There has been a big debate over the last few years over whether the Series A crunch is real or not.
What everyone can agree on, though, is that there are definitely more seed and early stage funds now than ever before, and more people willing to give money to young companies looking to make it big.
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.
In addition to being co-founding partner of Venture51, Zeuner also co-founded Republic Project, a cloud-based rich media ad platform which was acquired by DG MediaMind in 2013.
He did software marketing and sales at Interact Commerce and was part of the founding team at Flypaper, as a founding executive charged with growth.
VatorNews: What is your investment philosophy or methodology?
Brandon Zeuner: Venture51 is a modern, early-stage VC firm uniquely focused on investing in the most promising founders in high-growth markets at the Post-Seed Round” traction stage.
We bring our own entrepreneurial experience, relationships, and product/marketing/distribution expertise to the table. We back passionate and experienced entrepreneurs who are focused on creating highly scalable technologies and significant value propositions for their markets.
The firm's strategy centers on investing after product-market fit at what is often the inflection point of value in a startup. We aim to be the last “cheap” money invested in a company before a “super-sized” Series A Round. This approach provides founders with greater ownership and control of their destinies, and leaves optionality as they scale up.
VN: What do you like to invest in? What are your categories of interest?
BZ: Venture51’s overall investment domain is “Information Technology” with specific focus on Mobile, Internet and New Commerce startups for consumers + enterprise.
VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?
BZ: We’re proud of all the companies in our portfolio, but some notable companies are; Dollar Shave Club, A Plus, Reserve, Life360, Betaworks, Doubledutch, Betable, Classy, Getaround, Classpass and Etoro.
VN: What do you look for in companies that you put money in? What are the most important qualities?
BZ: We rely heavily on traction. Healthy traction demonstrates product/market fit and is valuable in evaluating a company's potential long-term viability. Traction is quantitative evidence of market demand. Ideally, it should communicate momentum in market adoption. Once we’ve identified a company with traction is comes down to the founders (team) and market.
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?
BZ: Broadly, we find traction most convincing in the following order: profitability, revenues, active users, registered users, engagement partnerships/customers, traffic.
For Venture51, the traction viability equation, in the majority of startups, will come down to balancing two variables: Cost to Acquire Customers (CAC) and the ability to monetize those customers, and retain those customers (hopefully with a multi-year value proposition and positive CLV)
VN: Tell me a bit about your background. Where did you go to school? What led you to the venture capital world?
BZ: In 2008, Ryan Swagar and I co-founded Republic Project, a cloud-based rich media platform. Spun out of Venture51 Labs, Republic Project was backed by Google Ventures and was recently acquired in 2013 by DG Media Mind (DGIT). In 2010, Ryan and Brandon formed their first fund under the existing Venture51 brand, creating a modern venture capital firm that has invested over 60 companies in three Funds over the past 5 years.
Ryan Swagar, for his entire career, has been a serial entrepreneur in the technology and internet-based-business-model space. He began his career working for a private family office managing investments across North America. In 2004, he co-founded a media company that had an innovative approach to delivering online video content. In 2008, Ryan co-founded Republic Project, a rich media ad-tech platform, which was acquired in 2013 by DG Media Mind.
Prior to co-founding Venture51 and Republic Project, I was part of the founding team at Flypaper where I was charged with growth. Flypaper, a rich authoring platform, found early success and was acquired by Trivintis in 2011. Before Flypaper, I was part of the high-growth juggernaut Interact Commerce Corporation, before Sage acquired in 2001, where I held various executive roles in sales, marketing and product for the SalesLogix and ACT! product lines.
VN: What do you like best about being a VC? What makes you excited?
BZ: John Doerr at Kleiner Perkins said itbest: “If you can’t INVENT the future, the next best thing… is to FUND it.” We agree!
VN: What is the size of your current fund?
BZ: $30 million
VN: What is the investment range? How much do you put into each startup?
BZ: Between $500,000 and $1 million is our investment range.
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?
BZ: Our target is to grab 5% ownership in our initial investment and then maintain that ownership beyond the B round of financing.
VN: Where is the firm currently in the investing cycle of its current fund?
BZ: We are 1/4 of the way through Fund III.
VN: What percentage of your fund is set aside for follow-on capital? What is the size of the fund?
BZ: More than 50% of the fund is set aside.
VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?
VN: In a typical year how many startups do you invest in?
BZ: It ranges, but anywhere eight to 12 companies a year.