Iowa’s largest venture fund added five companies to its portfolio in 2017 while raising additional capital towards its $125 million target.
After launching in February of 2017 ManchesterStory invested in five startups and was the lead investor in each deal. The fund also raised $10 million, raising its total to $41 million.
Dave Miles, a Managing Partner of ManchesterStory, said along with his partner Matt Kinley, they saw over 550 deals last year and anticipate a similar 2018. He said to expect the portfolio to grow to anywhere between 15-20 companies over the next five years.
The fund focuses on the InsurTech, FinTech and healthcare industries.
The five companies ManchesterStory invested in are:
- Groundspeed Analytics – Ann Arbor
- FinMkt – New York City
- Madduk Insurance – Los Angeles
- Insurdata – Colorado
- Rethought – New York/London
“There are few things that are more fun then helping,” Miles said. “We don’t make these companies successful, the founders and the team that they built makes it successful. But we give them a lift.”
Investing in those sectors also builds on their past deals and networks. Miles is the owner of asset management firm Miles Capital while Kinley is the executive vice president at Pappajohn Capital Resources.
“We are networked across the country, we can’t just set up shop and line everybody up where they drive five miles from their startup,” Miles said. “So we have this nationwide network and fortunately for us, insurance startups are all over the country.”
Last week they were in London for six days.
“Even though we have a lot of relationships and a lot of our deal flow comes from people we already know, you constantly have to be working to go to the accelerators, the incubators, innovation labs and industry meetings to continue to broaden that network,” Miles said.
Trusting the process
While each investment stands on its own, Miles said each company in the ManchesterStory portfolio contain consistent elements in terms of strength of the team, market size and product/service.
“Then we try to catch it when they’ve got a handful of customers and now they want to get from a handful out to a much larger market,” Miles explained. “That takes a bunch of money and we help fund that growth.”
During a meeting with a prospective company, Miles said his favorite question to ask the entrepreneur is about the size of their target market.
“A seasoned entrepreneur will have a really thoughtful answer to that and shows they understand a $6 trillion insurance industry is not the market,” Miles explained. “It’s a subset, with this need or these customers who buy, but a specific need with a specific profile and here is how we get to them. When people have a good idea, they are often not as good about answering that question about the market.”
What surprised Miles was how fast InsurTech exploded and how much money is flowing throughout the industry.
“The good side of it is FinTech is the most advanced, HealthTech is second and InsurTech is the furthest behind,” Miles explained. “The good news about all of this is I think InsurTech is going to make up that growth.”
The story behind the name
The name is a nod to their hometowns.
“Matt was born in Manchester, Iowa and I was born in Story City,” Miles says. “We were talking about name and we ended up saying, we want to create a firm that’s bigger than either of us so that each new person that joins doesn’t look at as here are the two guys on the door and I’m not one of those.
“We want to build something that is of lasting significance, however one defines that.”
Insurance-based startup VC firm launches in Iowa, hopes to raise $125 million – Feb. 8, 2017