1Mby1M Virtual Accelerator Investor Forum: With Michael Smerklo, Co-founder and Managing Director at Next Coast Ventures 2021 (Part 2)

Sramana Mitra: What are some of the companies that you have invested in the themes that are accelerating? What has been their journey? Give us a few examples.

Michael Smerklo: One of the examples on the healthcare side is a company called Everlywell in Austin, Texas. We invested in them four years ago. They do direct consumer lab testing. It was helping consumers with the massively frustrating situation of going to see a doctor and then the doctor tells you to get a lab test. You get the lab test, get some purple paper with results that your doctor doesn’t interpret with you, and you are left with a frustrating experience.

Everlywell disrupted that whole supply chain and went direct to consumers with 30 different tests. These include food sensitivity, testosterone, and even STDs. The business has done well pre-COVID. When you move forward with COVID, they were the first company to do an FDA-approved COVID test at home. Not only did they see an acceleration of their business from COVID, but we also have seen a radical change in consumer behavior.

There’s this big chunk of consumers that haven’t done a lab test at home, but they were forced to during COVID. They experienced this and they started to wonder what they could do more like this. That business has done incredibly well and was valuated close to $2 billion. This is wonderful and it has a long way to go. 

Sramana Mitra: Congratulations!

Michael Smerklo: Another company that we did in Austin is a company called Alert media. This was around duty of care and employee safety. That company helped companies once COVID forced them to come online. All executives were faced with this question, “How do I manage a wildly different employee base? My employees are not all in one location. They are now working from home. They have different physical and IT security needs.” Alert helps companies with that aspect of it. We have seen a massive acceleration pre and post-COVID.

Sramana Mitra: What are you thinking about looking ahead? Catch us up on your fund situation. What fund are you investing from? What is the size of the fund? What kind of check sizes are you writing? What stage are you coming into a company? What is the focus moving forward?

Michael Smerklo: Next Coast Ventures has raised two funds. Our fund was $90 million. Our second was $130 million. We are about two-third of the way through the second fund but we are still actively investing out of it. The typical check size ranges between $5 million and $10 million. We like to focus on Series A and Series B companies.

We only invest outside of the coast because all the metrics that I have talked about don’t work in the mega-rounds happening in the Valley or on the coast. We are much more aligned with the way you think about the world. We want to make sure that entrepreneurs own and continue to own a big chunk of their business, be capital efficient, and drive real outcomes. These are a lot of things that you talk about. That is where we play.

In terms of our investment philosophy. We focus on these themes. They are all listed on our website under NextCoastVentures.com. That list includes the future of retail, the future of work, software 3.0, and healthcare. They are all published on our website. We publish those themes out in the world.

We look to activate our network and also look for entrepreneurs to understand what we do and don’t do. We look to work with the best entrepreneurs building great businesses outside the coast. We try to roll up our sleeves and help them with what we call company building. We take board seats and we actively are involved in trying to help them. 

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Michael Smerklo, Co-founder and Managing Director at Next Coast Ventures 2021
1 2 3 4 5 6