1Mby1M Virtual Accelerator Investor Forum: With Robert Weber of Great North Labs (Part 2)

Sramana Mitra: What is the situation in the Minneapolis area for the kind of companies that you are looking for? What is the scale of the deal flow? How active are the entrepreneurs?

Robert Weber: I would imagine that Twin Cities is like many cities in the world. They have a corporate mindset. We have the largest amount of Fortune 500 companies per capita in the US.

Our schools and universities over the past decade tend to skew more towards classical management in terms of education. Recently, there has been a surge in startup management and innovation processes and practices.

On the funding side, we have the second largest number of first round funding annually. Chicago is number one. They produce 150 per year of first-round funded companies.

There is a much bigger gap between Chicago and Twin Cities, than the Twin Cities and the next 20 cities. It’s pretty healthy. We are dominated by healthcare and life sciences. Although, there is a growing group of software-oriented investors including Great North Labs. 

Sramana Mitra: If you were to assess how companies in your sweet spot are operating at this point, how many would that be?

Robert Weber: In the Twin Cities, it’s in the dozens but we have deals all around the region. 

Sramana Mitra: Let’s talk about a few companies that you have invested in. As you are describing some of the case studies, talk about what they had when they came to you, and how you found them. Also, talk about what it was about them that compelled you to write those checks.

Robert Weber: In terms of our current fund, our average hold is 16 months. It’s a little early to share the whole journey, but, as I mentioned, we have a prefund track record along with my partner Ryan that goes back ten plus years. Maybe I can share three stories from that?

One of them is a company in Minneapolis called Field Nation. They are the North American leader in sourcing field IT workers. Field Nation is like the Uber of field IT workers. They are the leaders in North America. It’s a 1099 worker platform. We funded that about 12 years ago. The founder, Mynul Khan, is an immigrant to the US. He was my brother’s Computer Science lab partner at a local state university known as Saint Cloud State.

He reached out to my brother. He joined as an advisor initially. He was interning at another company that we were involved in. He was going to school full-time while starting Field Nation. We invested $100,000 along with bringing along one friend who joined for $100,000.

We helped Mynul bootstrap that company for seven years until he raised a $30 million growth and recapitalization round. We have since exited much of our positions to a private equity fund. There are a couple of others.

Another company based in Minneapolis is a company called BestBuy. They acquired a services company called Geek Squad that also started here. Geek Squad was a W2 platform for field IT service work. This became an anchor to the growth of BestBuy over the last decade or two as they transitioned away from the retail model to services revenue.

In Atlanta, Georgia, we invested in a founder named Shachar Oren who started a music licensing tracking technology called Neurotic Media. We sold that company in 2008 to Peloton, the famous cycling and fitness subscription business that has taken the world by storm. They are headquartered in New York. It was sourced by a friend of mine who is in corporate development at a midsized publicly-traded e-commerce company here in Minneapolis. He mentioned that Neurotic Media is an interesting startup. So that piqued my interest and I called up Shachar and we invested in 2008.

The third is Zencoder. People who upload videos like TikTok, YouTube, or other mobile video services don’t really appreciate the technology that goes into video encoding because of the work of companies like Zencoder.

We invested in them in 2010. Before 2010, when YouTube was starting to take off, it was challenging to put up a video. It would suck out your PC or Mac resources. It was cumbersome.

Zencoder created a cloud-based video encoding. We sold that company to Brightcove a year or two after investing. We made that investment alongside Andreessen Horowitz and another famous investor Chris Sacca. Zencoder was based out of Minneapolis in Maddison, Wisconsin.

Those are a few examples. In the Zencoder case, I knew one of the co-founders. I got to know him socially in the founder community in the city that we live in. That was how we sourced that one. 

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Robert Weber of Great North Labs
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