March 27, 2013 at 6:00 AM
Maveron boosts consumer startup funding, to one a month
Bucking the trend toward enterprise startups, Seattle venture capital firm Maveron said it’s going to boost its investing in early-stage consumer startups.
The firm plans to invest in at least one consumer startup per month, with seed funding ranging from $100,0oo to $250,000 per company. That would more than double its pace in recent years; the firm backed a total of 15 companies in 2011 and 2012.
“We believe that we’re kind of in a great period of creating consumer companies, of great opportunity,” said Maveron Partner Dan Levitan [below]. “So as a lot of the venture capital world seems to be shifting away form consumer, we want to make sure that consumer entrepreneurs know there’s still money available.”
Levitan co-founded Maveron in 1998 with Starbucks Chief Executive Howard Schultz. Companies it has backed include eBay, drugstore.com and Groupon. Recent Seattle ventures include Zulily and Julep.
Maveron now has offices in both Seattle and San Francisco. Levitan said about 20 to 25 percent of its investments have been made in Seattle, and he expects 25 percent or more of its upcoming seed-round deals will be made here.
Traditional venture firms are competing with all sorts of organizations offering early funding and mentoring to startups. Levitan said Maveron is more complementary with startup accelerators and angel investor groups.
The firm is expanding the seed funding program in part because it helps build a relationship with entrepreneurs, and lets the firm and startup get comfortable with each other before making a multi-million funding round.
“I like the strategy of finding great entrepreneurs early, giving them some money, helping htem a little — perhaps not as much as we would a regular core investment,” he said.
This was the approach that connected Maveron to Seattle beauty company Julep. It started out as a seed investment then received multiple rounds of traditional venture funding, including a $10.3 million round announced last month and led by Silicon Valley firm Andreessen Horowitz.
Startups receiving Maveron’s monthly dollops of seed funding could go on to have an exit — such as going public — in three to 10 years, Levitan sad.
Meanwhile, Levitan believes that conditions are improving for public offerings by consumer-focused companies, including several Maveron is backing.
“Over the next 24 months just from our portfolio you’re going to see some significant IPOs,” he said.
Maveron will look across the country for the next generation of ventures and in its back yard.
Consumer-focused entrepreneurial activity in Seattle has lately been “pretty solid,” though “probably not as strong as it was maybe a year ago,” Levitan said.
Amazon.com’s expansion has absorbed a lot of the entrepreneurial talent in the area.
“Frankly, I’m hoping that when the stock comes down people will start peeling out of Amazon and starting new businesses,” he said.
Maveron — and other investors — will be ready and waiting.
“I think it’s important that entrepreneurs know that for great leaders, great visionaries who are creating products that are in big markets … there’ s lots of money available,” he said.
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