1Mby1M Virtual Accelerator Investor Forum: With Michael Smerklo, Co-founder and Managing Director at Next Coast Ventures 2021 (Part 3)

Sramana Mitra: I will tell you one thing that you may want to take note of. On the coast, there is also the kind of venture that you are looking for. They are capital-efficient ventures run by people who don’t want to play the unicorn game of flushing companies with capital. This came to be known as blitz scaling with capital. The philosophy that we espouse is being practiced on the coast as well. 

Michael Smerklo: It is great that you call that out. I had worked in Silicon Valley for 18 years. I was part of an operating team that ran a company there. I know the Valley well. It is a mentality that Next Coast Ventures is more interested in rather than a geographic limitation. 

Sramana Mitra: Geographically, are you constraining yourself to the US only or are you global now? 

Michael Smerklo: We do focus all of our capital in the US. It’s not because of some limitations that we do this. We do this because we like to be active in the company. We like to help on the ground. We feel that our best swim lane is where we can help locally. That may change over time, but right now with a relatively small fund that is how we think about our opportunity set. 

Sramana Mitra: There is a large number of entrepreneurs elsewhere and coming into the US after they get their thesis validated and get some customers. We see a lot of that flow just because of who we are. 

Michael Smerklo: That is wildly interesting to us. We are up to 15 investment professionals now, so we continue to grow. It’s grown the last time you and I spoke. We believe that our key attributes are helping entrepreneurs in a robust way. We try to make sure that our scope is resonating with what the entrepreneur is trying to do. That is our key focus. 

Sramana Mitra: What are the geography where those 15 partners are?

Michael Smerklo: Our headquarters is in Austin, Texas. The bulk of the firm is there. We haven’t announced it yet, but we are expanding into another Next Coast market. That will come out here in a couple of weeks. The bulk of our investment professionals sit in Austin, Texas.

We also know that in this world – we know that this is a post-COVID phenomenon – that you can do this job from anywhere. You can invest in companies anywhere within that US geography. We just try to have some center of gravity around Austin. That is where our firm is and that is where our physical presence is. 

Sramana Mitra: There has also been a big uptick in virtual companies. People are hiring wherever at the moment. That is a trend that we are seeing. Talk a bit about what you think COVID is doing to us besides what we talked about regarding the future of work. What other opportunities are emerging because of what we have gone through? What else should pay our attention to?

Michael Smerklo: It has been a human experiment on a global scale. This has largely been unprecedented. To your point, it will be interesting to see how it plays out. I have an assertion that we may look back at 2020 as a massive pivotal year for entrepreneurship. Not dismissing the personal challenge and the health crisis that was brought on by the pandemic, but it unlocked more entrepreneurship than perhaps we recognize.

It might be one of those years where we look back ten years from now and say, “Innovation happened at a pace and scale that we didn’t fully appreciate.” I mean that because just about every business was forced to think about digital transformation. There were a bunch of human patterns that we did and overnight, we had to think differently about.

We also had some preconceived notions that you can only do it one way. This includes thinking that everybody has to be in the headquarters and thinking that you can never build a remote company. If I want to go out to eat, I have to drive to the restaurant and sit down. There are simple things like that have been thrown to the proverbial blender. Entrepreneurship is going to emerge and say, “2021 was a massive time for innovation.” That is what makes me excited. 

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