1Mby1M Virtual Accelerator Investor Forum: With Mark Selcow of Costanoa Ventures (Part 3)

Sramana Mitra: There’s another company that I encountered. It was an Australian company that also did very well starting in Australia. It was also this mobile temporary workforce management type of thing. Have you seen this company called Deputy?

Mark Selcow: Yes. Deputy has done really well.

Sramana Mitra: Yes. I love these kind of stories of companies that are developing outside of the core circle Silicon Valley ecosystem doing really well. Then they come into Silicon Valley. Sometimes to other parts of the United States and raise money with proven products.

Your story resonates with me. We did a very large story on Deputy a couple of years ago.

Mark Selcow: We’ve invested in three Australian companies – Skedulo, Bugcrowd, and Propeller. There’s an explosion of company formation there. I’ve been really curious why. Maybe it’s the post-Atlassian effect where people saw that a multi-billion dollar, mission-critical, and an amazing company with really cool founders was created in their hometown. We’re seeing really interesting things.

For example, Skedulo’s engineering teams in Brisbane attract the top engineers from the University of Queensland. The Australian Government offers a really attractive R&D tax credit. So, there’re lots of reasons such as recruiting, labor retention and doing it cost-effectively so that investing outside of Silicon Valley or outside of San Francisco could be really attractive.

All three of the Australian investments that we’ve made are thriving.

Sramana Mitra: Very interesting. Are there other pockets that you have discussed in your work? I know you invest all over the United States.

Mark Selcow: Yes. We’re in Boston, New York, and Toronto. We have a Swiss investment. We’re active, especially on the East Coast in New York. I’ve spent some time looking at companies in Atlanta, which gets to the second company I wanted to bring up called Lively. Lively is in San Francisco now.

So, it’s a bit of a departure from what we were just talking about. However, it’s in an area that I’m personally excited about which is FinTech. I first got interested in FinTech because at Merced Systems we have lots of financial services customers who would use our software in their call centers.

I saw from the gritty underbelly of the processing environment that the claims and transaction environments in call centers are a crazy litany of systems that had to be integrated with and normalized for the purpose of getting work done. That had me leaning forward, particularly into insurance and banking. When I heard about Lively, I got very excited.

Lively is much like an HSA bank that you would see with a traditional banking company like Wells Fargo. What got us excited and got me personally excited was the rise in high-deductible health plans as a strategy for bending the cost curve and helping reduce the burden of healthcare costs on the overall economy.

The strategy was arming consumers with a little more motivation to be judicious in their healthcare spending and taking a play out of the 401K playbook. If a consumer’s employer or an individual on the individual marketplaces decide they want a high deductible health plan, they’re eligible to open an HSA bank.

If you do that, you can move money from pre-tax dollars into your bank account and then you can use that money to buy the healthcare services that you need at the doctor’s office, at the pharmacy, or at the optician. The money can be invested.

You can keep it long-term and make the most of those pre-tax dollars, you can spend it, or you can leave it in a deposit account. There are some very significant companies that exist in that sector, so I knew it was meaningful.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Mark Selcow of Costanoa Ventures
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