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Founded by Ignition's Kellan Carter and Cameron Borumand, Fuse will invest in B2B software companies
When you think of venture ecosystems, the first that likely come to mind are the Bay Area or New York or Los Angeles. One that doesn't get as much attention is Seattle, though it should; after all, the city is the headquarters of both two of the largest tech companies in the world, Microsoft and Amazon.
The Seattle venture ecosystem is on the rise, with a record-high $3.59 billion invested in 2019, thanks to companies like Convoy, Outreach, Auth0 and Icertis, all of which raised rounds of over $100 million. There's obviously a big opportunity for investment in the region, and now two venture capitalists from Ignition Partners are striking out on their own to take advantage of it.
Kellan Carter and Cameron Borumand announced on Tuesday that they launched a new firm called Fuse Venture Partners, with a mission of investing in early stage, Seattle-based companies (there is no affiliation between the new firm and the already existing firm called Fuse Venture Partners).
Carter joined Ignition in 2013 and was made partner in 2018, while Borumand joined in 2017 and was promoted to principal last year. Part of the reason for starting the new firm, they told me in an interview, is that Ignition decided it would no longer be making new investments. That opened up an opportunity for a new fund to come in and fill that void.
"Cameron and I are so fortunate to have grown up at Ignition, learning from a two decade old firm with six separate funds that jas backed some of the world's most iconic modern enterprise software companies like DocuSign, and Splunk," Carter said,
"The senior partners at Ignitions are at a stage of their lives and careers where they weren't going to commit to another full fund life cycle, which can be over 10 years. And with that backdrop, Cameron and I saw a super unique opportunity to double down on the most exciting software ecosystem in the world, which is Seattle, and build a fund of our own."
Focusing on B2B software
While the founders wouldn't say how big they plan for their fund will be, they would tell me that they intend to deploy roughly $100 million over the next three or four years into about 12 to 15 companies.
The firm will have a specific focus on companies in the B2B software space.
"We’re looking to partner with early stage technology companies based in the Pacific Northwest, focused on similar themes that have worked for us historically. So, software that reinvents the modern economy. It’s clear that every industry and every role is being reimagined to do more with less and software will be the key enabler. And that will only be accelerated over the next five years," Borumand explained.
When it comes to verticals, though, the company doesn't plan to have a narrow focus, as "every vertical is being reinvented and reimagined with software as the focus in mind," Carter said.
"We're in the first inning of how software will continue to augment business processes and critically, if you think about AI and machine learning, the key question we ask yourself with each company is what is the quality and quantity of the data that they can collect over time?" said Borumand.
As the firm will have a focus on early stage investing, putting money into companies at the seed and Series A stages, Fuse won't be looking for any specific numbers or metrics, instead focusing on the team, he explained.
"We look for tenacity in the founding team and passion for the problem that they're solving but, most importantly, we look for teams that are customer obsessed. They should be absolutely obsessed with the value that their customers are getting from the platform and willing to go the extra lengths to make sure their customers are happy."
The number of venture firms in the U.S. more than doubled in less than a decade, going from around 1,000 in 2010, to more than 2,200 in 2019. That means there are not only more options for where limited partners can deploy their capital, but also more options for where companies can take funding.
For Fuse Venture Partners, part of what sets the firm apart from the rest of the pack is its focus on Seattle and the Pacific Northwest, which Carter called "the most exciting ecosystem in the world, and also the most undercapitalized."
"First of all, you have the two most important enterprise software companies in the world with Microsoft and Amazon that are a magnet for global talent. What's not keeping up with the talent and the amount of entrepreneurial activity here is capital, and nor could it. It's almost impossible with the amount of tech folks who moved to the Seattle region. And so, we're looking to fill the void with an innovative venture platform to grow and support the ecosystem for decades to come," he explained.
The other differentiation for Fuse is what he called its "unique platform," which includes the team that Carter and Borumand have assembled, which included Venture Partner and Seattle Seahawks captain Bobby Wagner, as well as Senior Operating Partners John Connors and Satbir Khanuja.
"Both Cameron and myself are complemented by two of the most remarkable operating execs that we added as operating partners: John Connors, who used to be the CFO of Microsoft and ran the world wide enterprise division. Also, Satbir Khanuja who used to run IMDb and worldwide marketing at Amazon. Second, we added a very unique talent with Bobby Wagner, who's an All Pro captain of the Seahawks but who also brings a remarkable network, incredible leadership and a winner's mindset to the Fuse platform."
"Gary and Nader have have taken a personal interest in myself and Kellan and have been mentors to us. As we set out to build Fuse we wanted to surround ourselves with folks that will help us build a meaningful firm, not just a single fund," said Borumand.
Finally, the last piece of the firm's differentiation comes from its strategic LP base, which includes current and former executives at companies in the Pacific Northwest such as Microsoft, Amazon, Nike, Starbucks, Costco, T-Mobile, Avalara, DocuSign and Smartsheet.
"The quality of the LP community that we've been able to assemble, C-level execs and former executives from the world's most iconic brands based in the Pacific Northwest, whether it's Costco, T-Mobile, Microsoft, Amazon, Starbucks or Nike, have really surrounded and backed Fuse in a meaningful way. And so, our thought process with this is that this recipe will have one plus one plus one equals five," Carter said.
Ultimately, as Borumand explained, the goal at the end of the day for Fuse "is to partner with and, more importantly, provide value to the entrepreneurs."
"The entrepreneur community in Seattle has really stepped up to help back and launch Fuse, combined with the business community. Now that we're clicking go, we can't be more excited to return the favor."
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