1Mby1M Virtual Accelerator Investor Forum: With Tony Olivito of Comeback Capital (Part 3)

Sramana Mitra: Our philosophy is Bootstrap First and Raise Money Later – or not at all. Even if it’s bootstrapping with a small amount of capital and you can get to an early exit, that is considered a perfectly fine outcome. Can you talk about a couple of examples from your portfolio that represents the kinds of companies you like to invest in?

Tony Olivito: Generally if you look at the industries, it makes sense that they’re in the Midwest. There’s logistics and FinTech in the Midwest.

There’s a company called Exit 7C which is the first investment we made that’s based in Milwaukee. They broadly are a company that does maintenance for fleets. It could be mobile fuel delivery, mobile carwash, or fleet maintenance repair.

Another company is Honcho. Honcho is a company that has created software for enterprises’ smarter communication. That’s pretty important today as more companies are going remote or had to go remote. We’re in industries like the financial industry where information could be shared. They have this technology to ensure that employees are communicating in a way that’s consistent with policy. That’s more of an enterprise product.

Ziptility is more a SaaS for small utilities. Those are just a couple. We’re not married to one type of model.

Sramana Mitra: I have a question about the activity level in the Midwest. If you look at these pockets, what kind of volume are we seeing? How many startups are in these geographies?

Tony Olivito: The fact that we were investing, pre-COVID, at one company per month indicates that there’s decent activity. We’re looking at 100 companies per month. We invest roughly in one.

There are accelerators that are specific to industries. For example, Iowa and Nebraska have agriculture-related accelerators. Iowa is a big place for insurance. They’re focusing on what they’re good at. That’s because there’s a concentration of a certain type of company in those cities.

Sramana Mitra: What percentage of these 100 deals are part of the total startup pool?

Tony Olivito: If there’re 1,200 opportunities a year, there’s probably a couple of thousand.

Sramana Mitra: There are only a couple of thousand startups in this region?

Tony Olivito: I believe so.

Sramana Mitra: That’s interesting. 

Tony Olivito: Those deals that we are looking at are coming from accelerators, universities, or some other co-investors. I haven’t seen numbers. 

Sramana Mitra: The national number is closer to 100,000.

Tony Olivito: 80% of that goes to two states. That would mean that 20,000 would be spread across the rest of the country.

Sramana Mitra: That’s true. I’m so happy to hear about your activities. Our philosophy is developing the ecosystem in a distributed fashion and really supporting a global startup ecosystem. It’s very important for players like yourselves in the Midwest to do their part. That’s how an ecosystem comes together.

Tony Olivito: I think it’s important too that there are more people into these that are focusing outside of those two states – California and New York. There are great entrepreneurs everywhere. You really don’t need to be in California now because you have access to a lot of the tools. 

Sramana Mitra: We’ve always been of the opinion that you don’t need to be in California. In fact, you can’t support the cost structure of Silicon Valley if you’re a startup.

Tony Olivito: The focus shifts to what problem you are solving. It’s more about the product and why you have some type of advantage, and how well you are able to sell into that niche. 

Sramana Mitra: The companies that you’re not investing in, send them our way. We will do our best to help them. This is something we’re equipped to do. It’s figuring out why a company is failing to raise capital and what are the options of putting one foot before the other and not go out of business, and potentially come back to a fundraising round after plugging those gaps.

Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Tony Olivito of Comeback Capital
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