Kansas City companies need to buck the Midwestern, risk-averse mindset and sell audacious plans to investors, said John Fein.
“I would just love to see more crazy ideas, more big game type ideas,” said Fein, founder and managing partner at Firebrand Ventures. “We invest when [the startup] starts to generate revenue, so they have to also demonstrate that they can execute on a short term strategy, but long term, we would love to see startups, in general, just thinking bigger.”
“Maybe in the past startups haven’t been willing to do that because they didn’t think that investors would support it,” he added.
Click here to read John Fein’s tips for raising a round in the Midwest.
The venture firm invested in its 20th portfolio company in late 2018, said Fein, noting plans to dip into the firm’s second fund — an as-yet undisclosed amount — to augment its portfolio with an additional eight to 10 companies in 2019.
“We would love to add more Kansas City companies,” he said. “We obviously have to be disciplined to our investment criteria next year and they have to be a good fit for us, but I would like nothing better than to add to those four Kansas City companies that we’ve already invested in.”
Click here to read more about Firebrand’s initial, oversubscribed seed fund of $17.7 million.
Firebrand already supports KC-based firms FitBark, Sickweather, Super Dispatch, and Zohr, he added, with the rest of the 20 spread across “the greater Midwest” area. Zohr was recently selected as one of Startland’s Startups to Watch in 2019.
Firebrand was founded in 2016 to address the need for seed capital in the metro, said Fein, noting Kansas City has made marked improvement during the past three years.
“There are several new funds that all have sort of different approaches. In addition to the funds, you have individual angel investors and family offices — all of whom are much more active today than they were three years ago,” he said. “I just think that’s a huge positive for Kansas City and I think that has been reflected in its growth. I’ve been involved in the startup community since early 2012 and it is just leaps and bounds beyond where it was at that point.”
“It’s a completely different community,” he added.
Growing further comes down to investors and founders both taking more risks, said Fein, also noting a need for increased corporate engagement in the startup world.
“[Companies like Black and Veatch] have done a phenomenal job partnering with startups and I would love to see other corporations in Kansas City follow their lead and be a lot more proactive about partnering with startups,” he said.
Kansas City is only six or seven years into a 20-plus year entrepreneurial ecosystem cycle, he added.
“I’m personally impatient in nature, so I would love to see it happen tomorrow, but part of it is just — this is where we are in our maturation as a startup ecosystem,” said Fein. “All of these areas will continue to improve.”
Firebrand portfolio company and Austin-based tech firm ScaleFactor recently announced a $30 million Series B funding round, according to Fortune magazine.
“The VC that led this round — Bessemer Venture Partners —is the oldest in Silicon Valley and one of the largest funds. Firebrand is thrilled to co-invest with them as we all support ScaleFactor’s incredible growth,” said Fein.