Great North Ventures Investment Themes
Great North Ventures is a network-driven, generalist early-stage fund that prioritizes exceptional execution. Founded by founders, for founders – we back repeat founders, we back strong first-time founders, and we form founder teams in our venture studio.
Our innovator network and team’s connections drive our value-add to startups, and our network density is greatest in Minnesota and the Upper Midwest. While we are a generalist fund, we invest in three themes: “Solving Labor Problems”, “Digital transformation Through AI”, and “Community-Driven Applications”.
Community-Driven Applications
There is a global trend towards network-driven software expanding into every industry, for both consumers, and for businesses. And while much of the world is buzzing about Web3, we believe we are still in the early innings of Web 2.0, as these software platforms continue their expansion.
There is a strong investment reason to invest in network-driven startups: they outperform! Why? Network-driven apps have lower customer acquisition costs than their single-user counterparts. This is because of strong viral effects that make use of growth loops, which compound user acquisition. When these network effects cause customers to engage with other customers retention rates also increase.
Founders building software today can leverage the behavioral design patterns that dominated horizontal online communications (Facebook, Instagram, Snap, YouTube) and gaming (Roblox, Fortnite, Zynga, etc). These same Web 2.0 patterns can be applied in any category where end users benefit through collaboration.
Web3 startups will also take advantage of these network effects. The winners in the crypto and metaverse spaces will take on a mobile-first approach (“Start With a Mobile App, Not a Website”) and will adopt best-in-category community features. Regardless of which internet paradigm a startup is part of, the apps with the highest engagement of their end-users will win in most categories and capture most of that category’s profits.
Starting and scaling a network can be challenging due to what is commonly referred to as the cold start problem. In addition to having a strong product, successful startups usually find the smallest network that can stand on their own (“atomic network”) and focus on building a leadership position there before expanding to other networks while eventually eroding the market share of the incumbent network.
In practice, we have seen other strategies work as well. Andrew Chen details four of them in his book “The Cold Start Problem”:
1. Invite Only refers to allowing users to join only if they are invited to use the app by other users. This ensures a stronger network effect from those that get invited as they already know other users on the service.
2. Come for the Tool, Stay for the Network refers to providing a single-player mode that allows a user to get value from the service even before it has a strong network. Instagram had photo filters, for example.
3. Paying for Launch refers to paying to grow the network, after the initial atomic network has been figured out, as a way to accelerate growth until the tipping point is reached where the network grows rapidly due to compounding atomic networks strengthening each other. This tends to be expensive and is not usually a tactic taken in the early stages of a startup that is resource-constrained.
4. Flintstoning refers to manually helping to keep the network strong while still early in developing automated capabilities that can exist at scale through the stronger network and product.
Tactically, we see many of the same tools and techniques work effectively across social apps. We’ve had startups scale based on strong network effects in both consumer and enterprise businesses. Usually, incumbents lack the creativity and know-how to thwart a well executed attack. Utilize a new technology, or market trend, to uncover a unique and valuable tool or focus on a specific network whose needs are only partially being satisfied and you may have the next big community app.
What We are Looking For
Vertical Social and Passion Marketplaces
The Web 1.0 marketplace winners like Craigslist and eBay were largely horizontal in nature. Since the early 2000s, nearly every category of e-commerce has had multiple successful marketplaces targeting it. But most categories have not fully embraced Web 2.0.
We have multiple examples of these marketplaces in our portfolio, including NextGem, Mustard, Omnia Fishing, and TeamGenius.
Consumerization of Enterprise SAAS
Enterprises used to move slowly when it came to new tech adoption. Workers have accelerated and transformed that adoption as tools they elect to use garner enterprise sales. By getting enough workers to adopt the product first, businesses can’t say no to the enterprise products without risking productivity. As a result, now enterprise software is consumer grade: simple, easy to use, and mobile first.
Examples from our portfolio include Branch, FactoryFix, Dispatch, Flywheel, Mustard, Omnia Fishing, PartySlate, Pitchly, SkillIt, CoverLease, ClinicianNexus, and Structural.
Work with us
If you have a startup that is a community-driven application, submit here for feedback. We will provide pitch deck feedback to all startups who submit. Before you submit, get an inside look at our process first: “This is how to evaluate early-stage consumer app startups”
Welcome back to the Great North Ventures newsletter! (Sign up here!) This month we have some advice for founders as well as an open call for funding applications.
In the latest episode of “Execution is King” we talk with Jonathan Treble of PrintWithMe. Jonathan talks about his path from Wharton to Grubhub to CEO/founder, and shares advice for those starting out:
“Optimize for control over valuation” – when negotiating at early stages.
“Validate with the smallest team that you can” – because, really, more money means more problems.
For the full episode, including recommendations and resources on recruiting, find us wherever you get podcasts or on YouTube.
For the full episode, including recommendations and resources on recruiting, find us wherever you get podcasts or on YouTube.
As we move ahead with Fund II investing, our themes have coalesced. Here are descriptions along with examples from our portfolio.
Digital Transformation through AI – We are looking for technology-driven startups that are innovating analog industries using artificial intelligence. Examples include Dispatch and Flywheel.
Community-Driven Applications – We are looking for consumer or enterprise startups which are connecting people through software, especially in the areas of media consumption or commerce. Examples include NextGem and PartySlate (and our new investment, Mustard!).
Solving Labor Problems – We are looking for startups with market-driven solutions for workplaces and labor. Examples include FactoryFix and Skillit.
If you are a founder who fits a theme and our investment criteria, apply for funding on our website!
Portfolio Updates
Mustard is new to the portfolio! Mustard is a video-based food discovery and ordering app. Users view and share videos of restaurant dishes, discovering food from restaurants nearby, and can even order or reserve a table right from the app. The app is live in LA and free on the App Store.
Patrick O’Rahilly, CEO of FactoryFix Talks Jobs in Manufacturing with Tim Heston of The Fabricator
Allergy Amulet Research Secures Second Peer-Reviewed Publication
NoiseAware Introduces AutoResolve To Solve Vacation-Rental Noise Problems Automatically Any Time Of Day Or Night
Breezeway and NoiseAware announce integration
Open Positions
See open positions on the Great North Ventures careers page
Dispatch is hiring for 58 positions
FactoryFix is hiring for 8 positions
2ndKitchen is hiring for 5 positions
PrintWithMe is hiring for 22 positions
Parallax is hiring for 2 positions
Branch is hiring for 14 positions
Inhabitr is hiring for 6 positions
NoiseAware is hiring for 1 position
PartySlate is hiring for 1 position
Flywheel is hiring for 3 positions
Demystifying Startup HR
3 Portfolio Companies Make Inc. 5000 + Quicklly & Instacart Expand
3 Portfolio Companies Ranked on The Inc. 5000 List
iraLogix closes $22M + Branch expands with Uber
iraLogix closes $22M Series C
Flywheel lands Gates Foundation grant
Venture Capital Analyst
Executive Assistant – Venture Capital Firm
Orazio Buzza, Founder and CEO of Fooda – on Episode 13, “Execution is King”
$40M Fund II Raised!
Eric Martell, Founder of Pear Commerce: Episode 13, Execution is King
Great North Ventures Raises $40 Million Fund II
Investment Thesis: Fund II Strategy
Investment Theme: Community-Driven Applications
Investment Theme: Digital Transformation Through AI
Investment Theme: Solving Labor Problems
Trends in the Gig Economy + Work in the Metaverse
Portfolio raises $125M + talking fundraising with Branch CEO
Omnia Fishing closes $4M round, joins Great North portfolio!
Atif Siddiqi, Founder/CEO of Branch: Episode 11, Execution is King
Michael Martocci, CEO and Founder of SwagUp: Episode 10, Execution is King
Yardstik new to portfolio, closes $8M Series A
First venture studio startup comes out of stealth!
Una Fox: Episode 9, Execution is King
Start With a Mobile App, Not a Website
Joe Sriver, 4giving: Episode 8, Execution is King
2ndKitchen Acquired by REEF
Newsletter: Do you fit our investing themes?
Anna Mason, Revolution: Episode 5, Execution is King
Mynul Khan, FieldNation: Episode 4, Execution is King
Newsletter: “Podcast Launched: Execution is King!”
“Execution is King” – the Great North Ventures Podcast
Newsletter: Fund II is open for business!
Unlocking the Potential of Anonymized Commercial Real Estate (CRE) Data
Fund II is open for Business!
Mike Schulte Promoted to Venture Partner
New Name + New Venture Studio
Great North Launches Startup Studio
We Don’t Need No [full-time MBA] Education
Building Capacity for Innovation
Minnesota's Resilient Startups
Jumpstart, the Startup School, and Branch Wins a Webby!
Giving in the Time of Coronavirus
COVID-19 Resources for Startups, State-by-State
COVID-19, the CARES Act, and startups stepping up
New Business Preservation Act
Great North Labs’s Startup Summit 2020
Great North Labs's Startup Summit 2020
Top 5 Stories of 2019
7 Places to Spot Us at Startup Week
Talking VC, tech kids, and Forge North’s Horizon
June: Great North Labs’s first fund raised!
MinneBar 14 Recap
Dispatch and 2ndKitchen claim Tech Madness titles
Minnesota Innovation Collaborative
Great North Labs at CES
Carried Interest: Top Posts from 2018
Digital Transformation Summit, July 25th in Minneapolis
Putting the “Silicon” in Silicon Lakes
Digital Manufacturing and Logistics
May: Team Genius, IoT, and the Future of Everything
IoT 3.0
Healthcare Innovation
Great North Labs Newsletter – December 2017
A Letter To My Younger Self
Great North Labs Newsletter
Great North Labs Featured on Tech.mn
Great North Labs Featured in St Cloud Times
Great North Labs – Featured on BizJournals.com
