Wednesday, January 17, 2018
Kickstart's Gavin Christensen On A New Fund, And Utah's Startup Success
Salt Lake City-based Kickstart Seed Fund (www.kickstartseedfund.com) just announced a big new fund this morning-- a $74M seed investment fund—based off of the big success the firm has had in finding startups in Utah and the rest of the region. We caught up with Managing Director Gavin Christensen to hear more about the new fund, as well as why the firm is bullish on the prospects for startups in Utah and the broader region.
Congrats on the new fund! Tell us a bit about this new fund?
Gavin Christensen: We're excited about this, which is a big milestone. It's our fourth fund, and it shows the progress of Utah and the ecosystem here since we started in 2008. Our last fund was $39M, and this one is $74M, so we're very excited that we've been able to stick with the strategy of investing in seed stage companies in our region. This allows us to put significant dollars into startups that are breaking out, and raising money from some of the best funds in the world. It's really a mark of how much progress this area has made in startup. There are so many great opportunities in the region, and this also marks our support from our institutional limited partners, and also confidence in the successful companies here on their ability to attract a lot of outside capital.
Tell us a little bit about the ecosystem here and how it's grown since you started?
Gavin Christensen: When we started Kickstart Seed Fund, in 2008, it was a hard time. There was a slowdown in many parts of the country, and when we were trying to raise that fund, everything had stopped. We slogged through it over two years to get that $8M fund done, and luckily, since I was part of another fund at the time, that helped bridge that gap. It happened, despite setbacks and the dot com bust. Since then, there has been a huge quantity and quality of startups that have come up here, and lots of folks who have seen success in the game, and many people who decided they'd rather be an entrepreneur, rather than a management consultant or investment banker. That has resulted in some great companies here, particularly in the software and in SaaS businesses. What's cool, is there's now a whole new layer of companies coming up under those companies, companies like Brainstorm, Lucid Software, and others. For us, I'm really happy the ecosystem has become what it is.
So, for those startups interested in funding from Kickstart, tell us what you're looking for?
Gavin Christensen: That's a great question. Our strategy, and what we believe in startups, is that your most important weapon is your focus. We're going to keep doing that. Our focus is on investing in the best entrepreneurs in our region, which we think is underserved in terms of investment dollars. It's the same stage, the seed stage, though we'll also be doing some pre-seed funding. When those companies break out, we now have the funds to follow through with significant dry powder. What we have done, historically, has been B2B software, with some consumer and healthcare investments. We'll continue to be doing those categories. We've also added Curt Roberts as a Partner, and his experience as a senior player at Nike will allow us to continue to broaden our reach in the consumer space.
What's the biggest lesson you've learned since starting in 2008?
Gavin Christnesen: Our culture has been shaped by our experience. Every startup has a narrative that helps create the culture. Being a venture fund, in an out-of-the-way place , started during the great recessions, has made us very self-sufficient. We tell our entrepreneurs, there is no guarantee of a follow up investment, and so they have to figure out their business with our money. We have that same culture. Our companies, now, can thankfully raise money from a lot of great places now, but it's still important that companies figure out the unit economics of their business from the start. They have to have the efficiency metrics down, which allows them to grow, and allows founders to control their own destiny. There was a period in the go-go days a few years ago where that though was seen as sentimental. I am happy to say, however, that unit economics, efficiency, and profitability are back in vogue. That's always been a part of our culture, and that's the way that entrepreneurs can control their own destiny: by not needing money. Generally, that means profitability.
It's not just about massive growth and venture returns, as a startup, you need a business model where you can sustain yourself. I think that's probably the number one thing we've learned. One other thing I'd emphasize, is we're pretty choosy about who we work with. It's really about finding the entrepeneur ready to embrace the journey, who really wants to solve the problems at hand, who have grit as founders. As has been defined by a popular book, it's about passion and perseverance. It's so hard to be an entrepreneur, you need to find people who have an unreasonable desire to be successful, and to solve problems, and to get through tough times. The brand of our firm, is we want to do that with people who are really committeed, and who we never have to doubt. We want to let you know we're committed, and that the journey can also be fun and enjoyable. That's what we love to do, is help in that process, and be part of it.
We see you have some notable Utah entrepeneurs joining as Limited Partners (LPs), talk about those additions?
Gavin Christensen: Most of our money is from institutional investors, but what's cool about Utah, is we have entrepreneurs who have been successful, who are interested in giving back, and helping out the next generation. As our fund shows, many of our limited partners are entrepreneurs who have had their own success after we invested in them, and they're now coming back as LPs, so they can invest in other entrepreneurs. It's a way to channel their time and resources and make a difference. It's nice to get the feedback that they liked the way we treat entrepreneurs, and that we were a value and help to them.
Thanks, and good luck with the new fund!