1Mby1M Virtual Accelerator Investor Forum: With Michael Smerklo of Next Coast Ventures (Part 4)

Sramana Mitra: Very interesting. I would definitely like to learn more about EverlyWell. I’ve seen a company like this – Iris Wellness, which dealt with the issue of the physicians not wanting to process. None of the physicians were equipped to deal with it.

I’m very curious about how she is handling the interface with the physicians. Eventually, this has to plug into the physicians.

Michael Smerklo: You have to understand that when you introduce this product, it might be a great product. To be able to think about what you relate to is great systems level thinking. How is the market environment going to respond to it? Great entrepreneurs think holistically about that.

Sramana Mitra: Why don’t we do another example? Then we’ll talk a few trend issues.

Michael Smerklo: Another example of similar characteristics is a company called AlertMedia in Austin, Texas. She is a serial entrepreneur. AlertMedia provides software solution for critical communications in a multi-modality environment.

They have a very light touch environment for companies from medium-sized businesses all the way to Fortune 500 to have a communication infrastructure for their employees for all critical communication events. They sell a SaaS solution.

Companies can then have communication with all of their employees across all modalities. That would be everything from phone, desktop, to Slack. It’s controlled by an administrator.

Thinks about trends. This gets back to our thematic approach where you have people working from home. You have a distributed employee base. You have unfortunately a lot of localized terrorism. If you’re left to be a leader in the company, what you’re concerned about is how do I make sure my employees are safe, that they’re communicated with, and I can geofence them.

AlertMedia provides a robust solution for this market. It’s another example where the solution is big. The market opportunity is massive and growing. Most importantly, the entrepreneur solved this opportunity and has almost tirelessly, from a customer-centric point of view, built an amazing business. It has grown massively over the last three to four years. It’s an Austin-based company.

Sramana Mitra: You are operating in Austin. As you said, it’s the next coast, so you don’t necessarily operate in the two coasts. What are the differences in the companies that you see? What are the differences in expectations and how they navigate in your sphere of influence?

Micheal Smerklo: Having lived in the Valley for a long time, it’s pretty distinct. We’ve got companies in Salt Lake City, Minneapolis, and Austin. We see great entrepreneurs. We see big business ideas. Those are consistent with the coast.

We see more capital-efficient businesses. They tend to start out with more of a bootstrapping mentality. We see more realistic outcomes. We see more time, candidly, for the entrepreneur and the venture capitalist to develop a relationship.

I’ve got a ton of dear friends in the Valley and it’s hyper-competitive there. It’s billion dollar or bust. It tends to be pitch, term sheet, make decisions very quickly. The challenge with that last part is when you take capital from someone like us, you’re entering into a five to 10-year relationship/marriage.

What I love about working in next coast markets is, we get more time with the entrepreneurs to make sure they understand the business. We have a shared outcome. We spend a lot of time with the entrepreneur to try and understand where they want to take this business.

If you own 80% of the business and you sell it for $30 million, that’s a heck of an outcome for the entrepreneur. It may not work for our model. Third we like to roll up our sleeves. We join the board. We have a company-building mindset. We spend a lot of time with the entrepreneur to make sure we’re the best fit. It’s a very important decision.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Michael Smerklo of Next Coast Ventures
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