On this week's episode of Inside Outside Innovation, we sit down with Allison Weil, Senior Associate at Hyde Park Venture Partners. Allison and I talk about some of the latest trends in venture capital in places outside the Valley. And we dig into some of the tips and insights for new founders.

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Brian Ardinger:  Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger, and as always, we have another amazing guest. We have Allison Weil; she is a Senior Associate at Hyde Park Venture Partners. Welcome to the show, Allison. 

Allison Weil: Thanks for having me. Really excited to chat today. 

Brian Ardinger: Have you, we've had a chance to work together a little bit. You were panelists at the IO 2020 summit and helped look at a lot of the startups that we had at the startup showcase. And you and I were on an investor panel for the Pipeline Entrepreneurs about a month ago. I realized we hadn't had a chance to sit down and talk more in depth about the life and times of venture capital here in the Midwest. So, I figured I'd have you on the show. How about you tell the audience about Hyde Park Venture Partners and what do you focus on? 

Allison Weil: Yeah, absolutely. So, Hyde Park Venture Partners, we are a seed through Series A, venture capital fund, based in Chicago, that exclusively invests in companies in what we call the mid-continent. And we define that as the traditional Midwest plus Toronto and Atlanta. Most of our investments are in software companies. A lot of it is SaaS, but we're also investors in marketplaces and tech enabled-services and companies that we invest in can be anything from free product, you know, with a great team, all the way through a few million dollars in annual-recurring revenue.

Brian Ardinger: The new world that we're living in, the post COVID world, let's take a step back and over the last year, what have you seen? That's changed the dynamics of venture capital in this now post COVID world. 

Allison Weil: Yeah. Great question. So, I think, you know, the first and most obvious thing is the shift to entirely remote investment. You know, prior to this past year, we really actually emphasize meeting our founders in person.

You know, you learn a lot when you meet someone in person that you can't over Zoom call, you know, or a phone call. And I think that's still true for the record. So, it's not a thing that I think is going to stay permanently. I'm not on a perma-Zoom bandwagon, but you know, obviously that was kind of the first thing is a shift to fully remote investing and investing without meeting our founders in-person at all. 

The thing that, that enabled that's been different particularly in the Midwest, is it means that investors and founders don't have to be in the same city or location, which makes it easier for coastal investors to spend time with interesting companies in the Midwest. And so that's been a trend that we've certainly noticed a little bit.

The other thing that we've noticed, frankly is that investment hasn't slowed down at all. It might've slowed down for a little bit in March and April is everybody, ourselves included, took some time to like orient ourselves to this new world, like personal life, professional. Like what in the world is going on right now? Let's figure it out. What's going on with our portfolio companies, get everything stabilized. 

But past that, investment's been going on rapidly and at high valuations, and the markets are shockingly hot. All of that is what I'm seeing, which is certainly, probably not what I would have anticipated, if you would have asked me, you know, the second or third week of March, like what's this next year going to look like.

Brian Ardinger: A number of questions come to mind after what you just talked about, one being, so you mentioned investing remotely. What have you learned about how you can read a person or what specifically is different about investing remotely versus in person and how have you adapted? 

Allison Weil: What investing remotely requires you to do is spend a little bit more time just on having those conversations with folks over Zoom, right? So typically, you'd invest in person. You might go to lunch with somebody or dinner, you know, in the city, and just build that rapport. Right? Early-stage investment report is actually pretty important because you're building your relationship that can last a really long time. 

And so, you don't want to cut that time short. You still want to spend lots of time with the entrepreneur. You still want to get to know them and you can do that over Zoom. Right? Like you can still learn about like who are you as a person? How do you lead a team? You know, how do you interact with people who are different than you? How do you make decisions and all of these things that are still important, you can pick it up via Zoom.

There is some stuff that you can't. I think some of like the interpersonal chemistry is a little bit different over Zoom versus, you know, in-person, but you still have to spend all of that kind of time getting to know folks. It just might be more sporadic than the concentration that you had, you know, when you traveled to their city.

Brian Ardinger: Have you seen founders address it differently or different ways that they've come across better in that particular environment?

Allison Weil: I rely more on quality decks than perhaps I did in the past. So, in that first conversation, if it was in-person, it's a little bit easier to interject and kind of read the room a little bit more and people over Zoom, the really good founders, are doing that over Zoom effectively. So, they are using a deck, but they're using it as a prop rather than as the center of their conversation. Right. 

They're still reading my facial expressions. They're still figuring out, you know, if I have a question that needs to get asked or where to pause and where to keep going and things like that. And they're effectively guiding the conversation much more so. I prefer those kinds of intro conversations to be more like a conversation than a pitch.

Like I prefer folks to tell me their story, rather than walk me through their pitch deck. And so the best founders are using Zoom and are using their pitch deck to enable them to really tell their story, versus tell the story of their pitch deck. Those are two different things. 

Brian Ardinger: Are you seeing more cold outreach than that? Or are you still seeing the same deal flow from other founders recommending or other venture partners and that recommending? 

Allison Weil: I'm probably seeing marginally more cold outreach right now, but I don't think that that's a function of Zoom. I think that's a function of just some other things that we, as a funder doing and I'm doing.  So, most of our deal flow is definitely still coming from referrals, from our funds, or for me doing outreach. 

I certainly do a significant amount of cold outreach to new folks that I find a mountain ecosystem. I welcome cold outreach. Anybody who's listening to this, who wants to send me a note, who is a founder in the Midwest and is like, I would like to talk to Hyde Park, like don't wait, send me an email. 

I love cold outreach. I'm not scary, please do it because that's something that I welcome. Frankly, I think is a great quality in a founder because it shows a boldness that's going to be pretty important. 

Brian Ardinger: The other thing you kind of mentioned at the initial question, you see a lot of talk about founders and companies moving from Silicon Valley to other cities like Miami or Austin or Denver, Chicago. What are you seeing on that front? And are you seeing a shift from the tech hubs to the other places in the world? 

Allison Weil: You know, I find that that's probably a little bit more buzz than reality. You know, I'm actually originally from South Florida. And so, I see all the leg VCs moving to Miami talk and it's December and January. And like, that's a lovely time to move to Miami. Talk to me again in August and I'll welcome them to Chicago. Because I'm sure that's when the shift will come out of here. 

I think that there is a shift, but it's a marginal one. You know, I think at the end of the day, most folks are still, you know, for better or for worse, going to concentrate in the same place as they've been concentrating.

And it might be a 5 or 10% movement out of Silicon Valley or New York or something like that. And now 5%, 5 or 10% is, is certainly not nothing that that is, you know, potentially a pretty significant shift into other ecosystems and can make a pretty outsized impact. I don't think 90% of folks are leaving Silicon Valley or will anytime.

Brian Ardinger: Are founders talking about it as far as like, they're no longer thinking, well, I've got to actually go out and find money in Silicon Valley or open up an office out there. Are they actively saying, well, it's now on the radar that I don't have to be there?

Allison Weil: The founders that I talk to in particular are the ones that never were planning to like initially open an office in Silicon Valley. And our whole thesis is that you don't need to be in Silicon Valley to start your company and to build your company. And you can look at our portfolio and see that there are great companies in it that don't have any office presence out in Silicon Valley. 

They might raise funds out there, but that doesn't mean that you need to have a significant office presence out there and you need to find talent out there. I just fundamentally don't think that that's a requirement. I think it's even less of a requirement now. And I think what we are seeing is founders having an increase in their distributed teams and really building more fully, remotely and open to that because obviously, you know, everything is really fully remote right now.

But I think in the long-term, I am on the more skeptical side about the long-term impact there. Right. I am someone who believes that people will return to offices, kind of, as soon as it makes sense to. The network effects of being in an office and being around your coworkers are too great. 

And that It's a lot easier to get promoted when you're in front of your boss every single day, all the time, then it is, you know, remotely as much as you kind of wish it. And then as we returned to do those kinds of environments, that's where I think the world's going to go. 

Brian Ardinger: You do a lot of outreach to find startups in that. What's your favorite way to find or research startups? How do you go about analyzing the deck of opportunities out there? 

Allison Weil: So, I find opportunities, a lot of accelerators, incubators, pitch days, et cetera. You know, anytime a startup does something like that, there are VCs trolling it, looking for the interesting ones. So, I certainly do that a lot. 

I like local media, a fair amount, actually. Particularly because I tend to be sourcing in secondary markets. The kind folks at Startland News, for example, are going to report on a startup pretty early on once it starts getting momentum. And I certainly read that all the time to make sure I'm on the pulse of what's going on in the Western Midwest. 

As far as analyzing a deck, the first read of a deck of like, whether it's interesting or not. You know, my first question of anybody is who are you and how did you get there? So I look, I go straight to the team page and I'm like, what's going on here? Why is this a good team for this kind of company? And a good team can come in a bunch of different forms, but that's kind of a core question that I want to answer.

And then it's, is this an interesting problem? Is it an interesting solution? And I don't mean what I'm about to say next in a bad way, which is then my bar is actually pretty low after that, right? Like, which is, I am optimizing on I want to talk to every potentially great founder in the Midwest and every potentially great company in the Midwest.

That can be hard to tell off of like a website or a deck or a LinkedIn page or whatever it is. And so I want to have that conversation. And so, anytime I'm on, there's like a spark of anything, I'm going to reach out and I'm going to want to have that conversation. 

And I'm going to want to spend 30 minutes and see, Hey, you know, is this something I want to spend a little bit of time on? Because the upside for me is significantly higher than the downside would be. 

Brian Ardinger: So, let's switch gears and talk about what are some of the trends that you're seeing? What are some of the industries that you're looking at? What are some of the changes that you're excited about? 

Allison Weil: We're generalist investors. So, I take a look at everything across the spectrum. I look at healthcare, I look at FinTech. I look at e-commerce, I look at drones, you know, whatever. Whatever it is, I look at it, which is awesome in a lot of different ways, but it makes it really hard for a question like that. 

But I think the trends that I am watching in particular, I think the biggest one is e-commerce infrastructure. You know, obviously over the course of the past year, e-commerce as a share of the total, like retail has increased dramatically. It's something like, you know, 10 years of progress over two months is what happened in March and April. And so, we at Hyde Park have a number of investments in e-commerce infrastructure.

We just made another one announced yesterday in Blackheart, which is a Toronto-based company, that's enabling try before you buy, which we're really excited about. So that's kind of one area. The other area that gets me excited in the FinTech space is around financial tools for folks that like don't have financial tools that really work for them.

The banking system, as it stands, kind of works for a subset of the population, but it doesn't really work for lots of people or businesses. And so, anytime I see a FinTech company that is working towards building a better financial reality for the broader population, that's something that gets my attention.

And then the third thing that I get excited about are picks and shovels for industries that are still emerging. And things that kind of get my attention there, e-sports is a big one, you know, fast growing, you know, already a pretty significant share of users is the big one. 

Another one is drones, as I mentioned. So, like not so much a drone company, but a company that will enable drones to do deliveries. And a company that will enable the data to get off of drones, more easily. Stuff like that could be an area that I would get pretty excited about and same goes for other kinds of autonomous vehicles or whatnot.

And so that's the sort of third area that I love spending time in. And then I get really excited about. There's more, but those are three highlights. 

Brian Ardinger: And the last topic I want to talk about is, so you've been on both sides of the table. You've been a founder with a startup. Now you're on the other side as a venture partner. What's some of the best and worst startup advice that you've seen from both sides of the table that you'd recommend to our founders out there that are listening. 

Allison Weil: The best advice that I will tell you from my own failed startup is make sure that you are building a team around you that you can excel with. Right? You need to make sure that everybody around the table, at the earliest stages, when it's two, three, four people, every one of those people needs to be working in sync and effectively and at their best and entirely committed. Without that, it makes everything else really, really, really hard.

And so, like really making sure that you've got a great team and that you're working with a great team that you want to be in the trenches with is probably the biggest piece of advice I would give from my time as a founder. 

And from my time as an investor, the other side of it is, and like, there's part of me that really hates this advice. There's part of me that like, doesn't want to say this, but it's also really true. Make sure you know how to tell your story. At the end of the day, you only fundamentally get like 30 minutes with me most of the time or, or other venture capitalists. 

In that 30 minutes, I need to be able to answer a number of different questions about you and what you're building. I need to understand it well enough to share it and share what's exciting about it with the rest of my team if I find something interesting. And it can be hard to do that if you're not effectively sharing your story with me. Who are you? How did you come to this problem? Why are you passionate about it? What are you doing to solve it? You know, what's the status of the business and how's it going? 

And like quality answers to all of those in a short period of time can be difficult but practice it and really make sure that you're doing it. Because the last thing that I want as a venture partner is to have a great business in front of me that's just not good at like, making it clear that it's great. Because that's heartbreaking to me. 

Like there's something here, but if I can't see it and I can't like wrap my hands around it. Then I'm not going to be able to kind of keep digging in or it's going to be really difficult for me to keep digging in.

Brian Ardinger: I think that's an important point that being able to, the founder being able to translate that to the venture partner, so that they can translate that to their other partners and get feedback and that. I think that's the hardest thing. Oftentimes you see a nugget there, but if you can't clearly then re-communicate that back or transfer that enthusiasm the same way the founder does, it oftentimes dies right there. 

Allison Weil: Completely or the founders will get stuck on like one part of their business. Actually, one of the biggest problems I see sometimes in a pitch is folks that are solving big, hairy, important problems, get stuck on the big hearing important problem, but they forget that like, I know that it's a big carry important problem.

Like I live in the world too. And like, I see that the financial inclusion one is a great example. Like I see that this is a huge problem, and I don't want to spend 20 minutes, of my 30 minutes on it. I want to spend one minute of my 30 minutes on like the piece that's like, here's there's this big problem. And then I want to spend 29 minutes on, and this is how we're going to solve it so much better than anybody else that you talked to about it.

For More Information

Brian Ardinger: Absolutely. Well, Allison, it's great to talk to you and get some insight what's going on. I'd love to have you back on the show and tell us in the future, what you're seeing and that. If people want to find out more about yourself or about Hyde Park Venture Partners, what's the best way to do that. 

Allison Weil: Our website is www.hydeparkvp.com. And my email is Allison, ALLISON@HydeParkVP.com. And I'm always happy to chat. And as I said earlier, love cold outreach. So please, please do it.

Brian Ardinger: Excellent. Well thank you for being on Inside Outside Innovation and sharing your thoughts. Looking forward to continuing the conversation and have a great week ahead. 

Allison Weil: Thank you. And you as well.

Brian Ardinger: That's it for another episode of Inside Outside Innovation. If you want to learn more about our team, our content, our services, check out InsideOutside.io or follow us on Twitter @theIOpodcast or @Ardinger. Until next time, go out and innovate.

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Originally published February, 2021