September 25, 2012
This post is part of Tech Cocktail’s overview of the Downtown Project, a $350 million fund that aims to revitalize downtown Las Vegas by funding new buildings, education, small businesses, and tech startups..
“We talk to about 30 startups a week, and we have invested in 9, and I’ve been here for 6 months,” says Andy White of the VegasTechFund, the tech startup investment arm of the Downtown Project. In other words: you do the math.
We’re sitting at The Beat, the local coffeehouse/hangout on Fremont Street in downtown Vegas. Around us, startups are working – I later met portfolio companies Fandeavor and LaunchBit here – and people are chatting. During the interview, a few people come over and say hi. White was so entranced by this welcoming community and the opportunity in Vegas that he moved here from Salt Lake City, giving up a job as executive director of the BoomStartup accelerator.
The VegasTechFund is unlike most other venture funds because it’s so community oriented. To get funding, your startup has to contribute to and be involved in the growth of downtown Vegas.
“We ask the community for feedback about you and your company,” says Zach Ware, a partner at VegasTechFund. “If you come to Vegas and it’s clear that you really just don’t care about the community, then we really don’t want to invest in you – even if you’re going to be the next billion-dollar company.”
TicketCake, an event ticketing startup, started the process by pitching at a Tech Jelly, the weekly tech meetup. Afterward, the VegasTechFund listened to feedback from community members who attended. Jody Sherman, the CEO of EcoMom (one of the most mature companies funded by the group), routinely shares his opinion about whether prospective startups are a good fit.
But once you’re in, you’re in – welcome to the family. The leaders of funded startups are invited to monthly CEO Circles, where they can share ideas and get advice about challenges. TicketCake ended up getting investment, and now they’re a preferred ticketing platform for Downtown Project events, from the monthly speaker series to the recent CROWDSTART LV competition. Community members often volunteer advice to TicketCake, like how the site’s shopping cart should work. “It’s almost like we have two or three hundred little helpers, and that’s amazing,” says cofounder and CEO Joe Henriod.
Dean Curtis of Fandeavor, backed by the VegasTechFund, contributes to the community by educating would-be entrepreneurs. He often gives tech talks for computer scientists at the University of Nevada, Las Vegas, and helps teach kids to program using robots.
Digital Royalty, the social media consultancy founded by Amy Jo Martin, is another member of the VegasTechFund family. The company will be helping local educators with its Buy One, Give One program: for every social media training course purchased, one will be donated to a teacher. As a bonus, Martin is holding a crash course for Downtown Project members soon.
Because the VegasTechFund community is so tight-knit, it’s hard to get your foot in the door. “There’s about a 99 percent chance that you won’t pitch the partners while you’re in Vegas,” says Ware. First, you have to show genuine interest in the community, and then survive scrutiny by its members.
TicketCake, for example, was already thinking about moving to Vegas when someone introduced them to the Downtown Project. And other funded startups already had connections to the Downtown Project: creator Tony Hsieh knew the Fandeavor cofounders from Zappos, the LaunchBit cofounders from their intern work at LinkExchange (his former startup), and the LocalMotion team from a startup competition he judged. Martin of Digital Royalty met Hsieh over Twitter years ago and ended up consulting for his book, Delivering Happiness.
But there are some opportunities for outsiders: Text Me Tix, the Salt Lake City-based winner of CROWDSTART LV, will be considered for a $500,000 investment from the VegasTechFund. At least right now, however, random startups from outside the city shouldn’t jet in and expect to get funded.
As White suggested, the math is sobering: he’s talked to over 700 startups and invested in nine, around 1.3 percent. Hopeful startups will have to adopt the Vegas mentality: high risk, high reward.
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