Meet Ryan Helon, EVP of Investment Funds at Rev1 Ventures

Rev1 is a startup studio, providing guidance and connections, along with seed and early stage funds

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.

Ryan Helon is EVP of Investment Funds at Rev1 Ventures. 

As EVP of Investment Funds for Rev1 Ventures, Helon manages Rev1’s proof of concept, seed, and early-stage investment funds. He has served as part of CEO Tom Walker’s leadership team at Rev1 Ventures since 2012. As a leader on the Rev1 Ventures Advisory team, Helon works closely with Rev1 portfolio companies and serves as a board member and venture advisor for many of them to ensure they remain on the path to success before, during and after funding is closed. As a trusted startup advisor and fund manager, Helon and his team help with everything from early stage company valuation, due diligence, investment structuring, portfolio company and fund management, and investor relations. 

With Helon’s help, Rev1 has funded over 70 unique companies over the past five years, making it among the most active early-stage investors in the Great Lakes region. He’s committed to continuing to ensure Rev1 is well-positioned to invest in high-growth companies in Central Ohio, including startups commercializing technologies developed at Rev1 Ventures’ innovation partners The Ohio State University, Nationwide Children’s Hospital, and OhioHealth.

VatorNews: What is your investment philosophy or methodology?

Ryan Helon: Rev1 is based in Columbus, Ohio, and we're a startup studio, and we also manage a series of seed and early stage investment funds. So, we combine capital investment with a number of different strategic services to help entrepreneurs build great companies in central Ohio. We focus on high tech, high growth; our studio supports a wide variety of industries and our funds invest in a subset of those industries. We've been at this, in our current incarnation, since about 2012 or 2013 when a new leadership team, myself included, came to a Rev1 and basically built out the current model.

VN: What are some of those other services that Rev1 offers and how does the venture side of the business work with them?

RH: We help entrepreneurs build their teams: we have talent acquisition services, we have a Director of Talent on our team who helps both strategize on key hires as well as position description, sourcing strategy. We have what we call our Customer Connect team, which uses our network of corporations and organizations in central Ohio and beyond to both get early feedback on product concepts, as well as to become potential first customers for the startups that we work with. We also have a network of mentors that we can match up startups with, they will bring either relevant domain industry experience, functional experience, entrepreneurs that have built successful startups and can share their lessons learned from their entrepreneurial experience. And we also have a team of advisors that are the primary person in terms of advising the entrepreneur, determining what services and support is needed, and linking that with resources within Rev1 and within our network to help those entrepreneurs build their companies.  

VN: Talk to me about being located in Ohio. Even before COVID, but especially since the pandemic, with so many people working from home and so much remote work, there's been a democratization of venture capital into other sectors beyond just the coasts. What are some of the advantages of being in the Midwest and what have you seen happening in the last 18 months or so?

RH: We think the Midwest, and in Ohio in particular, are great places to invest and build great companies. We have a high density of large corporations that can become both customers of startup companies that are sources of talent, and just really build a thriving economic environment in which to build a business. We have some wonderful universities and research institutions that are both developing the next generation of scientists and managers and leaders, and bringing them to market. And then we have these research institutions that are doing just incredible research and creating innovations that can be the basis for the next great companies. So, we call it “the backyard effect,” looking at the resources and assets in our region and thinking about how that creates this amazing context to build companies, and we see examples of this every day in our work of different pieces of that puzzle coming together really nicely to form, launch, and then build a great company. So, we think there's a lot of positive things happening here. 

The recent growth and recent financings are always fun to look at and see some of the progress and examples. And then we're just really bullish on the outlook for the future as well.

VN: What are your categories of interest?

RH: In my work, we get to invest across a variety of sectors. So, one day I’ll have the opportunity to work on a really exciting life sciences company that's commercializing a new therapy for a disease that doesn't have good treatment options. The next day, I’ll be working on a new digital health company that's trying to bring a new mechanism of delivery of delivering treatment to patients. We've seen some really interesting and exciting developments in that sector. And then, where I've spent a lot of time investing is in enterprise software and seeing companies develop the next type of predictive analytics or artificial intelligence or machine learning company and apply that to solve their business problems.

We also work specifically in InsurTech; we manage a dedicated InsurTech fund with State Auto Insurance Companies, so we're looking at innovations that could positively impact the property and casualty insurance industry. That's been things involving computer vision, analytics, fraud detection capabilities, just some really exciting and cutting edge technology areas that we're getting to support as an investor, and then support those entrepreneurs in building those businesses.

VN: What's the big macro trend you're betting on?

RH: There are quite a few. Overall, at the highest level, it is a really interesting time to be in this business, just in terms of a magnitude of growth in venture investing. The headline the past few quarters has been the mega deals, the $100 million dollar-plus financings, all these unicorns being birthed, and then you've seen that come down to early stage financings increasing in size and increasing it higher valuations for these rounds. Now we're starting to see that come down to the seed and pre-seed stages of development, and that's the latest manifestation of this trend, but it's just really interesting to think about capital flows, trends in the way investments are structured, what the implications of that for growing and building companies is.

In terms of specific areas, our newest seed and early stage fund that we launched the middle of this year, Rev1 Fund II, that has a real strong focus on digital health and healthcare IT, so we still think there's a tremendous amount of innovation, both in terms of how healthcare is delivered and using new technologies to help manage things like mental illness and drug treatment, things of that sort. So, we're really intrigued by continuing to invest in unique telehealth and digital therapeutic types of applications, and we're spending quite a bit of time digging into that. And then, just on the other side of healthcare, at the back end, administration, claims, prior authorization, those are all areas that we've researched over the years. We've made investments in those areas, we know we'll make more investments in those areas as we identify where the next great opportunities are to create efficiency, take out cost, direct those dollars more towards patient care, as opposed to handling all the expenses associated with both the delivery of health care and the billing and claims side. 

VN: Is there a lot happening in healthcare specifically in the Midwest? Is there anything specific to that region or that area that you'd like to invest in?

RH: It really cuts across those areas I described. So, we had some incredible partnerships with Nationwide Children's Hospital, The Ohio State University Medical Center, and OhioHealth, each of which are leading medical institutions here in central Ohio. So, we work closely with physicians, technology and commercialization professionals, and researchers at those institutions, to identify what the latest research areas are, what innovations have commercial potential when they're ready to come out and be the basis for new startup companies. That's led us to look at a variety of areas over the years, such as gene therapy, looking at identifying patients for clinical trials, and technologies to enable more efficient matching of patients with clinical trials. As I mentioned on the digital health side, different, new approaches to telemedicine and the delivery of care using technology.

VN: What is the size of your current fund and how many investments do you typically make in a year? 

RH: We closed two different funds this year: I mentioned our new seed and early stage fund, which is called Rev1 Fund II; that's a $20 million fund that'll invest throughout the Midwest and Great Lakes region but Ohio will certainly be a key part of that strategy. We also formed Future Value Fund I, and that's a $10 million pre-seed fund that’s focused on investments in Ohio. So, $30 million of new capital this year, those two funds being investment vehicles, and very complimentary, what we call “capital continuum funds,” in terms of the pre-seed fund investing earlier, and then the seed and early stage fund being able to invest in later rounds for those companies.

We're targeting about 15 companies for Rev1 Fund I, and about 12 to 15 companies out of the Future Value Fund. We make approximately 20 to 25 investments per year. It really has varied over the years, depending on where we're at with the different funds we manage. Sometimes we're early in the investment period for multiple funds and we’re investing at a slightly higher pace, and then, as we reach more of the midpoint in those funds' lives, some of those are then focused on making follow-on investments, but it all averages out to 20 to 25 investments per year. 

VN: How much is that in dollar amount for you?

RH: Our check size varies quite a bit by the different funds we manage. At the lower end, we make investments of say $200 to $250,000 and, with some of our funds, we'll write $1 to $2 million initial checks into companies. So, all that pencils out into investment activity from, say, $10 to $15 million per year. It varies quite a bit, though, depending on which funds are actively investing and how that aggregates from follow-ons, new investments, and so on.

VN: It sounds like you go pre-seed all the way up to the early stages, so that'd be Series A? 

RH: Yes, we've actually even gone a little bit later than that with certain of our funds where we’ve made Series B and Series C investments, but definitely the majority of our investment activities is in the seed and early Series A stage. Then, with our new pre-seed fund, we'll be making pre-seed investments as well, so pre-seed to early Series A would capture the vast majority of our investment activity.

VN: What traction does a startup need for you to invest? Do you have any specific numbers?

RH: It varies, not just by stage but by the industry that the company is operating as well. So, at the pre-seed stage, for our software investments, for example, we do like to see an early version, MVP, alpha, beta version of the product with some early customer usage and being at least at revenue or generating early revenue. For some of our more advanced technology companies, and certainly for our life sciences companies, those have a much longer development pathway. So, all of our life sciences investments are, essentially, pre-revenue, especially in the therapeutic side, just because of the long development and regulatory pathway that those companies have.

As we move along to seed and early stage, again, certainly for our enterprise software and digital health-type companies, we like to see increased customer activity, repeatable sales processes starting to emerge, the early customers are satisfied and able to serve as references for the company as they seek to acquire additional customers. We want to see mounting evidence of market acceptance, the ability to win in competitive environments against incumbents or competitors, and seeing just increased evidence that company will be able to scale rapidly with new financing.

VN: What do you want to see from the team and those founders to make you want to invest?

RH: We want to invest with folks that we think we can work effectively with, and that can be open to feedback and building a team with folks that compliment their capabilities. Certainly, we'd like to see relevant domain expertise and a keen understanding of the industry that they're trying to build a company within. And we like folks that are just highly collaborative in nature, who are open to building complementary skill sets on their team, that want to bring in folks that will challenge them and work together to come to the best answers to the questions you face when you're building a company. We like folks that can balance an internal and external view; internally focused on building a great culture and building inclusive environments where teams can thrive, but then being also externally focused on what's happening in the market, what their competitors are doing, what their customers are looking for, and really being able to balance both internal and external perspectives in making decisions in building the business.

VN: When it comes to the product, what do you want to see? And do you like to try to use the product yourself before investing?

RH: Yes, we love demos, and we asked to see a demo in the first meeting. Even if it's a wireframe-based demo and still very much in the idea stage, we want to see what the entrepreneur is thinking right now in terms of the product concept. And, again, we really challenge ourselves to some of those themes I mentioned in terms of balancing internal and external perspectives, so we always challenge our entrepreneurs early. “What customer feedback  have you gotten? What customer validation have you done? How many potential customers have you talked to? Are you serving them? Have you used a rigorous, repeatable, and systematic process for gathering that customer feedback and information?” We think it's just tremendously valuable to have that work done in the very earliest stages of a company’s formation and development, and we challenge entrepreneurs to do that even before they've invested in building the first version of the product, whenever possible, in terms of really understanding what product features are valued, differentiated, and are going to position the product concept to be successfully received in the market.

VN: Talk to me about the market and how you look at that. Obviously, part of early stage investing is assuming that there's going to be a market for this company at some point in the future and the bet is that it will exist by the time they get to some of those later stages. How do you evaluate that and determine whether or not that market will eventually be there for this company?

RH: Well, we always like to start with the potential customer, even if it's not the customer today, and understanding, again, the problem that the company is seeking to solve, validating that that problem exists, validating that there is a customer segment that will pay to solve that problem, and understanding how they're either living with that today, or if they’re solving it with some type of inadequate, maybe status quo, type of solution. So, even for technologies that are very early in development, we still do all the model problem validation, making sure we understand what the customer need is, and then understanding what type of product can address that and trying to really build a product development roadmap on that basis.

A lot of what we do is enterprise technologies, so it does give you a good opportunity to talk to leaders on the company side that are prospective buyers and challenge their thinking about what problems they’re trying to solve today and what's on their roadmap of different issues that they’re going need to address as a business over the next two to three to four to five years as well.

VN: You mentioned earlier about valuations and round sizes getting bigger and I'd love to talk about the impact of that. Something a lot of VCs talk about lately are those later stage venture capital firms coming into the early stages, putting money into companies that maybe don't actually warrant those big rounds yet. What is the overall effect of that on those entrepreneurs and those companies, especially when they go to raise that next round of funding?

RH: Everyone's cognizant of it, so when you see a really large round come together for a very, very early stage company, it challenges you to think about how you would approach that opportunity. If we would look at around for a company at a given stage quite differently, thinking about how other folks are seeing it, and challenging our own thinking around the appropriate amount of capital at what stage. The piece that I think about when I see a really big round coming together for a very, very early company is discipline around capital management and deploying those funds effectively with a company that’s very, very early. So, we think a lot about stages of development of companies, and what are the next milestones that are most important to solve so that a company is building increasing evidence of the business opportunity, that the product works, that the market is there, that they can attract, retain, and motivate a team to execute against that opportunity. And there is still something to be said for the model of doing that in a diligent, methodical manner. And then, as things start to really come together, and provide that evidence of the growth opportunity, then we're starting to really finance the company in a way that enables it to scale more rapidly. 

But, again, financial discipline is something that's always top of our mind; we challenge entrepreneurs to be very disciplined with capital that they raise. With the larger rounds, it does present maybe a little bit of a challenge in terms of maintaining that capital discipline when you've got this really large amount of capital on your balance sheet. There certainly is a desire, when you raise a very big round, to deploy it, and thinking about how you would deploy it productively as you’re still proving out some of the really baseline assumptions around the business opportunity. 

VN: Do you feel like it puts more pressure on those companies? If they have those big rounds, they have these big valuations, then they have to prove that out to raise the next round. And if they don’t, then they're going to wind up taking it down round and that's probably not a great thing for that company.

RH: I agree completely with that observation: all venture rounds are based on expectations of future performance, and it does put the company under additional pressure in terms of how you're going to deploy that funding. This comes around to something that we spend a tremendous amount of time doing with entrepreneurs that we're seeking to invest in, and that's talking, in a lot of detail, around the business plan and how their capital is going to be deployed. What's the time horizon? What milestones are we going to accomplish? What's our contingency plans when things do take longer than we expect? And just really working through all that. So, there's just a high degree of alignment on what the plan is and how we're going to work together to accomplish that plan, and then plotting out what that will position the company for in terms of the next round, both sizing and what we might expect in terms of market receptivity if we're successful accomplishing these milestones before we go out to the next round.

VN: What does it mean for the smaller firms that can't put a lot of money into a company? Are they priced out of some of those rounds when one of those big firms comes in and puts money in at huge valuations? Does that make it harder to invest in some of these companies?

RH: Certainly, competitive pressures and market dynamics factor into how we think about the world. It just challenges us to be really clear in both how we articulate the value we can bring as an investor and we’ve proven that with every entrepreneur that we had the privilege to back. We're very comfortable always telling entrepreneurs: “Don't take our word for it. Any entrepreneur and venture investor can boast about their successes and that they've done this or that,” but having them talk to and interview CEOs and entrepreneurs that we backed on our prior ventures and take their word for it, we always encourage any company that we're working with to talk to other investors and make sure we’re the right fit. We always advise entrepreneurs to build a syndicate for their financings. It's always helpful to have other perspectives and investors around the table and the companies that often are most well positioned are really thoughtful and are able to build a syndicate of complimentary investors that can bring different networks to bear, both with regard to building the business as well as financing the business in the future. So, it’s the opportunity to figure out how we can be a complimentary partner. Sometimes we are the lead investor, sometimes maybe we're a co-investor in a smaller piece of financing, but really thinking about the different roles we can play and, no matter what role we're playing, making sure that we're being thoughtful and delivering on the complimentary value that we can bring.

VN: There are many venture funds out there today, how do you differentiate yourself to limited partners?

RH: Everyone's cognizant of it, so when you see a really large round come together for a very, very early stage company, it challenges you to think about how you would approach that opportunity. If we would look at around for a company at a given stage quite differently, thinking about how other folks are seeing it, and challenging our own thinking around the appropriate amount of capital at what stage. The piece that I think about when I see a really big round coming together for a very, very early company is discipline around capital management and deploying those funds effectively with a company that’s very, very early. So, we think a lot about stages of development of companies, and what are the next milestones that are most important to solve so that a company is building increasing evidence of the business opportunity, that the product works, that the market is there, that they can attract, retain, and motivate a team to execute against that opportunity. And there is still something to be said for the model of doing that in a diligent, methodical manner. And then, as things start to really come together, and provide that evidence of the growth opportunity, then we're starting to really finance the company in a way that enables it to scale more rapidly. 

But, again, financial discipline is something that's always top of our mind; we challenge entrepreneurs to be very disciplined with capital that they raise. With the larger rounds, it does present maybe a little bit of a challenge in terms of maintaining that capital discipline when you've got this really large amount of capital on your balance sheet. There certainly is a desire, when you raise a very big round, to deploy it, and thinking about how you would deploy it productively as you’re still proving out some of the really baseline assumptions around the business opportunity. 

VN: Do you feel like it puts more pressure on those companies? If they have those big rounds, they have these big valuations, then they have to prove that out to raise the next round. And if they don’t, then they're going to wind up taking it down round and that's probably not a great thing for that company.

RH: I agree completely with that observation: all venture rounds are based on expectations of future performance, and it does put the company under additional pressure in terms of how you're going to deploy that funding. This comes around to something that we spend a tremendous amount of time doing with entrepreneurs that we're seeking to invest in, and that's talking, in a lot of detail, around the business plan and how their capital is going to be deployed. What's the time horizon? What milestones are we going to accomplish? What's our contingency plans when things do take longer than we expect? And just really working through all that. So, there's just a high degree of alignment on what the plan is and how we're going to work together to accomplish that plan, and then plotting out what that will position the company for in terms of the next round, both sizing and what we might expect in terms of market receptivity if we're successful accomplishing these milestones before we go out to the next round.

VN: What does it mean for the smaller firms that can't put a lot of money into a company? Are they priced out of some of those rounds when one of those big firms comes in and puts money in at huge valuations? Does that make it harder to invest in some of these companies?

RH: Certainly, competitive pressures and market dynamics factor into how we think about the world. It just challenges us to be really clear in both how we articulate the value we can bring as an investor and we’ve proven that with every entrepreneur that we had the privilege to back. We're very comfortable always telling entrepreneurs: “Don't take our word for it. Any entrepreneur and venture investor can boast about their successes and that they've done this or that,” but having them talk to and interview CEOs and entrepreneurs that we backed on our prior ventures and take their word for it, we always encourage any company that we're working with to talk to other investors and make sure we’re the right fit. We always advise entrepreneurs to build a syndicate for their financings. It's always helpful to have other perspectives and investors around the table and the companies that often are most well positioned are really thoughtful and are able to build a syndicate of complimentary investors that can bring different networks to bear, both with regard to building the business as well as financing the business in the future. So, it’s the opportunity to figure out how we can be a complimentary partner. Sometimes we are the lead investor, sometimes maybe we're a co-investor in a smaller piece of financing, but really thinking about the different roles we can play and, no matter what role we're playing, making sure that we're being thoughtful and delivering on the complimentary value that we can bring.

VN: Venture is a two-way street, where investors also have to pitch themselves. How do you differentiate your fund to entrepreneurs?

RH: It goes back to where we started the conversation, talking about what Rev1 is. As a firm that's positioned as a startup studio, having both this talent network, this customer connection network, our mentor network, those ingredients, when brought to bear in a thoughtful manner, really do provide a lot of value for entrepreneurs. We've seen that day in and day out with our work, where we can help the team hire the next key role to be part of their organization, and we can help make a few introductions that can turn into either customer relationships or really valuable feedback, in terms of, “your product is really interesting, but you really need to think about these features that are going to be really important to organizations like ours.” So, being able to deliver on those capabilities that we talked about, and having entrepreneurs that will talk with other entrepreneurs about their experience working with Rev1, bringing those capabilities and opportunities to bear, that's the most compelling thing for an entrepreneur to hear. That would maybe convince them that a Rev1 is a really good team to partner with.

VN: What are some of the investments you’ve made that you're super excited about? Why did you want to invest in those companies?

RH: One of the companies that I cover is called Basking Biosciences. This is a new stroke therapy that we invested in 2020 and we have a really great CEO, a gentleman by the name of Richard Shea, we've got two great scientific co-founders, Dr. Bruce Sullenger and Dr. Shahid Nimjee, and this has the potential to advance stroke therapy which really hasn't seen a lot of innovation in treatment options over the last 20 years. 

It’s an Ohio State University and Duke University spin out, so that fits in one of the core themes I mentioned of looking to create spin out companies, commercializing innovations developed in our research partners. We think this company has some really interesting potential, and a really strong leadership team, as I mentioned, and some strong investors that are partnered with the company and with Rev1 in support of the company's growth. So, one such investor is a group called Broadview Ventures out of Boston, so that's really exciting too, having a Boston-based investor comeand find an opportunity in central Ohio, commercializing an opportunity that has some of its origins here. It’s exciting seeing what this company can accomplish in terms of bringing this to market, and potentially having a tremendous impact on stroke patients’ lives.

I'll mention a company called Healthy Roster. This is more on the digital health side, and it's an actual company we've been working with for a while. It's an example of a company that had initial success in one market segment and now sees some significant growth opportunities in another segment. So, what Healthy Roster does is it provides athletic training and health care-based EMR product, both to athletic teams at the high school, collegiate, and professional level ,and it also now is providing this virtual athletic training service to workplace safety. That's a really interesting growth area; if you think about industrial positions where there's all kinds of repetitive use and injuries that occur on a job, the biggest companies may have a workplace worksite clinic but, oftentimes, you're taking someone off the line, they need to go to a clinic off premise so you're losing time and that worker isn't getting treatment quickly. Healthy Roster, both through a mobile application, and through a kiosk-based system, is able to triage that injury at the workplace, figure out if there is some immediate treatment that can be provided, or if there's a follow-up needed. They’re consulting live through a video-based visit with an athletic trainer, and that's really providing both prevention of a worse injury from occuring if that person would just keep straining on the line, and also getting that employee treated faster and, hopefully, back to work and healthier faster. So, I'm pretty excited about the outlook for that company.

VN: What are some lessons you learned?

RH: I started my career in financial services at Nationwide Insurance here in Columbus, Ohio. I started out doing M&A work and that was really the role where I got my first opportunity to get involved with early stage venture investing. This was in the late 90s, early 2000s, so the first wave of the internet boom and companies like Nationwide were trying to figure out, “what does this mean to us?” The first wave of new, internet-based financial services companies were coming out and incumbents were really trying to figure out what this meant for them. So, I got to work with some of my colleagues at Nationwide exploring partnerships and strategic investments in early insurance-related technology companies. So, that's when I had the opportunity to make my first venture capital investments at Nationwide. That expanded into a more formal corporate venture capital fund that we developed, and I worked on that for a number of years. I did have a stint as a CFO of a company, and enjoyed that experience but really missed early stage technology investing. So, back in 2012, I had the opportunity to join Rev1 Ventures and take on this role with their investments work, and that's been a great run over the last almost 10 years now since I joined Rev1 and have been doing the work I’ve been doing.

The most important thing I learned since taking on this role is the importance of having a great team to work with and really being comfortable in the work that we do not having answers, and both knowing that need to find those answers with your colleagues, with experts outside your firm, and just through a real high degree of curiosity and desire to learn. So, just being comfortable not knowing things has probably been the greatest learning over the last 20 years, and really just being excited at the opportunity to learn and fill a gap in your understanding of how the world works, how technology works, and how a company can be successful in something that's very new.

VN: What excites you the most about your position as a VC?

RH: I get to work with brilliant people. The entrepreneurs we work with, the inventors and scientists at the research institutions, getting to work with people that really are just preeminent in their fields, and being able to listen to them, ask them questions, hear what their perspective is on where their research is going or where their industry is going. And then getting to partner with them, and trying to help them figure out the business side of commercializing the technology or creating a new company, the planning and strategies that go into that, be it raising capital, developing budgets and plans, thinking about connections and things that can increase the probability that they'll be successful. That's really the part I enjoy: getting to work with brilliant people and trying to add value to their efforts to build great companies.

VN: Is there anything else that you think I should know about you or the firm or your thoughts about the venture industry in general?

RH: I would just encourage entrepreneurs, in this age of mobility and virtual and hybrid work models, to think about opportunities in Columbus and Ohio and in the Midwest, broadly. There's tremendous talent and opportunity here, there's some great investment partners in this region, and it's just a really exciting time to be building a business in Columbus and Ohio. I  encourage entrepreneurs to think about this part of the country when they’re thinking about where to build their company.