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  • Michael Smith

Announcing Scrappy Capital Fund 1


Colonial Diner placemat with the initial vision for Scrappy Capital


From an idea on a diner placemat to an operating fund we are proud to announce


OPENING / INTRO


Our firm, it’s inception, and what we’re doing is almost cliche, but not entirely. Yes the idea started on a diner placemat like most good ideas do. The idea was simple, disrupt an industry, venture capital, that’s all about funding disruption, but yet doesn't take any of its own advice.


To do so would require several key items:


Have a strong network in and beyond rising tech cities. Check. Have a strong deal flow, and innovative approach to vetting investments through innovative technologies. Check. Have a team with decades of experience disrupting industries, setting standards and going beyond the traditional. Check. Be able to provide investor syndication opportunities as well as follow-on funding -- both crucial for success. Check. And last, but not least, be able to bring Venture Capital investment to a new group of LPs. Check.


Those prerequisites that we’re proud to boast, coupled with a start-up ecosystem primed for disruption, made for early exits, and begging to be disrupted create the perfect opportunity for Scrappy Capital to reinvigorate a tired, yet crucial element of the modern American dream.


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It started as an idea on a diner placemat. Almost cliche.


What if we started a new fund that would provide seed funding to undervalued and underappreciated startups in rising tech cities?


We have a strong network in many of those cities. We also have a network between, among and outside of those cities: providing investor syndication opportunities, as well as follow-on funding -- crucial for success. We have all kinds of deal flow. We have experience with early exits and the market seems right for more of that. There are new ways to secure LPs (JOBS Act) and new platforms to diversify our portfolio, as well as manage it. Let’s do it!


Today we are publicly launching that placemat idea. Scrappy Capital.


Founder Focused


As a friend of the fund likes to remind us: investing is more about the jockey than the horse. Startups without founders are just ideas. Founders have that lightbulb moment, turn it into an idea, recruit a team, secure funding and execute a growth strategy. We love taking, as First Round Capital calls it: PowerPoint Risk; which means investing in unfinished products, early ideas or before product market fit. We are comfortable with this risk because we have lived it first hard. We’ve built (and sold) companies from nothing to something and have deep empathy for the founder journey.


In addition to loving the grit and mentality of a founding team, we aspire to find founders who are generally overlooked by traditional venture investors. This means overlooked geographically but more importantly demographically. We love Revolution’s Rise of the Rest tour as it shines a spotlight in areas that are traditionally ignored by venture capital models. Part of Scrappy’s mandate is to discover companies in rising tech hubs like Nashville, Portland, Austin, Madison and beyond. To support this goal we have recruited a group of venture advisors that will be our “boots on the ground” in these cities.


Even more concerning than a lack of geographic diversity is that venture capital funded founders are overwhelming white males. At last count less than 9% of VC funding went to women and only 20% went to non white populations. We believe that talent is universal but opportunity is not and we strive to work with underestimated founders


Fact Focused


Early stage investing is almost entirely devoid of data. No stock prices, no credit scores, and barely even any data about the validity of the business that isn’t just conjecture. There is limited signal but lots of noise. Lots of profile but no proof. Our job as VCs is to figure out that facts of the business and the opportunity that lies ahead.



Future Focused


The goal with any startup or venture endeavor is skating to where the puck is going. We consider ourselves industry agnostic and are interested in disruption in all industries but pay a specific focus to media, the future of work, and distribution/logistics given our team’s background and interests.



How you can help


If you are an LP, we’d love to have you join us. (Straight up.) If you want to consider early-stage venture investing, talk to us about ways for you to get started and some of the new possibilities created by the JOBS Act. (We work with some of the leading platforms and services in this emerging space.) If you know someone who might be interested in investing along with us, we welcome your call. (“Hi. I’m calling for a friend.”)


If you know any early- and seed-stage startups in Media/Entertainment, Future-of-Work, or Logistics/Packaging in out-of-the-way places, DEFINITELY LET US KNOW. If you work with startups in any of our Scrappy cities, come talk to us. There are lots of ways we can work together here. If you are a fund interested in syndicating seed investment deals AND/OR looking for deal flow from seed investors, especially in out-of-the-way, rising tech hubs, we EXPECT to hear from you.


Let the next wave of innovation and disruption begin. In new places.


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Scrappy Capital

Focusing on seed stage funding in emerging tech hubs, we invest in traditional industries that are primed for disruption. We don't shy away from hard work where there are large opportunities. We're developing a portfolio diversified for the new reality of venture investing.

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