Venture Capital firms are about pouring gasoline onto already built fires.
Craig Ibsen and his team at Next Level Ventures are holding gasoline cans, looking for fires.
Next Level Ventures is a $40 million venture fund that focuses on helping Iowa-based companies reach their, “Next level.” Since launching in December of 2013, Next Level Ventures has invested in eight Iowa companies, who went on to create over 90 new jobs.
Ibsen—Managing Principal—of Next Level Ventures, was an entrepreneur with a software company before getting into venture capital 11 years ago.
Clay & Milk met with Ibsen to hear how that experience helps him in his current role at Next Level Ventures, how the state of Iowa could better help entrepreneurs and how starting a company has evolved over his career.
So, you were an entrepreneur?
Ibsen: I was an entrepreneur, I started a business that received venture capital, ultimately sold that and decided to switch sides and sit on the other side. I knew what it was like to receive venture capital, and then I decided to join a firm and deploy it.
So I’ve stood in the shoes of the entrepreneur. And I think that helps, I know the journey they are walking. I know what it’s like sometimes to not know where the check is to make payroll and how to work through that. Those are challenging moments that most every entrepreneur will face, and there’s no substitute for walking that journey yourself.
What’s your current role at Next Level Ventures?
Ibsen: I am the founder and managing principal of Next Level Ventures. We were founded in December of 2013 so as we approach this December, it will be our fourth anniversary of investing in Iowa.
I have two other partners and a team of five. Duane (Harris) and I go back to 2006 in a venture firm in the Midwest. I guess I’ve been doing this now for 11 years, the prior fund Duane and I had was more Midwest, this time around we are only investing in the four corners of Iowa.
Ibsen: Well, I am an Iowa native. I went to school at Luther College, got a MBA at Drake and have always been very passionate about living here, doing business here and helping others grow businesses here. When it came time for Duane and I to do a second fund, we made the determination to focus only on Iowa.
How does a venture capital firm come to life?
Ibsen: You have to raise the money, really we took about 12 months to assemble a $40 million pool of capital. It was about the same size of our prior fund. We assembled that across 65 different entities. Most of our money comes from large institutions with deep roots in Iowa, like insurance companies, financial institutions and utilities. We also have a large number of individuals who round out that group.
Then we started looking for companies. There’s some overlap there, so we were kind of aware of a lot of companies that had come before us. Dwolla and Bird Dog were companies that existed before Next Level Ventures was founded. Then when we were in the business of being able to deploy capital, we naturally looked around.
What do you think about the Iowa startup community?
Ibsen: There’s a lot of opportunities. We are in active due dilligence on five companies right now. I think in terms of some of the gaps. Where we lack as a state is maybe in the seed area, where companies are pre-revenue. Maybe it’s just a founder or two founders looking for capital to get to the stage where we can invest in.
How do we fill that gap is still worthy of conversation.
How has starting a company changed in your career?
Ibsen: Hundreds of thousands of dollars went into infrastructure to get started and today, it’s a fraction of the cost. SO the ability to start a business with $100,000 is there, and even less. That didn’t exist when I started in this business.
And I think young people today who want to start this journey are probably more willing to take the risk. And failing, it’s ok to start, fail, learn from that and go back to start again. Failing, and a quick failure, there’s no harm in that.
Is Iowa overlooked as a startup community?
Ibsen: There’s a lot going on in the Midwest ecosystem. There are new funds coming up since we’ve started, so I see a lot going on in the Midwest in general, Iowa is apart of that. So I don’t think that we’re overlooked. You are seeing larger funds trying to develop relationships in the Midwest because they’re concerned they are missing out on what’s happening.
Have you experienced any ‘high five’ moments?
Ibsen: The high-five moments, there are many of them, but they are so fleeting. Because they happen at 5 and the next morning you are going back to work and facing it. Even when you have an exit, we’ve got a portfolio of companies and you are facing the challenge the next day.
There are ups and downs, sometimes wrenching ups and downs, and sometimes ten of them a given day.
What advice do you have for entrepreneurs?
Ibsen: Keep at it, success rarely happens overnight. The wonderful thing about a state that’s relatively small like Iowa, is there’s a tremendous amount of resources for everyone. Mentors, advisors, connect with other people in the ecosystem who could help. Everyone is willing to give of their time and advice. Connect to the ecosystem, bounce ideas off people, digest that, internalize it and keep working on your product or service
Sometimes we will get to know a team for two or three years before we invest. Sometimes it can happen in 90 days, but come and talk to us. We are accessible.