. It’s also competitive, requiring you to learn something every day and allows you to work with bright minds and exciting concepts.

VN: What is the size of your current fund?

MC: Green D 4 will be around $10 million. We have annual funds that open every fall.

VN: What is the investment range?

MC: Green D typically puts $250k-500k as an initial investment in a company. If we co-invest with a sister fund from our family of funds under the Alumni Ventures Group umbrella, it can be quite a bit more.

VN: Is there a typical percent that you want of a round? For instance, do you need to get 20% or 30% of a round?

MC: No. We look at the valuation of a company and the state of its progress. The percentage is just the math and doesn’t matter. It’s all about funding great companies and investing in them at a compelling price.

VN: Where is the firm in the investing cycle of its current fund?

MC: Green D 3 is fully invested. We just started investing for Green D 4.

VN: What percentage of your fund is set aside for follow-on capital?

MC: We typically set aside about 15% of the fund for follow-on investments.

VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?

MC: All, from seed through very late stage. We are stage, geography, and sector agnostic. We’re focused on strong teams, traction and a fair price. That helps ensure that we deliver a great portfolio to our investors.

VN: In a typical year, how many ventures do you invest in?

MC: We invest in about 15 to 20 deals per year.

VN: Is there anything else you think I should know about you or the firm?

MC: People often ask what our affiliation is to Dartmouth College. Green D Ventures is not affiliated with or officially sanctioned by Dartmouth. We are private and for profit but very friendly with the college. We try to benefit the entrepreneurial ecosystem overall and support alums or professors teaching about entrepreneurism.

Green D was created to enable Dartmouth alums to invest together in a diversified venture capital portfolio. There are some very unique characteristics and benefits to our model:

  • Alumni have an easy way to acquire ownership of a diversified venture portfolio—most individuals don't have access to these kinds of investment opportunities.
  • It allows investors to “pay it forward.” Investors become part of something larger, helping support Dartmouth's entrepreneurial ecosystem and the next generation of Dartmouth entrepreneurs.
  • The power of our model is the huge community we’re building to source deals, refer investors and entrepreneurs, and socialize the fund.

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27806
Green D Ventures
Angel group/VC
Description:  Green D Ventures is a community of Dartmouth alums: investors, executives, entrepreneurs, and innovation enthusiasts, ...
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