An early-stage venture fund with a focus on tech startups may have its sights set on Iowa’s startup market.
Great North Labs, a Minnesota-based fund committed to bringing capital to the Midwest, has raised its first fund with $23.7 million in capital to invest in early-stage tech startups.
Unlike many larger venture capital firms, Great North Labs is not hesitant to invest in early-stage companies and commonly invests in pre-seed rounds.
“Why are comfortable investing earlier than most VCs? We’re lead by a group of entrepreneurs and we have a background as angel investors,” said Ryan Weber, Managing Partner and co-founder of Great North Labs. “As a result of our backgrounds as operators, we feel very comfortable evaluating the market risk but also evaluating teams at early stages.”
The fund is split between pre-seed (10 percent), seed (40 percent), and growth equity (50 percent) and has a 5-year invest period. Great North Labs has already invested $3 million of the fund in startups throught the Midwest.
“For us, the capital isn’t really the problem with pre-seed investing,” Weber said. “It’s the time that goes into managing a portfolio of smaller investments. So while we are going to do a number of those, that’s why it’s capped at 10%.”
The firm plans on making on about 30 investments, with reserves for follow-on investments. Each investment will be around $250,000 to $750,000.
Since starting in 2017, Great North Labs has invested in 17 companies.
Investing in Iowa-based startups
Last month, Weber visited Iowa both for EntreFEST and Monetery. Great North Labs was one of eighteen VC firms to take part in the investor 1:1s at Monetery in Des Moines last month.
In addition, Great North Labs has brought on Geoff Wood as an advisor to help Great North Labs improve its connectivity with Iowa-based startups.
“I have been really impressed with what I’ve seen in Iowa. I see an incredible amount of momentum happening throughout the state,” said Weber. “I definitely see us doing more deals there going forward.”
To date, Great North Labs has invested in one Iowa-based company — Pitchly — in August of 2018.
“By the end of the year, I’m expecting we’re going to close a couple more deals in Iowa.”
Pitchly completes seven-figure seed investment round —Aug. 21, 2018
Geoff Wood is the co-founder and Publisher of Clay & Milk