Doubling Down on Success Investing in Trailblazers

Minneapolis – May 23, 2022 – Early-stage VC firm Great North Ventures announced today it has closed $40 million for its second venture fund (“Fund II”). The fund aims to continue the firm’s success investing in startups from Seed to Series A stages. New investments will address three key themes: digital transformation through AI, community-driven applications, and solving labor problems.

Founded and operated by successful founders, Great North Ventures focuses on providing capital, connections, and operational guidance to startups. Its new Fund II has added a Venture Studio, whereby new startups are co-created and supported from ideation through launch and beyond. The fund’s investing and support are network-driven, with connection density in Minnesota, through the Upper Midwest, and extending beyond. 

Founders seeking funding can apply for immediate consideration.

“We have refined our approach as a network-driven investor with Fund II. Our Innovator Network has depth and breadth across startups and Fortune 500 companies. Our team’s network is diverse and rooted in our own experience as founders. It is densest in Minnesota and the Upper Midwest, and extends beyond. Our deal flow and support and consequently, our capital deployment, align with this density,  By playing to our network’s strengths in this way, we maximize investment potential, while also creating a blueprint for further Fund growth in locations that are undercapitalized.”- Ryan Weber, Founder & Managing Partner

“Great North Ventures has a strong track record. Our investors have given us a vote of confidence by coming out strong for Fund II, with a 70% increase in fund size, and we are grateful for their continued support as well as the support of new investors. Our strategy as a thematic, network-driven investor focusing on opportunities in underserved markets is resonating and we see this successful Fund II raise as proof of this theme and our ability to execute.”- Rob Weber, Founder & Managing Partner 

Fund II Strategy and Themes

Great North invests in domains with substantial unsolved problems that can be solved by entrepreneurs leveraging technology. The firm’s Innovator Network is a network of former founders, skilled operators, and successful investors that have a track record of execution. It is a key resource for helping with sourcing opportunities, diligence, strategy insights, referrals for team additions, and mentorship for the core team. 

One of the key strategies of Great North Fund II is its Venture Studio, in which it designs and builds companies with world-class founders in focused market segments with substantial opportunities. In the venture studio model, problems that startups could solve are identified, markets are evaluated, teams are built, MVPs (minimum viable products) are spun up, and experiments are run to iterate products until product/market fit is achieved. 

Startups co-created in the Great North’s Venture Studio continue to receive fundraising support and board oversight after they launch. NextGem is a tool and social network for trading card enthusiasts to better manage and discover great cards. It is the first company created in Great North’s Venture Studio. The second startup to come out of the studio is Backhouse Brands, a self-serve marketplace for creating and managing virtual restaurant brands.   

Three investment themes drive Great North Ventures Fund II:

Digital Transformation Through AI – Great North is looking for technology-driven startups that are innovating traditional industries using artificial intelligence. Its portfolio examples across Fund I and II include Allergy Amulet, Coverlease, DispatchFlywheel, Inhabitr, and Nested Knowledge.

Community-Driven Applications – Great North is looking for consumer or enterprise startups that are connecting people through software, especially in the areas of media consumption or commerce. Its portfolio examples include NextGem, Omnia Fishing, and PartySlate.

Solving Labor Problems – Great North is looking for startups with market-driven solutions for workplaces and labor. Its portfolio examples include FactoryFix, Skillit, and Yardstik

Founders who fit one or more of these themes and are raising a Series Seed through Series A round may apply for funding on this web page.

Fund I History

The firm was originally known as Great North Labs when it was founded in 2017. Its first fund of approximately $24 million was one of the largest debut venture funds raised in the Midwest and now includes a portfolio of 27 investments, six of which have exited. New investments from Fund I are now complete,  with the remaining capital reserved for follow-on investments. 

Strong growth has continued across Great North’s Fund I portfolio. Aggregate revenue run rate of these companies increased 294% from the time of initial investment through the end of 2021. Recently, several of Great North Fund I portfolio companies have announced new growth rounds including Dispatch, Branch, and FactoryFix.

Great North Ventures’ co-founders, Robert and Ryan Weber, are twin brothers with a successful track record since the early 2000s as founders and angel investors. They were joined in founding the firm by a former mentor, Pradip Madan, who is a successful technology executive and investor. Rounding out the team are Venture Partner Mike Schulte, and Director of Marketing Josef Siebert.

About Great North Ventures

Great North Ventures is an early-stage VC firm located in Minneapolis. The firm has raised two funds since its 2017 founding. As a network-driven, early-stage investor, the firm has deep roots and density in the “capital desert” outside Silicon Valley, New York, and Boston. 

Built by founders, for founders, the team is experienced in founding and scaling tech companies. Its team consists of ex-operators with significant experience across stages of growth from startup to public companies and M&A, and broad and deep technical, sales, marketing, and transactional expertise. Great North prioritizes execution over strategy and pedigree when choosing companies and founders to back. Fund II will invest in startups that fit three themes: Digital Transformation through AI, Community-Driven Applications, and Solving Labor Problems


For more information, please visit its website, or follow the firm on LinkedIn or Twitter. Listen to the Great North Ventures podcast, or sign up for its newsletter.

Intro to Great North Ventures

Great North Ventures is an early-stage VC located in Minneapolis and St. Cloud, MN. Our investment team consists of ex-operators with significant experience across stages of growth from startup to public companies and M&A, and broad and deep technical, sales, marketing, and transactional expertise. Starting in 2017, we have raised two funds. 

Fund I, from which we made new investments from 2017-21, focused on opportunities arising in the Upper Midwest given the strength of the entrepreneurs, and the relative lack of venture capital. Our focus on the Upper Midwest allowed us to leverage the substantial network our founders have in the region, as well as the operating experience of all the partners across sectors and geographies.

Fund II Thesis

Geography

For Fund II, we have narrowed our investing themes, as well as expanded our lens with respect to geographic focus. Roughly, we aim to invest 1/3rd of our Fund in Minnesota, 1/3rd in the Upper Midwest, and the remainder without a geographic constraint. This enables us to continue to address the undercapitalization as well as take advantage of our deal flow momentum in the Upper Midwest. For another 1/3rd of our capital, as we have built relationships beyond the Upper Midwest, we want to take advantage of the deal flow for the best opportunities. Our allocation of the remaining 1/3rd further enriches our deal flow, as all regions in the US and elsewhere have concentrations of expertise, and the greater geographic diversity enables us to find the best deals in our target domains.

Fund II Investment Themes

We invest along three themes, Digital Transformation Through AI, Solving Labor Problems, and Community-Driven Applications. 

Digital Transformation Through AI – The next dominant wave of technology-driven innovation will occur in legacy industries. We invest in the tools and technology that use AI to solve pervasive problems in legacy industries. 

Solving Labor Problems – The world’s talent markets are more competitive than ever, and the hardest challenges for virtually every business are related to attracting and retaining talent. Across all industries, we focus on investing in startups that tackle talent issues like recruitment, development, and retention.

Community-Driven Applications – Network-driven software is expanding into every industry, spreading beyond consumer to enterprise. These applications feature lower customer acquisition costs and higher retention rates, driven by strong viral effects that make use of growth loops. We invest in these startups that can kickstart networks. 

As an early-stage fund, we seek opportunities from inception through evidence of product market fit. 

Our investment criteria are foremost the size and potential of the opportunity. initial evidence of adoption or early product-market fit (e.g., registration growth, time spent using the service), low cost of customer acquisition, high lifetime value/customer, stickiness, sales motion simplicity, team strength, defensibility, and capital efficiency. We invest in domains where there are substantial unsolved problems that can be solved with entrepreneurship, and where we have strong expertise. Supplementing our own strengths, our network of advisors is a key resource for us in helping with diligence, key strategy insights, referrals for team additions, mentorship for the core team, etc.

Venture Studio

For opportunities at inception, we substantially rely on our venture studio. Our strategy for the venture studio is to create startups where we have unique expertise and where we do not see attractive opportunities based on external deal flow. We have incubated two opportunities to date in our venture studio.

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

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 theses: “Solving Labor Problems”, “Digital transformation Through AI”, and “Community-Driven Applications”. 

Digital Transformation Through AI

In Steve Case’s book “The Third Wave”, Case describes how the greatest opportunity for innovation will come from startups who disrupt legacy industries, and that proximity to these companies in these industries will enable founders to better empathize with their prospective customers and grow faster.

We agree with Steve, but we would take it a step further. The tools and technology that use AI to solve pervasive problems in legacy industries are going to be the dominant wave of technology-driven innovation in the years to come. 

From the 1990s to the 2010s, early adopters of AI implementation were largely found in financial services and digital media. The talent required to build and deploy machine learning models was inaccessible by most companies- the world has an extreme shortage of scientists with advanced degrees in machine learning. Our firsthand experience backs this up, as founders from the digital media space where our company implemented predictive modeling at scale, our machine learning talent came at a premium. 

In the last few years, we have seen developer tools and cloud infrastructure improve so much that building applications using AI is now less of a scientific hurdle. These advancements enable startups to implement machine learning in their target market, and will accelerate the pace of digital transformation. 

Now the problem is more of a data acquisition hurdle. Can a startup identify a path to acquire the data they need to train the AI in the beginning? Can they build a proprietary data pipeline, that with scale, creates a strong competitive advantage? In our experience, typically, the best way to monetize data is to keep it to yourself. Startups succeed by requiring users to engage through their product to make use of their data.

What We are Looking For

Retail/E-commerce

E-commerce has gone from nice-to-have to a requirement for retailers, accelerated by the pandemic. Digital has become a cornerstone of retail strategy because of the ability to collect and act on customer data at the right time, in the right place. Top retailers are refining omnichannel strategies that embrace the right channels and offer seamless customer experiences. 

An example from our portfolio is NextGem. NextGem has developed core AI technology to create an image scanner which reads and maps data, and a search engine which uses that data for their trading card platform. 

Manufacturing

Digital transformation in manufacturing includes things like asset optimization, workforce productivity, and production speed. It also includes IIoT (Industrial Internet of Things), which encompasses the use of smart sensors and actuators to enhance manufacturing and industrial processes.

In our portfolio, FactoryFix is a marketplace for skilled manufacturing labor, which uses a matching algorithm to help predict the best-suited candidates for hiring managers. 

Transportation/Logistics

It doesn’t always take a container ship lodged in the Suez canal to cause worldwide supply chain issues- worldwide pandemics and war easily do the trick. Predicting behavior, weather, demand based on troves of data leads to optimization of routes and delivery, increasing efficiency, decreasing waste, and better service and profits – whether the cargo is goods or people. 

An example in our portfolio is Dispatch, which is a last-mile delivery company that provides on-demand delivery services to businesses of all sizes. 

Healthcare

Protein folding algorithms, case triage, and AI-enabled medical devices are three examples of how AI is changing how healthcare professionals research new drugs, diagnose issues, and treat patients. 

Flywheel is an example which offers solutions for the life sciences, clinical research, and academic research industries to accelerates collaboration, enables machine learning, and streamlines the massive task of data aggregation, curation and management. Nested Knowledge, which consolidates insight through metastudies, systematic reviews and living reviews in medical research, is an example in our portfolio.

Education

The most visible of digital transformations in education was accelerated during the pandemic: remote learning. Not only is it improving accessibility, but it has opened the door to personalized learning approaches, and wider inclusion of digital resources – both of which can be complemented or optimized through AI. 

Yardstik is an example from our portfolio focused on worker training, screening, and verification. Its platform offers solutions to help marketplaces and platforms more easily hire, onboard, and manage safer workforces.

Food and Ag

Agriculture is being optimized at all levels through AI. Tools for crop and soil monitoring, systems that can develop models and tools for assessments and management strategies, and self-operating machines  are some uses of AI. 

An example in our portfolio is Allergy Amulet, which uses AI to correlate allergen detection in food at the point of consumption. 

Travel/Hospitality

From restaurant reservations and food delivery, to airline pricing and route planning, to chatbots and data analysis, digital transformation through AI has affected every facet of the travel and hospitality industry. From what is available, to how it’s procured, and even to how we experience it – every aspect has been affected. 

Examples from our portfolio include Inhabitr and PrintWithMe. Inhabitr curates, sources, and delivers furniture for rental or purchase. PrintWithMe provides self-serve in-house printing amenities for coffee shops, apartment buildings, and other places people gather and work remotely.

Real Estate/Construction

Transformations in the industry are as mundane as chatbots serving real estate customers, to AI-controlled robots performing dangerous construction tasks. Scheduling, monitoring/sensing, and cloud-based collaboration are all widely used, and AI is increasingly used for planning, design, and risk mitigation. 

CoverLease is software that enables data collection for the commercial real estate industry, which enables insight discovery and decision-making. Another example is SiteKick, a construction site monitoring and reporting system that allows for remote, constant monitoring of job sites. 

Work with us

If you have a startup that is driving digital transformation through AI in these or other ways, submit here for feedback.If you have a startup that is driving digital transformation through AI in these or other ways, 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

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 theses: “Solving Labor Problems”, “Digital transformation Through AI”, and “Community-Driven Applications”. 

Solving Labor Problems

The world’s talent markets are more connected and competitive than ever. The hardest challenges for virtually every business are related to attracting and retaining talent, including skilled and unskilled. Given the pressure across all industries for recruiting, developing, and retaining top talent, we are focused on investing in startups that look to tackle talent issues with either horizontal approaches (across industries) or vertical approaches (going deep in a single industry). 

The future of work will see more workers who value their flexibility connecting across the world, working from anywhere. Traditional definitions of jobs (like the “9-5”) will also change as gig work and variations of employment affect how talent approaches the idea of work. 

As the industry changes, down to the very conception of “work”, new solutions will come to market to meet demand while accommodating new realities.

What We are Looking For

Labor Marketplaces

Despite the rise of horizontal recruitment platforms like LinkedIn and Indeed, most workers are unsatisfied with the way they find new work; similarly, employers want to source the right workers more easily . Workers end up with low success rates on time-consuming applications for many job types because the horizontal platforms can’t go deep enough to match-make at a high rate. This same filtering issue plagues employers because they end up with a lot of noise from poorly recommended matches.

Examples in our portfolio include FactoryFix and Skillit. FactoryFix is a labor marketplace that for manufacturing businesses to find skilled talent to run their business. Skillit matches skills-tested carpenters with great construction firms.

Financial Services for Workers

As companies compete to attract talent, services offered to employees factor into employment decisions. Financial services for employees improve the employee experience by reducing inefficiencies, saving money, and giving employees greater control over their earnings.

Examples in our current portfolio include Branch and Micruity. Branch allows users to budget, take paycheck advances, and earn more income by picking up available shifts. Micruity partners with life insurers and fund managers to  pensionize 401(k) plans, to provide access to a secure retirement for workers.

EdTech

Workers expect that they will advance in their careers. If they stay stagnant for too long, they will leave and go to another place. As such, employers and recruitment platforms need to get better at advancing the skills of workers so that they can level up. Edtech, especially “continuing education” offers this skill advancement.

An example from Fund I that has already been acquired is Clinician Nexus. Clinician Nexus provides clinical rotation management for health systems, medical and nursing schools, and medical and nursing students, with a transparent, people-centered platform.

Gig Work 

Employees want flexible solutions so they can choose when they want to work and have the flexibility to work around their personal schedules or part-time positions.

Examples in our portfolio include Dispatch and Yardstik. Dispatch employs a driver network that performs last-mile delivery on-demand. Yardstik makes it easy for gig marketplaces and SaaS platforms to screen, verify, and train their workers.

Workplace Collaboration 

A very effective way to increase productivity, while also increasing the engagement of workers, is to increase collaboration within and across functional areas of businesses. Collaboration limitations can be due to institutional silos, or physical barriers like those presented by remote work.

An example from our portfolio is Structural. Structural is an Employee Success Platform built to nurture employee connections within an organization.

Remote & Hybrid Work– The market was already trending towards supporting remote work, but the pandemic has accelerated the transformation by 10X. The cat is out of the bag and it isn’t ever going back. We still have a lot of opportunities to continue to innovate.

PrintWithMe is an example in our portfolio. PrintWithMe provides an accessible and smart printing solution for people who work from coffee shops, apartment buildings, or wherever a kiosk is located. 

Project/Task Management– Given talent constraints in the market, efficiently allocating resources is more important than ever. Businesses that can increase operational efficiency can stay ahead. 

An example from our portfolio is Parallax. Parallax is a platform built to help digital agencies and tech consultancies operate more efficiently, with better utilization of billable resources.

Work with us

If you have a startup that is solving labor market challenges in these or other ways, submit here for feedback. We will provide 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

May newsletter
Great North Ventures

$40M Fund II Raised!

Great North Ventures Raises $40M Fund II
Great North Ventures

Great North Ventures Raises $40 Million Fund II

Investment Thesis: Fund II Strategy
Great North Ventures

Investment Thesis: Fund II Strategy

Investment Thesis: Community-Driven Applications
Great North Ventures

Investment Theme: Community-Driven Applications

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