An Introduction to Bascom Ventures Fund 8

Frequently Asked Questions

FAQ

• Where is the transcript for this webinar?

  Speaker 1:
  Hello, and thank you for attending our webinar on Bascom Ventures. My name is Greg Baker. I’m Managing Partner of Bascom Ventures, joined here by Keaton.

  Speaker 2:
  Hi everybody, I’m Keaton Nankivil, Senior Associate with Bascom Ventures.

  Speaker 1:
  Over the next several minutes, we’re going to talk a little bit about Bascom Ventures, Alumni Ventures Group, our portfolio companies from Funds One, Two, and Three, and where we’re headed with Fund Four. So, without further ado—well, a little bit of ado—we’re going to start with some legal information. I’m not reading all of this; basically, this presentation is for informational purposes only. This is not an offering to sell securities or anything like that. If you would like more information about potentially investing, reach out to me and we can talk about that further.

  With no further ado, Bascom Ventures is an actively managed venture capital portfolio for University of Wisconsin alums and people with an affinity for the school. We are part of Alumni Ventures Group, which is a large organization that has 15 other school funds—schools like Harvard, MIT, Yale, UCLA, University of Texas, Duke, Northwestern, and other top universities across the country.

  We work together, we share deal flow, we help each other analyze investments, and we invest together on a number of deals to help with check sizes and give us a little more flexibility on what we can do and which deals we can invest in. Alumni Ventures Group was started in 2014. Bascom Ventures started in 2017.

  Over the last few years, we’ve had tremendous growth. We’re now with over $400–500 million in investments into our funds and just continuing to grow. Last quarter, we were determined to be the most active venture capital fund in the country. It’s clearly not a strategy of quantity over quality. We continue to do what we did from the beginning: invest alongside established venture capital funds in institutional rounds of fundraising for these companies.

  We have a very detailed due diligence process. For most of the companies that go into Bascom Ventures Fund, we’ll start with that process as we get further along, and we’ll bring in another fund or two to help us take a look. That allows us to have different perspectives and viewpoints, and then write bigger checks for companies where there’s room for us to write bigger checks. Keaton works almost exclusively on evaluating deals.

  You want to talk a little bit about the pipeline and what we’re looking for?

  Speaker 2:
  Sure. By virtue of being connected to the Bascom network, we see a lot of fantastic companies that are somehow connected to UW—either through a founder, an executive, a board member, a previous investor, or a current institutional investor. We also see other opportunities that might be less obvious in the UW network but cross our screen.

  We always collaborate with our partners at the other funds to make sure we’re addressing these appropriately and funneling them to the right people. We see a lot of fantastic deals—sometimes it’s an embarrassment of riches—but we really do get a look at a lot of great opportunities. Since I’ve started, the pipeline has been full with an incredible array of opportunities across stage and industry. It really allows us to execute on our strategy of providing a diverse portfolio.

  Speaker 1:
  Yeah, and as I mentioned, we’ll bring in other funds to help us evaluate deals. We’ll join our sibling funds on that. About half of the portfolio are deals that we bring in, and the other half are ones that we join.

  This is actually really strange—Keaton and I are in the same office, but we’re about 10 feet apart from each other with walls. It’s just a product of the times that we’re sitting here looking at each other but in different windows.

  Going forward with our presentation: As we mentioned, we’re investing alongside established venture capital funds. Over the past decade, as we show here—but this goes back several decades—venture capital has had a nice return profile.

  What this shows is if you invested in a fund in 2005 and it was a 10-year fund ending in 2015, if it performed at the median, it delivered about a 14% return each year compounded, which is right around 3.6–3.7 times your money net of all fees. If the fund performed in the top quartile, it was about 22%, which equates to roughly 6.5 times your money.

  Past performance is never a guarantee of future success, but this industry has, in many periods, outperformed other asset classes. It just hasn’t often been available for individuals to invest in. The top investors have this history, so we decided to invest along with established lead investors—it just makes sense. I never want to be the first institutional investor or invest alone. That’s the strategy we’ve taken, and the results so far have been pretty good.

  We have a report that shows what Alumni Ventures Group has done over the years. We’re still very young. Bascom Ventures’ oldest fund is only two and a half years old, but its return is currently above the median for funds that started investing in 2017.

  You can say that about nearly every one of our funds across Alumni Ventures Group—we’re performing above the median, and some are performing above the top quartile. The strategy seems to work and kind of feeds on itself. Right, Keaton? They start to invite us into deals after we’ve invested with them in the past.

  Speaker 2:
  Yeah. To do something new in the industry when AVG was first started—and certainly when Bascom was founded—was looked at a little more skeptically. I rarely see that friction now when talking about our strategy with founders or when I’ve had opportunities to talk with other investors. I think AVG as a brand has continued to show value-add, and it will continue to compound in the future if we continue to execute well on the strategy.

  Speaker 1:
  Yeah, and Keaton joining us full-time now is interesting. Keaton was the first person who joined Bascom in the Fellows Program. He totally immersed himself in it, went to investor meetings with me in Madison that first year when no one had ever heard of us and had no idea if our checks were even real money.

  Now, joining us for Fund Three, Fund Four, and beyond, the conversations are completely different. Still, we’re very proud of that first portfolio. We were able to convince people that we were worth having around, and now it’s continued to grow.

  I wanted to take you through some of the portfolios we’ve had over the years. This is the list of companies we invested in for Fund One.

  Some of the highlights: American Gene Technologies—you’ll probably hear about them a lot over the next six to eight weeks. A few weeks ago, they started a clinical trial. They have a gene modification treatment process and have started a trial on a functional cure for HIV. The first patient should be fully cured of HIV (unless something terribly goes wrong) within the next week or so, and I’m sure they’ll heavily publicize that.

  It’s a tremendous opportunity for us. Their intent is to sell off that HIV cure—it’s really just a proof of concept of their technology. They hope to sell that cure off sometime in 2021, which would be great. We’re not counting on it, but it would be nice.

  Errand Solutions is a nice little company that’s been around forever—one of the longest-running venture-backed companies you’ll ever see. It has created a lot of jobs in Northern Wisconsin and is headquartered in Chicago. A woman started this company and had an acquisition offer in 2008, but the next week the financial world collapsed and the offer was pulled.

  They actually had another offer in March of 2020 that again got pulled, but that worked out well for her because they provide concierge errand services. They’ll do whatever you need, and during this time of lockdowns, many companies have brought them in to help employees.

  Markable AI, a company that for a while was headquartered in Madison, has great technology to help with advertising and is making great strides with large players in China.

  Phase Four is making booster rockets for CubeSats, and they’ll be selling quite a few over the next few years as companies put constellations of satellites out there.

  Speaker 1:
  Righetti—for those of you who invested in Fund One—on paper, it’s not doing great. But in reality, functionality-wise, they’re out there performing. They’re building a quantum computer and are considered one of the leaders in the quantum computing world.

  This is going to be one of those companies that shows the importance of valuations of companies. We invested at a certain point, and when they needed to raise money again and the market was a little off, they took a round that was at a lower value than the first round we invested in, even though they had exceeded all their milestones.

  So, we invested there as well to make sure we didn’t get diluted from the down round. Assuming they continue to perform the way they have been performing, they’ll end up exiting at the same point, and that interim on-paper negative value will be wiped out.

  Any companies you’d like to highlight, Keaton?

  Speaker 2:
  A couple of my favorites. Right now, it’s really relevant to talk about Heal. When we first got into Heal, I believe it was in 2017 or 2018. It was an idea that sounded very interesting and progressive at the time—adding a tech layer onto physicians. Essentially, they built infrastructure that allowed physicians to make house calls very easily, and they facilitated that with a lot of technology.

  Fast forward to 2020, and they have an incredible head start in building technology for what has become a necessity—telehealth and tech-enabled health services. This was already a company doing well, but now it’s riding the trend and is really well positioned to take advantage of the moment. That’s not only great for Bascom but great for people who need healthcare during a time like this.

  Another is Shine, another Wisconsin company. It’s really interesting how they’ve leveraged a cornered resource—they are the only producer of the isotope Molybdenum-99, which is crucial in a lot of healthcare functions. They’re the only producer in North America, so they obviously have a large chunk of the market that is very accessible to them.

  It’s a rapidly deteriorating isotope, so the ability to distribute from a facility in America gives them a huge market advantage.

  Speaker 1:
  Just to be clear, they’re not the only manufacturer in North America. There’s one in Beloit that just makes it in a different consistency and is much tougher to use. As the Shine CEO would say, it’s like your option of going to the gas station and filling up your tank or buying a barrel of oil and refining it in your driveway—and Shine is the better, easier option.

  Moving forward to Fund Two—Keaton went off to business school and worked for another venture capital fund while I was doing most of this, so he’s not as familiar with some of these companies.

  Compass is one—one of the top realtor companies in the country now. It grew from close to nothing by adding tech to an industry that’s been around for a while. They announced in the last couple of weeks that they’ve hired investment bankers and plan to go public next year. Tremendous growth from when we invested.

  FinLocker—when you’re dealing with Compass and need to get a mortgage, FinLocker works with mortgage companies and other financial institutions to help them get the information they need easier and cleaner, and it gives customers a nice tool to track their financial health.

  Mythical Games is a gaming company. Their first major product is coming out this month. It’s an alternate reality game, but Mythical Games also has technology that will help other gaming companies provide a way to track sales of items and souvenirs within e-sports.

  Mission Bio does single-cell sequencing of DNA, RNA, and proteins. They were doing so well that they were able to close a financing round in March of 2020 without a change in valuation despite everything going on in March. Tremendously successful company right now.

  Trifacta is a leader in data correction for big data analysis. They’re a cousin of Snowflake, which had a tremendous IPO earlier this year.

  Some other companies are also doing really well in this cohort.

  Simple Machines is a Madison company that recently released their product. They had been working on it as a demo previously, but now their chip—which is orders of magnitude faster and easier to use—is being sampled by major companies.

  Point Load Power allows for tracking of rooftop solar panels.

  One of our companies is working through a merger with a public company, so we’ll be exiting soon from that investment.

  Moving into Portfolio Three, we’re still in the process—we’re only showing 15 companies here. There are a few more that we’ve invested in that either haven’t been made public yet or we haven’t wired the check yet.

  One of those checks we’re wiring in the next day or so for a very exciting company I’m looking forward to talking about.

  As I mentioned earlier about Righetti in Fund One, we liked where they were, and since we liked it at a higher price two years ago, we really liked it at a lower price. So, we invested again out of Fund Three.

  Actuate is a company based in Madison. Rock Mackie, who was the founder and CEO of TomoTherapy, is basically creating Tomo 3.0 with pretty much the same team. We invested there.

  30 Madison is a company with a variety of platforms for telemedicine treatments of issues you generally see a specialist for. There’s a shortage of specialists, so they’ve built a network of these specialists that can meet with you via telemedicine.

  This was an interesting investment we made on March 5, 2020. We had a webinar where I interviewed the CEO during lockdown in April. If you want to hear that, I can send you a link. He basically said that the first month and a half of lockdown was the equivalent of one free year of marketing because people were looking for ways not to go to the doctor—similar to Heal from Fund One.

  Keaton, you worked on some of these?

  Speaker 2:
  Yeah. I think it’s worth highlighting what Greg said about Righetti—you see Shine in here again. With our annual fund vintages, it’s a really unique opportunity.

  Not only do we maintain reserves from the original fund, but we also get an opportunity to see these companies through their life cycle. Fund One participants get a piece of Shine, and Fund Three gets to participate as well.

  That’s a really nice part of our model—we can explore these companies as they develop, see how they’re growing, and allow our LPs to participate not just once but multiple times as they progress.

  Another one I’m a fan of is Loom. As someone who’s been in Madison the past couple of years, Loom—Live Undiscovered Music—is a really scrappy, fun team. They started this company as undergrads. We invested at an early stage.

  They not only have a team that resonates in the area of independent and underground music, but they also have an exceptional board of advisors and people supporting them. They’re one of the hardest-working teams I’ve seen.

  It’s been fun to see them in the Madison area. They’re being very strategic about how they grow the business and roll out to other opportunistic areas of the country.

  Speaker 1:
  And then Miraculex here has actually changed their name to Joywell. They’re a protein-based sweetener that’s over a thousand times sweeter than sugar and has no carbs. As they work with some of the large consumer packaged goods companies, we could see some interesting new products that don’t add to the carbo-loading that most of us inadvertently do in our lives.

  Moving forward, let’s talk a little bit about Alumni Ventures Group and Bascom Ventures. Fundamentally, we’re a venture capital fund putting together a diverse portfolio of 20–30 companies for our investors. It’s a one-check investment, and people can treat it as passively as they want.

  We have investors who get involved, join us, and help with our investment committee. But we’ve always struggled with the fact that many people want to be involved in building their own portfolio to some extent.

  Alumni Ventures Group has created our syndicate to address this. Over time, they’ve refined it and figured out the right approach. Currently, about twice a month, there’s a deal that goes through the AVG syndicate. Everyone who has invested in one of our funds can participate for a year. If they invest in another fund, they get another year.

  Once or twice a month, people can dial in—set whatever frequency they want—and we’ll present a deal that we’ve already decided to invest in as part of Alumni Ventures Group. If there’s room for more capital, investors can review our due diligence materials and decide if they’d like to write a $10,000, $25,000, $50,000, or $100,000 check because they really like that company.

  Righetti, which we’ve mentioned a few times, was one of these opportunities. We let individuals invest in a Series B round led by Bessemer, with Andreessen Horowitz having led the Series A—not exactly your typical angel deal. Timbo, Well Health (Wasabi), Shine, and others have also gone through this syndication program.

  Righetti was the most popular syndication ever within Alumni Ventures Group, and Shine was in the top three. Another Bascom company was the fifth most popular. Out of 16 Alumni Ventures funds, two of the top five syndicate deals were Bascom deals.

  This provides a very interesting opportunity for people who want to be more involved. We have active Bascom investors who regularly participate in these. We also have people who sign up simply to read about the companies out of curiosity, and a few who call me during every syndication to discuss the company.

  Another feature we’ve created for the syndicate is called Venture Clubs. If you don’t want to call me every time, you can form or join a group where members can discuss deals together. You get access to the data room and a secure way to communicate with each other. Each person then decides individually whether or not to invest—it’s not a pooled group investment, but the club provides a collaborative discussion environment.

  Anything you’d like to add on syndicates or clubs?

  Speaker 2:
  No, I think Greg summarized it well. It’s a really interesting opportunity. Angel groups have existed for a while, but through AVG’s effort to democratize venture capital, we’ve created a mechanism for people to participate in unique opportunities.

  These are companies that, hopefully, people will be hearing about for a long time. They’re fascinating, innovative companies and compelling opportunities across a wide array of deals. Even if you just want to read the reports, it’s fun and informative. Across AVG, we see some incredible deals, and it’s a great place to be.

  Speaker 1:
  With that, we’ll move into Q&A.

  We have one question already: How do the companies you invest in differ from those that Alumni Ventures Group’s Basecamp fund might invest in?

  There are two levels to that. Basecamp is one of our focused funds. Alumni Ventures Group has a series of focused funds, and each quarter a new focused fund is available.

  Last quarter (Q3), it was the Deep Tech Fund. In Q1, there’s going to be a Diversity Fund. These focused funds are very passive—they don’t have dedicated managers. For example, the Deep Tech Fund automatically invests in every quantum computing deal that any Alumni Ventures fund invests in. If Keaton and I invest in a quantum computing company like Righetti, the Deep Tech Fund automatically participates.

  Basecamp, the focused fund available in Q4, is a pre-seed and seed-stage venture capital fund. Four managing partners spread across the country are sourcing very early-stage deals. They’ll assemble a portfolio of around 100–120 companies over the year with relatively small checks—high risk, high reward.

  Bascom itself makes about five seed-stage investments out of 25 portfolio companies. The majority—10 to 12—are Series A deals (slightly later stage, lower risk, lower upside). We’ll also have three or four Series B deals and later-stage investments with shorter times to exit.

  Another twist is that 6% of Bascom’s capital automatically goes into Basecamp. So every Bascom investor has a small exposure to Basecamp investments. For an individual, it’s probably only a couple of dollars per Basecamp investment, so it’s minimal.

  If you’re specifically interested in very early-stage companies and want a much broader portfolio, Basecamp is the better choice because Bascom is slightly later stage.

  The intent of Basecamp is to let AVG “get its foot in the door.” As Basecamp companies mature and move to Series A, we’ll introduce them to one of the school funds (like Bascom) to continue investing, taking advantage of our early pro-rata rights.

  To summarize: All Basecamp investments are technically in Bascom (through the 6% allocation), but the exposure is so small that a dedicated Basecamp investment provides significantly larger exposure to those early-stage deals.

  Any other questions out there? If not, we could scroll through and read the five pages of legalese—but I’d rather not.

  Keaton, was there anything you wanted to add to the Basecamp question or anything else we haven’t covered yet?

  Speaker 2:
  Yeah, and as the point person for inbound portfolio construction matters, this fundamentally is built on the backs of Badgers. If you’re someone interested in this ecosystem, never hesitate to reach out directly to me. We love hearing about anything interesting going on.

  One of the biggest benefits of this network is that we have eyes and ears across the country sending us interesting ideas, and we love to follow up on those leads. Whether you’re a participant in the fund or not, this is a network of passionate people, and the reason it works is because it’s built around a community like Wisconsin.

  So, never hesitate to send us interesting stuff or reach out with questions. We love talking about this, we love supporting Badgers, and we get to play in the broader ecosystem as well. Anything you want to talk about, that’s what we’re here for.

  Speaker 1:
  Another question we have is: what percent of companies we invest in have Wisconsin ties?

  As I mentioned, Keaton and I find about half of the deals that go into our portfolio. Over 95% of those deals have a Wisconsin tie—whether it’s a C-level executive, board member, or founder.

  Of the 12 to 15 deals we’ll put into the portfolio, typically 11 to 13 have a Wisconsin tie. The other half of the portfolio comes from investments we make alongside the MIT fund, the Princeton fund, and other sibling funds. Those won’t necessarily have Wisconsin ties, but about 25% of those do.

  Overall, around 60–65% of our portfolio companies have a Wisconsin tie.

  If you look back at Fund One, it was all but one company with Wisconsin connections. That was the mission back then, and it was actually the only way we were getting into deals—we hadn’t yet started investing with sibling funds and were siloed amongst ourselves.

  What our investors told us is: Bucky is nice, but they really like money. So, we focused on getting into the best deals possible.

  Next question: Would it be possible to show and talk about the breakdown of Portfolio One?

  If you go back a few slides, you’ll see Portfolio One and its companies. We’ve already talked about several of these. A number of them have gone up in value, and a couple have gone down.

  As mentioned, Righetti, despite performing well, has decreased in valuation.

  Regarding Wisconsin connections: almost all of these companies have them. For example:

  • Phase Four: The CTO, a brilliant rocket scientist, earned his PhD at Wisconsin.

  • Markable: Executive team mostly Wisconsin grads; based in Madison.

  • Heal: Senior executive is a Wisconsin alum.

  • American Gene Technologies: Tommy Thompson is on the board; Wisconsin was the largest outside investor; CTO has a strong research background at Wisconsin.

  • DogSpot: Husband and wife founders; husband attended Wisconsin; #2 and #3 team members also attended Wisconsin.

  • Errand Solutions: CEO is a Wisconsin alum.

  • Flex Lighting: CEO is a Wisconsin alum; sits with me on a university mechanical engineering board; company is based in Chicago.

  • GrubMarket: CEO is a Wisconsin alum; rapidly growing farm-to-table supply chain company that just announced another acquisition.

  • Harbor MedTech: One of the board members attended Wisconsin.

  • HealthMine: Based in Middleton; many Badgers on staff; specializes in AI for CT scans; founders have Wisconsin ties; company acquired by Twitter.

  • Inablative: Founder (now CTO) is a Wisconsin undergrad and Northwestern alum; company makes a cauterizing tool for tumor removal.

  • LARQ: Spun out of Radiant, another portfolio company. LARQ makes a self-cleaning water bottle using Radiant’s UV technology. Radiant’s CEO is a Badger.

  • Shine: Previously discussed.

  • Tether: The one exception without Wisconsin ties.

  • Verity: Makes miniature drones for light shows.

  • Wheels Up: Founded by Kenny Dichter, one of Wisconsin’s most famous entrepreneurs; offers private aviation memberships (~$10–12K/year).

  Overall, this fund has seen about 30–32% growth so far, which is strong for early-stage venture investing in its first couple of years. That’s well above the median.

  Hopefully that covers everything you wanted to know about Portfolio One’s breakdown.

  Not seeing any other questions—we’ll give it another minute before we wrap up.

  There will be opportunities to set up a call with me if you’d like to talk more. We started fundraising for Fund Four in November and will be raising through the first quarter, likely into the second.

  So far, fundraising is going well, but our main focus now is finding investments rather than raising money. It may take a bit longer because Keaton and I are primarily working on sourcing great deals to wrap up Fund Three and kick off Fund Four.

  If there are no other questions, please take a moment when exiting to provide feedback and let me know if you’d like to schedule a call with me or Keaton.

  Thank you very much for taking time out of your busy day. Hopefully you have a great holiday season. Here in Chicago, it’s December 9th and 50 degrees!

  Speaker 1:
  So, if I count that as a win, I know where I can visit snow without having to shovel it yet. With that, thank you very much—and go Badgers! Thank you, everybody.