Seven Peaks Ventures is tiny by Silicon Valley standards, but its new $28 million venture capital fund is the largest in Oregon, according to data compiled by PitchBook.
Managing Director Dino Vendetti spends a lot of time on the road meeting with investors, attending board meetings of companies in the Seven Peaks investment portfolio and looking for deals.
When he’s in Bend, where he founded Seven Peaks in 2013, Vendetti has a lot of catching up to do. He went to Economic Development for Central Oregon’s PubTalk in September but didn’t hear any of the startup company pitches because he was engaged in one conversation after the next, he said. “It ends up being a lot of people time, this business is,” Vendetti said.
Vendetti talked with The Bulletin about Seven Peaks’ approach to investing in and working with early-stage companies. His answers have been edited for length and clarity.
Q: How difficult was it to raise $28 million, considering Seven Peaks has not yet cashed in an investment from the first $8 million fund?
A: It wasn’t that difficult, in part because of the companies we’ve invested in in Fund I. Fund I is currently the second-top performing early-stage venture fund in the country. We’ve consistently been in the top 10 since the first year the fund’s been up.
As we sit here today, the exits have to materialize, but these companies — Opal, Crowdstreet, Cozy, Vungle, Bright.md, Amplero — those are all real businesses, generating real revenue. Over half of this portfolio of companies, their revenue is increasing two to three (times), year-over-year. Those companies, they’re not going out of business. They’re really valuable companies that are becoming more valuable over time.
Q: You received significant investments from Oregon institutions, including $3 million from the state’s Oregon Growth Account. What portion of the new fund will be invested in Oregon companies?
A: I would say 70-plus percent of the capital was invested in Oregon from Fund I. Fund II will be somewhere in the same vicinity. We see a ton of deals out of Oregon. Seattle and Portland are the two biggest markets in the Northwest that we’ll invest in. We’re always looking for investments in Bend. They come around every once in a while.
Q: Which trends in technology interest you?
A: AI (artificial intelligence) and machine learning essentially are changing how, fundamentally changing the way software solves problems for its intended business use. Every industry’s being disrupted by those kind of technology solutions.
We’re not interested in investing in crypto (currency) deals, but we are interested in investing in blockchain, as an underlying technology that will enable different kinds of reporting and transactions.
Q: In addition to the four general partners, Seven Peaks has an operating partner, a chief financial officer and venture partner in Seattle. Did you grow the firm in anticipation of raising the $28 million fund?
A: When I started Fund I, I knew we needed to have a team, like a normal-size venture fund team, even though we were a small fund. That’s what startups in these regional markets need. They need the help. They need to have experienced, wired-in investors that can help them build the businesses, that can help them raise the next round of funding.
We’ve all built companies and scaled and grown them.
Q: How do you cover the firm’s expenses?
A: That’s one of the benefits of our team is that everybody’s had some success or a success. So we don’t need big paychecks. We don’t need the management fees of a large fund. We’re putting a lot of sweat equity into this.
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