SALT LAKE CITY — There’s a sort of macabre symmetry for Utah venture capital firm Kickstart Seed Fund’s announcement Wednesday of its fifth — and at $110 million — largest investment fund round.
While the new fund closes in the midst of a deadly pandemic that’s wrought global economic havoc not seen since the Great Recession, the company itself was born in 2008 in the very trough of the last market upheaval.
Kickstart not only survived the economic conditions it faced as a startup but has gone on to prosper and expand along with Utah’s burgeoning tech sector. The company has since logged investments in some 100 startups, has $250 million under management and is in the midst of a month where a string of its portfolio companies have hit noteworthy and valuable benchmarks.
In just the last few weeks, customer interaction innovators Podium announced a $125 million Series C funding round; visual communication experts Lucid closed a $52 million Series D and surpassed a $1 billion valuation; digital health company SonderMind nabbed $27 million in a Series B; and, in a monster deal for any market, fintech vet Galileo was acquired by Bay Area personal finance giant SoFi in a deal worth $1.2 billion.
While most of the work behind the new fund was completed before the rise of the novel coronavirus, Kickstart will be facing an investment prospect playing field that has a lot of factors in common with its early days. But the company’s principles say they have no intention of taking their collective foot off the gas when it comes to finding and backing the best new companies out there.
“It’s never been our approach to choose the easy or obvious deals,” said Kickstart partner Dalton Wright. “We’ll keep going after big ideas and taking big swings on founders and their teams … we’re in no way ready to take a step backward.”
Wright said funding from the latest round will continue to follow the company’s bent toward Utah efforts, with over half of new deals likely to originate in the Beehive State, but that Kickstart considers the Mountain West and Southwest states a solid part of its investment territory.
Kickstart partner Kurt Roberts said the characteristics that distinguish a company as the right investment opportunity for the firm really are the same regardless of economic conditions and, in some respects, trying times may only help highlight the people and companies that have what it takes to prosper.
“Great startups always operate with a mindset of scarcity,” Roberts said. “What that does is fosters a willingness and necessity to make hard decisions about what they can do and what they can’t. Founders that operate with a scarcity mindset will find a way to thrive in virtually any circumstances.
“The hardest times serve as a separator for those that have the perspective … to run a company through lean times versus those who simply don’t.”
Utah’s fast-growing tech sector has continued to draw investor attention to a region which, not that long ago, was essentially a flyover state when it came to attracting out-of-area investment. Back in 2008, Kickstart’s debut fund of $8 million and a focus on local startups was something of an anomaly, but now venture heavyweights from Silicon Valley and other areas have Utah squarely on their radars. But Kickstart says competitive investment interest is more than balanced out by the opportunities created by the still-expanding number of local startup efforts.
“We made some great bets in our first and second rounds,” Roberts said. “Lucid was one of our second round companies in 2012 and is now one of the most successful companies in the state and will continue to be so.
“What’s changed is really that there are only more potential Lucids in the region. There’s more than enough opportunities for us, and others, to support companies of that quality.”
Kickstart Seed Fund said its portfolio of companies have collectively raised some $1.6 billion in investments, employ over 5,000 and account for over $850 million in annual revenue. The company has had 20 exits, has metrics that well exceed national averages for venture investment performance and reports that 13.5% of its companies are led by women founders, far ahead of U.S. average for venture firms of 2.7%.