A new firm is hoping to find a diverse mix of opportunities — and entrepreneurs — in the Midwest even though it’s not a VC haven like Silicon Valley, Boston or New York.
Subscribe to the Crunchbase Daily
Pittsburgh-based Magarac Venture Partners (MVP) recently launched, hoping to take advantage of what it thinks is an area with untapped potential that has seen underinvestment.
“We believe there will be a dozen unicorns in this region eventually,” said co-founder Zach Malone.
Although the firm cannot talk about funds or investments, Malone said MVP anticipates writing checks from $500,000 to about $5 million for seed and Series A rounds. MVP will look at companies around the region, and especially eye sectors the area has excelled in such as enterprise software, robotics, medtech and autonomous vehicles, he said.
Following the numbers
Aside from seeking out impactful companies, MVP also will look for diverse founding teams. The firm does not have a hard target, but is aiming for about a third of its money to go to founding teams that are composed of underrepresented groups.
That idea was planted by partner and co-founder Will Allen, a prolific angel investor and former NFL player.
Malone and two other MVP co-founders — Jay Katarincic and Mike Stubler — all are colleagues at one of Pittsburgh’s largest venture firms, Draper Triangle Ventures. From Draper Triangle’s last fund — an $80 million fund from 2013 — the portfolio companies with diverse teams were some of the highest performers, said Allen.
“VCs who aren’t thinking about (diversity) are going to miss out on those returns,” Allen said. “I’m not out to prove that, I just know what the data says.”
In addition to the money MVP will provide to companies, the firm anticipates giving a significant value-add proposition to its investments, which also may help with inclusion and diversity. The firm anticipates putting together a team and resources to help companies grow through sales, marketing and hiring. That last aspect likely will include helping finding talent to keep companies and their employee base diverse.
Rust to gold
Although MVP is new, the founding team is long on experience in investing — including in the Midwest.
Katarincic and Stubler co-founded Draper Triangle Ventures, the first satellite office of Tim Draper’s venture network, in 1999, with Malone joining in 2011. The firm — which will continue to manage its current portfolio but will not look for new investments — raised three funds in 14 years totaling $215.5 million, investing in companies such as Locomation, Aware, Autobooks and Alviere.
Allen has made 15 investments, mainly in fintech, esports and software. In 2010, he made his first investment and realized his football background related to building companies.
“You keep building so you can get to that highest level,” he said “It’s kind of like I’ve been an entrepreneur since I was 8 years old.”
While Malone remains optimistic about the region, he readily admits it can be hard to find money as limited partners look to invest in areas like New York and the Bay Area. But he sees an upside too.
“It may be harder to raise money, but it’s easier to invest — there are just so many opportunities here,” he said.
MVP thinks it can take advantage of that.
“We are going to be the firm transforming this region,” Allen said.
Illustration: Li-Anne Dias.
Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.