Venture capitalists Jonathan Triest and Brett DeMarais believe their ability to understand people and build long-term relationships with founders is a key reason their Detroit-based venture firm, Ludlow Ventures, is celebrating its 15th anniversary.
It sounds silly to attribute their longevity to something called “Midwestern kindness.” But is it crazy? Maybe not. Before Ludlow, neither Triest nor Demarais had much management experience; none even in investing. Triest had just finished school when he started the company in 2009; Demarais joined him three years later after finishing his first job running a wedding videography company.
Fast forward to today, and Ludlow has $250 million in assets under management, including the duo's recently closed fifth fund, $50 million, with investments from billionaire Dan Gilbert, financial-services firm Northern Trust, Israeli venture firm Vintage Investments and StepStone, the fund-of-funds outfit that is the backbone of the new fund.
Indeed, it's hard to know what Ludlow offered in its early days other than a lot of passion and a good instinct for people. During a 2012 visit to Los Angeles, for example, Triest and DeMarais met with entrepreneurs Ryan Hudson and George Ruane about a Chrome extension that would help customers get deals. Young investors had a hard time getting interested in what the founders were building. But “George and Ryan were really good,” Triest told me by phone, over the blaring voice-over at a networking event in Detroit.
Mr. Ludlow wrote his first check to Mr. Hudson and Mr. Ruan, who soon launched a shopping and points platform called Honey. When Honey was sold to PayPal in 2020 for $4 billion in mostly cash, the payment represented a six-fold return on Mr. Ludlow's original $15 million investment.
“Your colleagues may seem like they're working harder than you, but the truth is, all you see is the talent,” Triest says. “The biggest miscalculation we've made is when we invested in an industry or idea we loved, but the talent wasn't great.”
Of course, investing in talent is nothing new; most venture capitalists claim to do the same thing. Ludlow Ventures also had a bit of luck in its founding; Triest raised a $15 million first-year fund with a $1 million loan from friends and family. Not everyone has access to that kind of early capital.
But luck won't keep a business going for that long, especially in a relatively tough market where institutional investors are losing patience with startups. While General Catalyst, Kleiner Perkins and other large venture firms have secured billions of dollars in capital commitments, startups are now increasingly retreating due to lack of investor interest.
Indeed, when Triest talks about the relationship, he makes a compelling case that he means business. Ludlow maintains such strong ties with Hudson that earlier this year the venture capitalist wrote a $3 million check for a $5 million investment round for Hudson's latest, still-secret startup. “Hudson had lined up a top-tier VC firm, and anyone could have led that round,” Triest says.
(Triest also notes that Hudson is married to another Ludlow-backed founder, Lumi founder Jesse Genet. He, too, takes no credit for the marriage; after they started dating, he says, he was surprised.)
As for other differentiators, Triest eschews them; the company has neither a geographic nor vertical focus. For marketing, Triest relied heavily on “Carpool VC,” a series of videos that Triest and Demarais used to post sporadically to YouTube, in which the pair would engage in unscripted banter while playing audio of another famous VC through the car's speakerphone.
Most of the show was recorded in 2015 and 2016, but now Triest, whose oldest son is 15, says his kids are tired of it. He adds that the show has served its purpose and he's still amazed that “people talk to us on the phone and feel like they know us a little bit.” In fact, “a lot of people have turned us down because they don't want to work with clowns like us, but we still have a lot of people who want to do it,” he says.
Apparently so: Ludlow, which invests in around 25 companies in each fund, has funded hundreds of startups, some of which have gone to zero while others have risen substantially in value since the firm funded them.
Flex, a flexible payments platform that now promises to break monthly rent into smaller installments and plans to expand into other verticals, just raised a growth round led by a well-known venture capital firm, Triest said. (Rival startup Circa was recently acquired for $9.5 million in cash and stock from the royalty company that bought it.)
Ludlow has also invested in workplace analytics company Density, which was valued at $1 billion in its last round of funding in 2021, video editing app Captions, which raised $25 million in Series B funding last year, online notary network Notarize, which was valued at $760 million by investors last year, Backbone, a startup that turns iPhones into gaming consoles, which raised $40 million in Series A funding in 2022, and budgeting app Copilot Money, which raised $6 million in Series A funding led by Ludlow in March.
When asked about common themes across the diverse group of companies, Triest again turns to the murky topic: “The common thread across our portfolio is that the people who founded them were people we would want to spend time with, people who would make us want to leave Ludlow to work with them. We need to believe that what they're doing is possible, but it doesn't have to be the be-all and end-all.”
I'm sure every VC is saying the same thing: “I hate the 'founder-friendly' story that other VCs tell us,” Triest says. “There's no integrity there.”
In Ludlow, “If we don't stand up, [a founder’s] The wedding was a failure.”