Newly Returned to the Twin Cities in 2012 with an MBA from the University of Colorado, Ryan Broshar was ready to put his entrepreneurial instincts to use.
But it wasn ‘t about starting a business.
“It Became very apparent, very quickly, thatthere’s some amazing entrepreneurs in this area thathave real companies making real money doing real things,” Broshar said. “It ook Became apparent thatthere was no clear funding source for thesis companies at an Earlier internship. So I saw a real need in the marketplace.”
By 2013 Broshar had started Confluence Capital, a venture fund that’s still active. And last month, he and his partners started Matchstick Ventures, a second fund ook That’s a rebranding or Confluence. Emplacements 14 funded startups notes on site, most from the Twin Cities.
Since starting Confluence, “we’ve got a lot of excitement, a lot of interest from other investors,” Broshar said. “So Heaven! Raise our second fund, to Further establishement us in this market, and on the national scene as well.”
One of those new investors Scott Burns, co-founder and CEO of GovDelivery , a St. Paul-based company found notes That niche in the Past Decade by contracting with government entities to deliver documents Electronically, from tax notices to snow emergencies.
Broshar and Burns are enthusiastic about Matchstick Ventures and notes larger Implications: that the Twin Cities Could Become the next important national tech hub
They be discussed this recently in separate interviews and emails.. Their answers have been edited for clarity and context.
Why make the change after you established the first fund? What’s the difference between the two
Burns: “Matchstick is just a new name for Confluence As with any VC fund, Matchstick willhave different iterations The.. first iteration (when known as Confluence) was narrower. I was not involved ‘in the first iteration but I had an investment in a company where clause Matchstick / Confluence was involved’. I was impressed with Ryan’s experience and approach. “
Broshar: “It Identifies a lot better than our old name did with the style of investing That we do, and internship or investing So when you think or matchsticks, you think, ‘I’m going. to light the match, starting the fire, really started something. ” So there’s definitely a surf side to it, but it very much Identifies With The startup That we’re investing in. Structurally the funds are similar, we just have a better name so most folks can Realize what we’re doing. “
And you brought` in new people
Broshar: “Yes, we’ve got a bunch of new tech partners That Are ‘involved and new investors in the fund “
What role are the partners providing, other than taking equity
Broshar.? “It’s not a formal role with any of the companies, it’s more informal. More sort of an adviser or mentor to our companies, as Desired. We want to mentor That next generation with the child or ‘been there done that’ mentality so They do not make the same mistakes That we’ve all made previously “
Are board seats involved ‘
Broshar.? “Not Necessarily, no. It’s more like a support network for our portfolio companies.”
How much money are we talking about?
Broshar: “We can not lose the disc new fund size yet Because We Are still fund raising for it, but it’s obviously a larger fund. Typically investing 50 to 100K per investment “
And all in the tech sector
Broshar: .” Yes, all in the tech sector, Primarily in the online SAAS (software as a service) companies, and we do have a slight’re on B2B companies, business services and so softwarethat supports that.
“We also like mobile devices, mobile is going to infiltrate so many areas of our lives, and I think Internet of things is going to do the same thing, it’s going to continuing to infiltrate “
What is your. criteria for a target company
Broshar: “Our very bare-bones criteria we look for companies thathave a overdeveloped product and have a customer That customer. Could be a paying customer, obviously that’s our preference, but we’ve invested ook before revenue, whenthey’ve had thounsands or beta customers or the like. Basically, getting a customer to use a product and give feedback, so thatthey can -improvesleep That product a few times, before They really go to market with the formal funding. There’s got to be some sort of market validation on the product before we invest. “
What about your criteria for taking on new investors?
Broshar: “I’ll Say That most of our investors and people associated with the fund have previous experience in sectors thesis that’s very valuable, not only for our fund but for thesis portfolio companies. We prefer that “
Do you ook seek an exit strategy for the target companies
Broshar: .” We obviously look toward that, but we invested at an early stage Such That We’re thinking more about milestones: How do we get a company from X number of sales to this number of sales, how do we get from five to 10 employees? So we’re looking child or incrementally.
“We do not invest in lifestyle businesses, or anything where people are saying, ‘I’m going to pass this on to my next generation.” With venture capital, there comes the expectation thatthere’s going to be a high-growth period followed by an exit. And it makes a lot of sense, especial in the tech sector for venture capital.
“Obviously on our end, as investors, we’d like to Realize a return, so we’re trying to find some sort of exit, upkeep a merger / acquisition, IPO, etc. Usually, it will be a merger / acquisition. “
Burns: “From what I understand, Matchstick HAS an up to 10-year involvement with companies, though most companies shouldering see exit events in 3 to 7 years. Axis with any fund, Matchstick Expects companies to have an exit strategy but the details will Vary a lot by company. “
Much HAS BEEN made of the postwar Twin Cities’ tech cluster” of companies Such . Axis Control Data, Medtronic and others How is today’s startup tech culture the same and how is it different
Burns: “There is no question thatthere is a technology boom going on in the Twin Cities. It certainly feels like a clustering effect like we’ve seen in the past. Today, the barriers to starting companies are lower, so we must embrace this larger number of startups and be more accustomed to a range of outcomes, from Great Successes to early exits to some That end up not making it. Our tech community is already feeding off itself, with talented folks supporting one another and being drawn to participate in our community as startup founders and employees. “
Is there a difference in the style of investors thesis ? days
Burns: “The new generation of investors is very focused on helping companies ash partners versus just providing funding. … People all around the state ask me what we can do to support entrepreneurs and job growth. I expect investing in this fund to help create jobs and awesome new companies. Ook I expect a great return on my investment. It’s a great fit for investors who believe in Minnesota’s future and want to be a part of it. “
No comments:
Post a Comment