1Mby1M Virtual Accelerator Investor Forum: With Mark Hasebroock at Dundee Venture Capital (Part 3)

Sramana Mitra: At what stage did you encounter AddStructure and how did you encounter them?

Mark Hasebroock: We have an office in Chicago and I have a partner there. David is very plugged into what’s happening in Chicago. He heard about this at an event that he was at. He realized that it was something that could be a fit and just reached out.

Sramana Mitra: When you sold the company, what milestones had it gone through? How much money had you already put in? How much had the company raised in total?

Mark Hasebroock: I think they had raised $1.5 million in total. It wasn’t a huge amount.

Sramana Mitra: How did Bazaarvoice find them?

Mark Hasebroock: I think they saw the technology at a conference.

Sramana Mitra: Interesting. This is a very good segue into one of my observations. We are in 2018. A lot of stuff have already been built. There’s a tremendous amount of money chasing “unicorns” but there aren’t that many unicorn opportunities. There are unicorn opportunities, of course, but commensurate with the number of firms looking for unicorns, I think it’s a disproportionately big search.

In contrast, there are lots of niche opportunities out there. You could actually make very nice money by catering to these niche opportunities and seeking capital-efficient business building and early exits. It sounds like the case study that you just provided is a good example of exactly that.

Mark Hasebroock: It supports that very well. I couldn’t have said it better myself. I think that’s what we’re doing. Would we love to sell a company for a billion dollars? Of course. The problem in the capital markets for these growing companies is that the Series A funds are getting bigger and bigger. Therefore, their need to deploy capital is, instead of a half million dollar check, they need to write $3 million checks.

The seed becomes the critical piece when you truly can create the most value. For me, the valuations of the markets that we’re in is very reasonable. So invest at a reasonable value. Let’s grow the company. If the right acquirer comes along, because the bar has been set so low, you consider that opportunity.

Sramana Mitra: How many of the 30 odd companies have you sold?

Mark Hasebroock: We exited six companies so far.

Sramana Mitra: Can you talk a bit more about the ones you have exited similar to what you just took me through? Could you take me through a few more case studies. I think this is very interesting for our listeners to look at the different styles of venture capital. Obviously, we do our share of venture style stuff. The niche venture capital is very interesting to me.

Mark Hasebroock: We can’t disclose the companies and the amounts, but I can walk you through the transaction. They’re very similar to what we just talked about. Maybe just a little bit larger. They were anywhere from one year from investment to five years from investment. They had short time frames because opportunistic buyers showed up. We weren’t auctioning the business or anything like that.

I just don’t want our founders constantly looking over their shoulders thinking, “Should I sell my company now?” They should just operate and continue to grow. We’ll continue to provide the capital and also find strategic investors that are really good upstream partners. By being in Chicago and Minneapolis regularly, we have good relationships with Series A and B funds that they know when we show them something it’s not going to be a junky deal. For the most part, every deal was almost exactly like the one I described to you with AddStructure.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Mark Hasebroock at Dundee Venture Capital
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