Firebrand Ventures announced the close of its seed fund on Wednesday, with an oversubscribed total of $17.7 million, nearly 250% over their initial goal of $7M.
In a time when roughly 75-80% of venture capital raised in the U.S. still goes to California, Massachusetts and New York, Firebrand’s Kansas City-based fund is proving there’s VC interest and talent in the Midwest.
“While I was Managing Director at Techstars I noticed first-hand that many fundable startups weren’t able to raise seed capital in Kansas City or the Midwest in general,” said John Fein, Managing Director of Firebrand Ventures. “Firebrand’s mission from day one was to invest in compelling startups outside San Francisco, Boston and New York.”
Fein said the success of the fund shows a growing interest in Midwest capital investment.
“There’s a much bigger appetite on the part of the investors to invest in Midwest startups,” said Fein. “I think investors recognize that not just the quantity, but the quality of startups has grown significantly in just a few years in this region.”
Firebrand invests primarily in a region they refer to as the Greater Midwest, a territory bordered by Austin to Minneapolis, and Boulder to Columbus, OH.
Firebrand has already made 12 investments to date, 11 of which are either headquartered in their defined Greater Midwest territory or will have a significant presence there.
“We’ll continue making 10-12 investments per year during our active period, investing in a total of about 35 companies,” said Fein. “We’ve co-invested with top funds including Union Square Ventures, Foundry Group, and Techstars Ventures.”
Qualifying criteria for startups include being located within their general investment region, looking for an average seed investment of $200,000, and sector-agnostic, capital-efficient business models that can multiply for financial advantage.
But most importantly, they have a ‘no jerk’ policy and only partner with founders they truly connect with.
“More than anything, we invest in exceptional founders,” said Fein. “I don’t just mean business skills but also character. We love building relationships with entrepreneurs who are not only intelligent but also have that rare combination of integrity, grit, focus, and audacity.”
Fein said there is no shortage of pipeline for companies that Firebrand looks at, even with them being fairly picky and disciplined as to where they make investments.
“With that fairly broad scope for the areas we look for startups in and the different sectors we’re willing to invest in, we get a pretty good flow of companies,” said Fein.
Fein credits Firebrand’s network, team and advisors with their success so far, and said that now that they’ve completed their raise, they’ll be hiring a fund associate whose name and hiring will be announced in the coming weeks.
“I’m honored to have the advisors that we have,” said Fein. “Our team of advisors and I have been founders ourselves, and I believe most entrepreneurs want a more human approach from their investors. […] They want a trusted partner, and that’s what we continually strive to earn, not with talk but with our actions.”
What Firebrand is accomplishing is beneficial for the entire Silicon Prairie ecosystem, but Fein said the Midwest could still use more funds.
“I think the more good funds we have in the Midwest, the better it’s going to be for entrepreneurs and the more likely they can raise the capital they need,” said Fein. “I think it’s going to start attracting more coastal dollars which is a good milestone.”
Christine McGuigan is the Managing Editor of Silicon Prairie News.