Guest post by Clayton Mooney.
Since boomerang’ing back to Iowa in 2014, I’ve developed Topophilia for Ames’ startup ecosystem.
I believe the most beneficial loop that can happen here for wealth and resource creation is…
- Someone starts a company.
- Someone has a positive $ exit from said company.
- That someone (and hopefully others from the company) turns around and writes checks into other companies.
- Repeat.
Ames, like other college towns, has many people with diverse backgrounds and excitement for solving problems on and off campus. At the foundation of science and technology, we also have entrepreneurial support.
That support is really good at cheer-leading and making introductions. That support lacks investors.
Is there a way to create more investors here before there are more exits?
I didn’t have an answer until I discovered Spearhead. I was excited and remember applying to their first batch in January 2018.
When asked which peers’ companies I’d try to invest in if I were accepted, I gave Colin Hurd of Smart Ag, and Steven Brockshus of FarmlandFinder as examples (Spearhead missed out).
I was excited about Spearhead because it could equip me as an investor before having liquidity while learning from some of the best investors in the world—which in turn would help me fundraise more efficiently for Nebullam. We also can’t forget that, as founders, we’re all in the trenches together with our peers. We hear about and have deal flow opportunities before anyone else.
Then I was rejected from Spearhead. Now what?
Not a big deal. I went back to thinking there wasn’t a solution for creating that beneficial loop and bringing more access to capital here (as founders), unless steps 1-4 were completed.
A couple of years later, just as AngelList had brought Spearhead to the world, they introduced another option; rolling funds.
I didn’t hear about rolling funds until May, when I came across someone who was putting one together. While still learning how they work, here are a few of my initial thoughts on rolling funds:
- They save time in raising and back-end work. More time to write checks
- I’d expect most of them to operate at the pre-seed through seed stage, which is what we need here, in order to continue optimizing for the upside for the many programs helping to launch startups
- If rolling funds operate at the pre-seed through seed stages, they’ll compete with other funds here. That’s a good thing, because more ideas and a broader group of founders will be funded
- Commitments from LPs can be much smaller, opening up a whole new class of LPs
- You may never need to raise another fund
Is anyone else excited about/working on/starting a rolling fund?
It may work here.
Clayton Mooney is the co-founder of the Ames-based companies Kinosol and Nebullam and is a familiar face in the Iowa startup ecosystem. Learn more about him here.