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Bascom Ventures is a UW alumni venture fund investing in UW alum-led companies
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.
Baker has spent much of his career growing business in the electrical products, packaging, and chemical industries. Throughout, he has been buying, selling, and combining companies to fit strategic goals as an executive for public and private companies. Greg has also held a variety of board positions.
Most recently, he served as President and CEO of 2D2C, Inc. At 2D2C, he created a company that develops safer energy-saving products through innovative technology. Greg was also VP Corporate Development and Acting Division President for a high-tech subsidiary at Woodhead Industries, Director Corporate Development for Tenneco, and Financial Analyst for AlliedSignal, among others.
Baker has a BS in Mechanical Engineering from the University of Wisconsin (’86) and an MBA from the Fuqua School of Business, Duke University.
VatorNews: What is your investment philosophy or methodology?
Greg Baker: First and foremost, we look for investments with a University of Wisconsin (UW) connection. From there, it depends on the stage of the deal. Bascom Ventures is stage agnostic, so when we’re looking at a seed round versus a Series B or C, the priorities might be a bit different.
For example, when looking at a seed investment, a lot of it is on the team. A great team is going to find the right fit for their technology and work through issues. However, with a Series B, the philosophy becomes more focused on how the product or service is being accepted in the market.
Regardless of stage, it’s important to note that we always look at three critical areas: 1) The idea - we are looking for big ideas that have the opportunity to disrupt an industry, 2) A strong team that works well together, and 3) A good deal with a smart financing structure.
VN: What do you like to invest in? What are your categories of interest?
GB: Bascom Ventures likes to invest in a portfolio that’s diverse in industries and stages. We are looking for great ideas almost anywhere. As a mechanical engineer, I have a personal interest in manufacturing technology and robotics.
VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?
GB: We’re proud of all of our first investments at Bascom Ventures: Healthmyne, Markable and Highly. They all have incredible teams--both smart and dynamic. And they span a variety of emerging and hot industries such as SaaS, Artificial Intelligence, and Healthcare IT.
VN: What do you look for in companies that you put money in? What are the most important qualities?
GB: At different stages, we look at different metrics and milestones. However, regardless of stage, there are three important qualities: big ideas, strong teams, and a good deal.
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?
GB: It depends on a number of factors. It can vary based on the company’s stage (are we looking at customers versus order volume). It can also vary by industry and market.
For example, when a company is raising a seed round, it’s great to see some customer traction and a proven market fit underscoring that this is more than just an idea.
VN: How long does it take before you meet a startup and make an investment? How do you conduct your due diligence?
GB: We only invest when there’s a strong lead--which means terms are negotiated and established. We don’t lead rounds, set valuations, or take Board seats.
When we take a serious look at a company, our deal team will write an independent report, and then the company presents to our Investment Committee. That group is composed of 10 – 15 experienced business leaders (generally alums) with long careers in investment and entrepreneurial ventures.
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 need to be to get their Series A round?
GB: These terms are used differently across industries, firms, and geographies. We evaluate stages as less about the money than about development. So seed rounds are a time when a company is still figuring out their business. The company/team is in the early stages of identifying a problem and a solution and is just getting the solution off the ground. That process might take several seed rounds.
Series A rounds are when a company is transitioning into growth phase, 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?
GB: I earned a degree in mechanical engineering from the University of Wisconsin and then received my MBA at Duke University. I spent the majority of my career growing business in the electrical products, packaging, and chemical industries. But throughout, I have been buying, selling, and combining companies to fit strategic goals. From founding to scaling to investing in companies, I have paired that experience with my long-standing ties to the University of Wisconsin. Having sat on both sides of the table, starting Bascom Ventures was a natural progression of my career.
VN: What do you like best about being a VC? What makes you excited?
GB: What I like best about VC is talking to entrepreneurs about what they’re working on. It’s really special to see their excitement as they talk about their dream. What’s even more exciting--and rewarding--is to be one of the people who can help move their dream forward.
VN: What is the size of your current fund?
GB: We’re still in fundraising mode, but Bascom Ventures is targeting to be a $4-5 million fund.
VN: What is the investment range?
GB: Bascom Ventures will invest between $150,000 to $500,000 per company as an initial investment.
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?
GB: We don’t look at percentage. It’s all about funding great companies and investing in them at a compelling price.
We consider the valuation of a company and the state of its progress.
VN: Where is the firm in the investing cycle of its current fund?
GB: We’ve made a couple of investments, but we’re still early in the investment phase, aiming for a portfolio of 15-25 companies.
VN: What percentage of your fund is set aside for follow-on capital?
GB: We will set aside 5 to 10 percent for follow on rounds, but in some cases we’ll invest from our current annual fund.
VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?
GB: We invest in all rounds. We are stage (along with geography and sector) agnostic. Our focus is on great teams, good traction and a fair price.
VN: In a typical year how many startups do you invest in?
GB: Bascom will invest in 15 to 20 startups during the year, with a total portfolio of 15 to 25 companies.
VN: Is there anything else you think I should know about you or the firm?
GB: At our core, we are a UW alumni venture fund investing in UW alum-led companies. Bascom Ventures was created to enable UW 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 UW's entrepreneurial ecosystem and the next generation of UW entrepreneurs.
- The power of our model is the huge community we’re building to source deals, refer investors and entrepreneurs, and socialize the fund.
It’s also important to note that Bascom Ventures is not affiliated with or officially sanctioned by the University of Wisconsin. 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.
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