An opportunity to deliver exponential impact in a community committed to entrepreneurship has resulted in the launch of Target Hill Capital –– an outside-the-box venture capital fund, Marshall Dougherty said.
“When we were involved [with previous startups], we compared notes and surveyed the startup ecosystem in Kansas City,” Dougherty said of the events that led he and his partners –– Jim Ferree, a former NASA designer, and Brendon Barker, a veteran Kansas City attorney –– to found the investment fund.
Deposited into the startup ecosystem in January, Target Hill aims to fund early-stage companies that have grown past the “friends and family” investment stage, but aren’t yet large enough to launch a round of seed funding, Dougherty explained.
“There’s not a lot of folks doing that,” Dougherty said in response to the size-based capital cap. It’s the first of three investment pain-points he and his partners identified, as well as an understanding that will set Target Hill apart from other Kansas City investment funds, he said.
Adequate opportunities to vet companies before investment and helping investors become comfortable with the risk profile attached to investing in early-stage companies were also identified by the group, Dougherty said.
Lacking a track record that could leverage support within the investment community, Target Hill needed to explore new ways of reducing volatility in early-stage investing, Dougherty shared. The investment fund offers VC holding and high-quality, income-producing multi-family real estate assets in order to mitigate risk and balance its growing portfolio.
“You have to convince folks that, ‘Hey, this is a good idea’ and we have the requisite expertise and ability to be successful at it,” he said. “We’ve found bolts on both sides. You’ve got to develop relationships with people and have them put their faith in you.”
So far, the structure of the fund has returned success, Dougherty said encouraged.
“We’ll have some announcements [soon] that will provide evidence of success, we’re really excited and we would like to think we’re on the right path as a startup ourselves.”
Target Hill Capital current portfolio is on track to earn a 12 percent cash-on-cash return by the end of 2018, according to a company-issued release.
Current portfolio companies include:
- Digital Baron – A powerful text-to-order and payment tech platform using standard smartphone capabilities that targets the fast-food and quick-service restaurant markets.
- PlanIT Impact – A SaaS model platform that calculates and analyzes the impact energy, water, stormwater, and transportation design decisions have on building performance and efficiency.
- Blipd – A location-based augmented reality mobile app development company – Blipd allows you to create, share, discover and connect with the important people and places around you.
- Tweedl – A mobile app created by the former CFO for Sean “Diddy” Combs that connects aspiring music artists with music lovers everywhere, empowering users to select the next hot artists and boost their influence as tastemakers in music.
- Novel Growth Partners – A flexible capital firm working to improve access to capital for companies in under-served markets.
- Vesta Realty LLC – A boutique privately held real estate investment firm that focuses on the acquisition and management of opportunistic and value-add multifamily properties (through which Target Hill invested in Jenk’s Best Living LLC and Bixby’s Best Living LLC).
The right investment isn’t always local, Dougherty noted. However, to receive the support of a Kansas City fund, each company should establish a presence in the City of Fountains. It’s a requirement for any investment made by Target Hill, he said.
“[Our partners] are focused on Kansas City … It’s where we live and work,” Dougherty said. “In our hands-on approach, it makes it much easier if [companies are] local, but [if they aren’t] we have a desire to have an impact on our community and to create opportunity and to create value here in the community.”
Gaining notoriety, Target Hill portfolio company Tweedl is in the early stages of identifying its Kansas City presence, Dougherty said, using the New York City-based company as an example.
The entrepreneur-turned-investor is currently partnering with a local university, to establish a student think tank that will help the company test its app, that’s been compared to a hybrid of dating-app Tinder and NBC reality competition show “The Voice.”