How to get paid to spend other people’s money.

Venture Capital is a highly lucrative, yet abnormally exclusive career path. Few outside of Silicon Valley and Wall Street circles can accurately articulate what a Venture Capitalist (VC) does. Hell, I grew up with one and I can barely explain it. If you don’t know Venture Capital existed, then how can you hope to become one? Answer: you can’t. This is partially intentional, insulating VCs within a network of highly successful, intelligent, and entrepreneurial people. So unless you went to a top ten undergrad/grad program or personally know someone in Venture, the likelihood you’ll end up a successful VC is slim. Which is a real bummer because being a VC is awesome.

I’d like to change the culture of exclusivity because there are tons of people that don’t fit the “Ivy League profile” that would kill it in the industry. Look at Troy Carter; rapper turned business mogul/investor. I’d like to see more non-traditional applicants in the VC pool; I’m all about improving outcomes for everyone, not just the elite. I think that starts with educating people on what Venture Capital is, then giving you an insiders look on how to be successful.

Since I’m all about sharing the love, I interviewed one of the coolest guys in the world, a successful VC and a modern man who balanced work and family seamlessly.

But before I drop some serious knowledge, here is a 30 second crash course on Venture Capital. If any of you watch HBO’s Silicon Valley (a freakishly accurate portrayal of Silicon Valley startup culture), or are generally familiar with venture backed startups, you’ll know that Venture Capitalists are investors who fund companies at various stages of growth in exchange for a percentage of the company. VCs are seasoned professionals that aid in the growth of a company in a number of ways. 1) Capital infusion 2) Business and strategic direction and 3) Access to powerful, expansive networks. It’s a strategic, analytical job and requires specific experience to be successful.

I interviewed Greg Robinson, Managing Director at 4490 Ventures — a Venture Capital fund in Madison, WI. Robinson was previously with Peninsula Ventures for 12 years in the Bay Area before making the move to the Midwest. Below are excerpts from our conversation that I found particularly enlightening, hopefully you do too.

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SR: Tell me about your educational background.

GR: I did my undergrad at Arizona State, I got a B.S. in economics and a minor in Chinese. After my undergrad, I went on to get an MBA from Dartmouth.

SR: Did you go directly from your undergrad to your MBA?

GR: No…I worked for seven years before going back to business school. I worked for a few years at a large consulting company (Andersen Consulting/Accenture). Then I started my own enterprise software company.

SR: How did you become interested in venture capital?

GR: Really through the process of being an entrepreneur. I got to see firsthand the process of funding early stage companies. As an entrepreneur you work with one company for a very long period of time, while VCs get to work with many entrepreneurs and projects over that same period; the idea of working with a number of very talented entrepreneurs at any given time was very appealing to me.

SR: What types of companies do you typically invest in?

GR: Typically, software. I have spent most of my career investing in enterprise software or SaaS companies…Software as a Service. I’m been investing in SaaS companies for almost 15 years. 15 years ago SaaS was still untested, unknown, unproven…being part of its evolution has been interesting. There are interesting dynamics around investing in SaaS companies that allow for constant innovation and opportunities.

SR: What was it like finishing college in the early 90’s?

GR: It wasn’t a great time to be graduating in terms of opportunities. The economy was struggling. I was fortunate enough to come out of school with a great job which helped me learn a lot and grow. I feel very fortunate to have had that opportunity to work at Andersen Consulting (a large technology consulting firm) coming out of school. It made a big difference. It provided a nice foundation to gain understanding and get exposure to tech.

SR: When you graduated did you think you would be an entrepreneur?

GR: Yeah. When I graduated I thought that I would end up on that side of things…whether that was starting my own company or being part of an entrepreneurial venture. I was more interested in smaller, faster growing companies that the large, stable companies.

SR: What was your experience like in grad school?

GR: Grad school was great. I went to a great school in a great part of the country (Dartmouth, New Hampshire) in an environment surrounded by very talented people, professors, and students. So the experience itself was fantastic and it opened up doors and opportunities that probably wouldn’t have been otherwise available to me.

SR: Did you feel like the educational content was really beneficial? And has helped you in your Venture Capital world? Or was it more of the network and the overall experience?

GR: Well I had a BS in economics and I had seven years of work experience under my belt, including starting, running, and selling my own enterprise software company. So I had a lot more experience than the average student. While I learned a great deal, I felt like the real value was that Dartmouth expanded my vision and exposed me to so many new ideas.

SR: So you went to school on the East Coast, at Dartmouth, which typically funnels MBA students into consulting and banking in Boston and New York. Was it difficult making the transition out west to Silicon Valley?

GR: Typically for a school in the North East, the network is pretty dense in the North East…so getting from the East Coast to the West Coast required focus and initiative. It was definitely doable, but it wasn’t the normal career path. The normal career path was banking, consulting, or even just a general management job. Venture Capital by itself is very, very hard. So to source a job there and go from East Coast to West Coast was even more difficult. So it was a challenge, but it was doable if you showed initiative and focus.

SR: What was it like going to school and moving across the country to be a VC as a father and a husband?

GR: Being a husband and a father meant I was more focused. The family was was definitely a consideration in terms of where we would live, what jobs I would take. What kind of place we wanted to raise kids; What school districts there were for the kids; Where we wanted to settle long term, geographically….it was definitely a consideration, but never an impediment.

SR: How long did you do Venture Capital in California?

GR: I was there twelve, thirteen years.

SR: Are you still in California?

GR: No, about two years ago we decided to move from Palo Alto, CA to Madison, WI. I started a new venture fund called 4490 Ventures. The 4490 Ventures strategy is very similar to what I was doing in the Bay Area. The only significant difference is the geography. I’m just tailoring the approach to the geography and opportunities in the Midwest where we think there is a great imbalance between the number of talented entrepreneurs and the money available to support their projects. Anytime there is an imbalance in terms of capital to opportunities, that can be a positive thing. We think the Midwest is a very interesting place to be investing…interesting opportunities, projects, and people.

SR: Interesting! What has been the most exciting part about Venture work here in Madison?

GR: I think it’s two things. Because anytime you’re building something up from scratch it’s exhausting, but exhilarating. You get a blank piece of paper and you get to remap everything, but hopefully based off of learnings you’ve had or prior experiences. The other one is just being part of an ecosystem that is thirsty for help, knowledge, and capital so you really feel like you can contribute and help make a difference to the ecosystem.

SR: What are the greatest challenges being in the Midwest?

GR: It’s the fact that most people have not been part of a company that has been started, supported, and scaled in a dramatic fashion like you would find commonplace in Silicon Valley. In Silicon Valley everyone knows how to start a company, to scale a company. Here people have read about it or heard about it, but they haven’t done it. People don’t have that experience, so providing that mentorship and finding those mentors and working with those companies is critical.

SR: How have you used your experience from California, your work at Peninsula Ventures, to map to what you’re doing here? Have you used similar strategies and techniques or are you trying to branch out given the different geography?

GR: The approach we had is to try to take what is appropriate from Silicon Valley and apply it to the Midwest. There are certain parts of the model, or certain extremes of the SV model that just don’t work here because you don’t have critical mass or you don’t have experience or you don’t have the ecosystem or you don’t have capital. So you take certain aspects of the SV model and try to figure out how to apply it here.

SR: Would you encourage entrepreneurs to move to Madison? Move to smaller up and coming startup cities instead of moving to Silicon Valley? Like if you were an entrepreneur right now, where would you go?

GR: That’s a great question. In some ways, SV can’t be beat as far as where you start a company. There is just so much energy and so much talent there, it’s hard to beat that.

On the flip side, trying to build a company in SV has become increasingly challenging as you have an employee base that is incredibly expensive, cost of doing business is incredibly high as you scale. I think there are a lot of reasons to be in these second tier markets, where you have critical mass and an innovative community, but you don’t suffer from the same bloated cost structure or have to fight for talent. So there are definitely pros and cons to being in both places. I can see the virtues of both, for sure. And it really kind of depends on where you want to live and what tradeoffs are you willing to make. Also, do you have access to capital? Do you have access to talent? Some of those things will drive where you could or should base your company.

SR: Can you tell me about some of the second tier markets you’ve seen?

GR: Well Silicon Valley is really in its own league so if you use that as a first tier, then your second tier markets are New York, Boston…LA more recently. Then your third tier markets are places like Chicago, Seattle, Salt Lake. Smaller places that are probably about 10 years behind all of those places…those would be Portland, Boulder, Madison….many of your Midwest tech hubs would be in that category. There are a whole host of interesting places that people want to live for a variety of reasons that can support fairly interesting entrepreneurial communities.

SR: Specifically, in Madison, what are the 2–3 biggest industries that you consider investing in?

GR: Healthcare IT is one Madison is well known for. The largest EMR company in the country is based here. There is a lot of healthcare tech talent in Madison. I would also put agtech (agricultural technology), advanced manufacturing and Internet of Thing as areas that are pretty popular in the Midwest generally.

SR: What’s the next move for you? Do you plan on being here for a while?

GR: When you set up a venture fund you make a long term commitment to your investors. The typical venture fund is set up with a 10 year life, but often times will take closer to 15 years to wrap everything up. So when you set up a venture fund you are not thinking in terms of a 2–3 year time horizon, but with a 10–20 year time horizon. We want to make Madison successful, we want to make Wisconsin successful, we want to make the Midwest successful over the next, 10, 15, 20 years.

SR: Awesome. I guess related to the business specifically, how many people do you have working for you right now?

GR: Venture Capital is a very HR light model. So we have half a dozen folks that work in the firm, and 4490 will expand that a little bit as we expand our capital base. But by and large, venture funds, despite having lots of money to invest, have relatively small teams. You’ll have a handful of partners and a handful of support staff. That is pretty typical.

SR: So you’ve been here about two years now, how many portfolio companies, or how many companies have you invested in?

GR: Our pace is typically about 1–2 investments per year per partner. We have about half a dozen companies in the portfolio and that’s about right for now. But we will accelerate that pace as we add additional investment partners.

SR: In Venture, you raise funds. How many funds have you raised?

GR: We raise a new fund every 3–5 years, so we raised one fund in 2014 (4490 I) and we are raising another one at the end of this year (4490 II). That will be our second fund, and then, the idea would be that we would raise our third fund in 2020 (4490 III).

SR: What types of people/organizations invest in 4490?

GR: 4490’s first fund (4490 I) was backed by a couple of very large local institutions. 4490 II will be backed by those same institutions plus a couple of other institutions.

SR: Do you have any advice for people that want to get into VC? Any must haves for your resume? Or experiences you need to get to be successful?

GR: There is no right or wrong way. But some things that are very, very helpful are a technical background, so someone who can understand the underlying technology. Having a very technical education is helpful. The other thing is having gone through the process yourself as an entrepreneur. Having started a company, raised money, built a company, sold a company, doing that multiple times would obviously be great. Those tend to be the people who have the best perspective, the best network, best insight into what the next generation of companies will look like as entrepreneurs, as board members, and as investors.

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If you read this far, congratulations! Your attention span is significantly longer than mine ;) If this sparked something in you, a desire to learn more about Venture Capital then I encourage you to take Greg’s advice, start a company, brush up on your technical skills or maybe think about applying for an associate position with 4490 Ventures. If interested, reach out to me, Sasha Robinson, at sasha.robinson@gmail.com, for a job description and other information!