Venture capital firms in the Midwest may always be looking to catch up to their coastal counterparts, but that doesn't stop some companies from raising significant amounts of capital to support startups in their local ecosystems and across the region. do not have.
Investors focused on the coast say money continues to flow into the area, despite being a so-called “elevated city.” For example, he made a $50 million investment in Michigan's Grand Ventures last October. In 2023, Columbus-based Rev1 secured his $30 million third Catalyst Fund aimed at life sciences.
Now it's Hyde Park Venture Partners' turn. The Chicago-based early-stage company secured his $98 million in new capital commitments to Fund IV. The closure of Fund IV brings HPVP's total assets under management to approximately $320 million. It has four general funds and a $30 million opportunity fund established in 2021.
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Managing partner Greg Burns and partners Alison Rechniel and Guy Turner lead the 12-year-old firm, which invests primarily in founders in the Midwest and Toronto.
“We are very excited to operationalize our new fund,” Burns told TechCrunch. “Whenever we raise money, it's a good reminder of what our company is going through.”
The three said the past year has been a difficult time for fundraising, with Turner saying much of that difficulty was “driven by the extremely fast-paced fundraising environment of the past two years.”
“Many institutional LPs seem to be focused on their existing managers,” Turner says. “That being said, we are really pleased with our fundraising results and were able to bring in a number of great institutions who joined our fund and our company for the first time. As we've been building over the years, we've seen larger funds become more institutionalized. That's important for funds like ours and for the region.”
The fund's limited partner mix includes approximately 25% institutional investors, 35% family offices, and the remainder ultra-high net worth individuals. New partner institutions such as NVNG and Cintrifuse Capital are backing his fourth fund. They join repeat backers including the Illinois Growth and Innovation Fund, the RK Mellon Foundation, and Renaissance Venture Capital.
Hyde Park Venture Partners understands more than 90% of mid-continent startups and is known for supporting companies such as ShipBob, FourKites, G2, LogicGate, and Dentologie from their early stages.
In April, logistics company ShipBob announced it was considering an initial public offering. Although the company says it can't comment on what's happening right now, Turner said HPVP led the 2016 Series A and that “they're a phenomenal resource group and we're really pleased.” Ta.
HPVPs often lead deals, with average check sizes ranging from $500,000 to $4 million. The new fund will be rolled out to 20 to 22 companies. HPVP has already invested in two companies from this fund. One is Diffit, which leverages generative AI to help teachers create customized lesson plans, and the other is CivCheck, which partners with cities and architects to accelerate the building permit process.
The company declined to share cash-on-cash return information for previous funds. Instead, it announced that its portfolio companies continued to raise follow-on funding totaling $1 billion. Notable exits include workforce management startup VNDLY, which was acquired by Workday, and restaurant tech startup Tock, which was acquired by Squarespace.
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Meanwhile, the Midwest continues to establish itself as a startup hub. TechCrunch also covered this, focusing on what's happening in Columbus, Ohio's startup ecosystem in 2022. Much of that is supported by “universities and research and development funding from the federal government that flows directly to them,” said Cristi Cardenas, managing partner at Grit Ventures. As part of a panel discussion with VCs in the Midwest at the time.
During the same panel discussion, Kelly Jones, general partner at Indianapolis-based Sixty8 Capital, said, “All the legacy industries that have not been touched by technology and digitalization will continue to drive our economy. It will move us forward.” We're going to have to look at the South and the Midwest as a place where this innovation really starts to emerge, either because of the people on the ground or because of the people who have been doing this work for a long time. ”
One advantage of being a Midwest venture capital firm that invests at the seed stage is “slightly lower valuations than you'd see on the coasts at the seed stage,” says Hyde Park Venture Partners' Rechnir. Stated.
Additionally, the pandemic has given Midwesterners a reason to return home, or for others, an opportunity to live there for the first time.
“Our argument from day one has been that this is a great place to invest in technology startups,” Rechnir said. “The quality of founders has really improved over the last 10 years, and we're seeing great product managers becoming the next founders. They've brought an influx of talent.”
When it comes to talent, the trio noted that one of HPVP's differentiators is having Jim Conti on board as a talent partner.
Barnes believes Hyde Park Venture Partners is one of the smallest funds with talent in this type of role.
“We are focused on bringing great talent to our team and growing our network,” Burns said. “This region is a place where everyone migrates to each other. They're born here, they go to college in the next state, and then they go to the next state because their husband or wife is from there. Our talent partners spend a lot of time getting to know people in the community, so we have developed very close connections over the years.”