Venture capital investors live with risk, anticipating extremely low hit rates on the startups they invest in in the hopes that one or two blow the lid off and fuel returns for their entire funds.
Boulder has a long history of entrepreneurship with notable accelerator programs and venture capital firms such as Techstars and Foundry Group, but its venture capital companies operate at smaller scales compared to their heavyweight counterparts in Silicon Valley, New York City and Boston.
Boulder, however, has a plethora of early-stage VC firms, including Batshit Crazy Ventures (BCV). With a witty and modern approach to venture capital, its founders chose to name the company after the seeming impracticality of VC economics.
While many venture capitalists downplay the risk involved by choosing conservative names and talking about de-risking their bets, Batshit Crazy founders Dane McDonald and Alex Bogusky call a spade a spade.
“People want to forget how risky things are,” Dane tells BLDRfly. “It’s often very difficult for founders even to express to their own investors how risky this is. Early stage venture is batshit crazy.”
It’s not that they invest in crazy things (unless you count companies that spark their crazy excitement), but BCV simply owns that the high-risk nature of early-stage investment at such high levels is nuts.
With a 28-company portfolio focusing on tech and hardware, some local brands that BCV invests in include Spark Grills, Sunday with its direct-to-consumer lawn care, and Shinesty, a wacky clothing retail company.
The fund also invests in companies like Dor, which provides brick-and-mortar businesses a way to track their customer count and conversion rates; Kubos, which creates software for satellites to build an across-the-board operating system for space; and Influence.co, which BVC co-founder Dane McDonald calls “an IMDB for influencers.”
One of its recent investments includes participation in a $29.7 million funding round for in Constellation Labs, which provides cybersecurity for big data enterprises.
Dane McDonald, BCV’s co-founder, grew up in an entrepreneurial family and moved to Boulder from St. Louis, specifically to get into venture capital. He had a goal to land a gig with Boulder’s Foundry Group, and after graduating from CU’s MBA program in Entrepreneurship, he did.
Upon spending close to four years at Foundry Group, Dane re-centered his personal goal: to have his own fund by the time he was 30. With that marker quickly approaching, he left Foundry and within a couple of weeks met Alex Bogusky, who would become the VC’s co-founder.
“Alex was at a point in his angel network where people start talking to you about joining a fund or making a fund,” recounts Dane. “He was learning about what funds were. I wanted to create a fund.”
To Dane, operating in the venture capital world meant an opportunity to help entrepreneurs in whatever capacity they needed. As more of a mentorship process, it meant “jumping into the trenches and really helping people on their journey.”
And the journey Dane and Alex take with their unique vision in VC goes about everything organically. They invest in companies that excite them and interesting people trying to make the world a better place.
“Founders often want to know what our investment process looks like,” says Dane, when it comes to standard processes and hit goals. “For us, it’s a very organic process. Sometimes it’s one meeting with a founder and immediately we want to invest, while other times it builds. We try to approach our deal flow in an organic manner and keep an open mind.”
The high-risk world of VC + Boulder’s ecosystem
Boulder stood out to Dane while choosing places to pursue his MBA because at the time, in 2010, most cities were having a difficult time after the 2008 economic downturn. When he visited Boulder, he found it still vibrant, with people building businesses and deploying capital.
Though Boulder has an incredibly vibrant startup ecosystem now, back then Boulder still did not have many VCs or early-stage investment companies, and startups had a lack of capital with few funds to create that capital. Dane and Alex felt that they could actually build something here, so they got to work.
“It’s really that the entire industry is crazy,” says Dane. “People taking crazy risks, trying to change things for the better. And people investing in those people. It’s someone trying to convince their spouse to refinance the house because of a dream they have.”
More often than not, the probability of success is tremendously low, but everyone might love to invest, sometimes selling stock or refinancing their homes to get a crazy venture off the ground.
While some might say Boulder still has a need for more funds, it has a lot more than it did ten years ago, and much has changed in regard to types of company verticals.
For example, for a long time Boulder has had a reputation for its food companies, but people would say things like “people won’t find consumer-grade hardware companies here,” with tech-based Sparks Grill holding a perfect example of that change in the industry, something we may not have seen eight years ago, according to Dane. Boulder has also grown immensely in the software-as-a-service arena over the past ten years.
“It’s fun to see ecosystem continually evolve in ways people wouldn’t expect,” says Dane. “If we continue in the direction we’re headed in, it’s a very good thing. With the types of people and amount of people moving into town and the capital being deployed — all very good indicators on how the future looks.”