Four local entrepreneurs and angel investors have teamed up to create Indianapolis-based Round One Capital, a new fund for emerging startups.
The partners—Jay Love, co-founder and former CEO of eTapestry and Bloomerang; Gary Rush, former chief technology officer at ExactTarget and Angie’s List; Todd Katz, former CEO of Bell-Horn; and Scott Brenton, former chief operating officer at Angie’s List and president and chairman of the Orr Fellowship—plan to offer startups more than just money. And they plan to grow the fund over time.
The partners have significant operational experience, as well as expertise in areas including technology, finance, sales, marketing, operations, products, security and board formation and operation.
The partners are seeding the fund with about $2 million and the size of the investments will range from $50,000 to $150,000, Love said.
Round One will seek to make 25 investments over the first two years. Part of its plan is to use the founders’ extensive contact lists to help Round One portfolio companies raise larger rounds. Love said startups can submit pitches or their contact information through Round One’s web site, round1cap.com.
Love said Round One is considering adding one or two more investors.
Rush, Love and Katz have been collaborating on angel investing since 2018. They publicly launched Round One this week.
“We were getting decent deal flow, and we thought we could ramp this up if we went public,” Love told IBJ.
Love said Round One has more to offer than capital.
“We want to do this in a way that helps company founders get better,” he said. “There are some formulas and pathways to success, and we think we can help these founders find those pathways. Our ultimate goal is that everyone we spend time with we leave in better shape than we found them. We’re going to go about this in a very unique way.”
One of the tactics being used by Round One, Love said, is its scorecard system. Each startup that pitches Round One will get a score from zero to 100 and an explanation of that score. That scorecard will be shared with the startup’s leaders even if Round One decides not to invest in them.
“I think about the first startups I started, and I would have given someone the biggest hug if they would have offered this to me,” Love said.
“When I got a ‘no’ from an investor, I never could figure out why and where their thought processes were. That’s why we plan to share the numeric scorecard,” he added. “We want to share the scorecard with every one of the startups that pitches to us to encourage them to fix the problems they have or build on their strengths.”
Round One is looking for entrepreneurs who are working on their startups full-time, and those who have already received funding from friends and family and are looking for their first round of seed funding.
Round One is looking to invest in companies where the four founders have expertise, including startups in the technology and software, manufacturing technology, insurance, health care and consumer products sectors, Love said.
“These four partners were not chosen by accident,” Love said. “We wanted folks that filled out the C-suite in expertise. With many of the investments, we will look to take a board seat or take an advisor role and be of service in that way too.”
Love said Round One is primarily looking for investment targets in the Midwest, but the partners won’t rule out looking for opportunities nationwide.
Round One officials hope to use the return from the first round of investments to launch a bigger second round.
“A portion of our return will definitely be going to future investments,” Love said. “The number and size of the investment could grow over time, but our main interest is to work with startups. Working with startups is so rewarding. We love to mentor these young companies and entrepreneurs. It just puts you on cloud nine.”
Additionally, he said, there’s a real positive economic impact to working with startups.
“I just look at the number of jobs created by the companies I’ve started,” Love said. “These startups can account for hundreds and hundreds of jobs. These are often white collar, recession—even pandemic—resistant jobs. So jobs creation is a really big part of our goal.”