This Week @ The Garage SF (5/26)
Last Wednesday, 25 student startups competed for over $300,000 in non-dilutive prize money during VentureCat, Northwestern’s annual startup competition. Gearflow, a marketplace for construction equipment parts and rentals led by Kellogg candidate Ben Preston won first place and the audience vote, taking home $160,000. Second place and $58,000 went to Qade, a social gaming platform co-founded by Spencer Levitt (Weinberg ’22) and Austin Pager (SESP ’22). Tilt, a resource for low-income and first generation prospective college students founded by Kellogg candidate Sinthuja Nagalingam walked away with third place and $33,000.
Thanks to everyone who tuned in live to watch the final pitches and results! You can read a full recap of the event here. If you’d like to get in touch with any of the finalists or semifinalists from this year’s competition, let me know!
WILDCATS IN THE NEWS
Benepass, co-founded by Mark Fischer (’13), raised a $2.4 million seed round led by Gradient Ventures. Fischer serves as the COO of the company, which bills itself as “the benefits card for modern companies.”
From the article: “Benepass was founded last year by CEO Jaclyn Chen, CTO Kabir Soorya and COO Mark Fischer. Part of its mission is enabling small-to-medium-sized companies to offer benefit packages that can compete with ones at larger employers. In addition to its tools for tax-advantaged benefits, Benepass also enables clients to offer company stipends for perks like wellness programs.”
Congrats, Mark!
UPCOMING EVENTS
Friday 5/29, 12:30-1pm PST: Virtual Lunch & Learn with Jon McNeill (’89). Jon has founded and scaled six companies, led teams creating tens of thousands of jobs and delivered multi-billion dollar returns for investors. He has also operated at scaled companies leading hypergrowth in revenues and operations. Jon was President at Tesla from 2015-2018, before becoming the COO at Lyft in 2018. Last month, Jon announced the launch of DeltaV, an evergreen fund and platform building a repeatable process to create and scale breakthrough businesses that have a positive impact on the world. Join us for a conversation about his experience and advice as a serial entrepreneur. Sign up here!
JOBS / OPPORTUNITIES
Somewear Labs, co-founded by James Kubik (’14) and Alan Besquin (’14) is hiring a Product Designer and Marketing Lead. Apply here.
Capiche, founded by Austin Petersmith (M.S. ’11) is hiring a Product Designer. Apply here.
Overview, co-founded by Austin Appel (’15) is hiring Computer Vision Engineers. Apply here.
GIVES
Zack Moy (’11) has been organizing small gatherings with a specific, often difficult-to-discuss topic. His current sessions are centered around coping with loss, focusing on the effects of COVID-19. If you're interested in discussing the psychological and emotional aspects of the pandemic or know someone who might be, respond to this email or reach out to Zack at moy@u.northwestern.edu.
5 QUESTIONS WITH PATRICK EGGEN (NU ’98; KELLOGG ’04), CO-FOUNDER & PARTNER OF COUNTERPART VENTURES
1. How did Northwestern prepare you for a career in venture capital?
“I was fortunate to attend Northwestern both as an undergrad and graduate (Kellogg) student. I loved my time in Evanston as very impressionable years. My Northwestern years trained me to think critically and make decisions with imperfect information, a core skill of Venture investing. Additionally NU provided me with an invaluable and engaged network, one which has been immensely helpful to my development.
After Kellogg I joined Qualcomm Ventures, the corporate venture capital (“CVC”) arm of Qualcomm. Working with a small core team, we transformed it from a sleepy strategic fund into one of the top 3 CVCs in the world. We elevated the group to think with the mindset of a financial VC based on pure financial returns, domain expertise and activist investor role. I also launched Qualcomm Venture’s Bay Area practice and founded Qualcomm’s Global Early Stage Fund, the first of its kind at any corporate organization. This Early Stage Fund had multiple exits in excess of $1BN. We were the largest Series A investor in Zoom, led rounds in Cruise Automation (acquired by GM) and 99 (acquired by Didi) and early seed investors in Noom and Matterport. Additionally I was involved in our Ring investment (acquired by AMZN) and Waze (acquired by GOOG). I led the U.S. investment team and portfolio ($500M AUM) until 2018. Given our combined track record, my partner (Joe Saijo of Recruit Strategic Partners) and I were the rare CVC leaders to launch an independent traditional fund with external LPs.”
2. Tell us about Counterpart Ventures.
“We started Counterpart Ventures in early 2018. Counterpart is a San Francisco-based lifecycle venture fund, embracing a flexible funding model which creatively aligns with the needs of our portfolio companies. We aim to inject the optimal amount of capital, conscious of founder dilution yet arming founders with the right dry powder to scale their business to the next level. The nuances of this model are very different from the standard VC funding playbook.
We often invest $2M-$6M in B2B SaaS, mobility and marketplace technologies which target nontrivial problems or fill missing gaps in large markets. Today’s VC landscape is increasingly divided by microfunds (AUM sub-$50M) and much larger mega funds. Counterpart Ventures is uniquely positioned to price and lead rounds where others funds cannot or simply will not. We don’t require social proof by blindly following other investors, when we have conviction we are all in and prefer to lead rounds. We are not reactionary investors.
We help build companies by providing meaningful access to real customers and strategic partnerships. We are obsessed with brokering meaningful customer introductions to our portfolio companies. In fact our “Counter Club” represents the most active and engaged network of CVCs (150+ active partners) among any traditional VC firm.
We recently had a first close of Counterpart Fund II ($100M) and are now actively investing from that fund.”
3. What types of companies and founders do you invest in?
“I think first important to acknowledge what we don’t invest in. We avoid “shiny object” syndrome, specifically the pursuit of perceived hot companies or participation in a crowded investment syndicate, just so we are another name on the cap table. We are not “spray and pray” investors. Rather we focused on building a concentrated portfolio with meaningful ownership. We want to establish an authentic relationship with our founders and be aligned on day one.
We pride ourselves on investing in less glamorous B2B sectors. We believe unsexy is sexy. We also search for what we call the weird factor, what makes a founder so unique and perhaps why others don’t believe in you. We like founders with a little bit of weird and believe it is the foundation for a great narrative. Many of my best historical investments embraced this weird factor.”
4. What are some unintuitive or unobvious lessons that you've learned as a venture investor?
“(1) Ventures is a classic apprenticeship business. There is no simple playbook, no matter how many blogs you read. You will be lost without mentorship. Listen to them. Then pay it forward by mentoring others. Many times it takes a minimum of 5 years, if not 10 years, to determine if you are actually good at this business. It requires considerable time to build a meaningful investment track record. Keep in mind, the venture business is really hard. You learn by making and seeing mistakes. I made a ton early on in my career. It’s the only way you learn. Humility is key.
(2) You spend an inordinate amount of time with less successful portfolio companies. Keep in mind, the “loss rate” (investments which don’t return 1x capital) could be as high as 65% for Early Stage focused funds. The path to success is not a straight line. Many portfolio companies will face turbulence outside of their control and even multiple existential crises. As an investor or Board member, often you need to lean in and be much more involved during such difficult moments. The best investors earn their stripes during these times.
(3) Venture math is simple. If you want to win really big in venture, you need to be right when everyone else is wrong. Typically, the best early stage deals involve the most polarizing internal debates since these bets are so contrarian. My prior Zoom investment (2012) is a textbook example as only 3 team members pounded the table in support of the deal. The remainder of group was very lukewarm for all the obvious reasons. Fast forward several years later and this small Zoom investment is far and away the most successful investment in Qualcomm Venture’s history. Given Covid19, Zoom is now a fixture in the American household.”
5. Do you have any fundraising advice for early-stage founders?
“During early stage fundraising dialogue, I typically look for certain attributes in a founder. One essential and often overlooked skill is story-telling, the uncanny ability to craft a compelling narrative on why you are building something so unique. This might seem too cute, but storytelling serves as a wonderful proxy for many elements of company building: it is great indicator of how you will sell your vision to customers, partners, recruits, investors and ultimately an acquirer. It is also critical for founders to convey this narrative with utter conviction and authenticity, ideally they experienced first-hand the pain of the problem which they are trying to solve. At the same time, I like founders whom are coachable as collaboration and alignment with investors so important. It is so important to be flexible, iterate quickly and make decisions fast – decision fatigue can paralyze company building.
Finally avoid buzzwords and dropping unnecessary names or humblebrags during investor pitches. Be prepared, ensure proper fit with prospective investors and bleed confidence, but not cockiness. Fundraising is a very humbling experience as you could meet with 40+ investors before securing a lead investor. Recently I have been on the other side of the table raising our Fund II, so I definitely have more empathy these days.”
Thanks for the insight, Patrick!
Go ‘Cats,
Mike Raab
Director, San Francisco
The Garage
Northwestern University
mike.raab@u.northwestern.edu
323.929.3634
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