Kickstart Seed Fund (not to be confused with crowdfunding giant Kickstarter), has raised $26 million for a second fund to invest in Utah-based startups, along with others in the “Mountain West” region of the U.S. Since its launch in 2008, with a $8 million fund raised by Managing Director Gavin Christensen, Kickstart has invested in 24 companies, including two exits with Panoptic Security in November of 2012 and GroSocial in January of 2013.
Today, the firm holds investments in a number of startups including Needle (our coverage), Ecoscraps, Fuze Network (our coverage), and Dropship Commerce, among others. Companies in Fund II, include Ecoscraps, Dropship, Needle, Powerpot, and WAVE.
Kickstart is also adding to its management team, with two new hires which see vSpring/ Signal Peak Former Director of Finance, Alex Soffe, named Kickstart CFO, while former Skullcandy VP of Global Business Development, Clarke Miyasaki, now joins Kickstart as Managing Partner, alongside Christensen.
While at Skullcandy, Miyasaki helped manage partnerships between the company and high-profile names and brands, including the NBA, Jay-Z’s Roc Nation, Kate Upton, Dell Computer, Major League Baseball, and aided with the Astro Gaming acquisition. Miyasaki also spent time at Logoworks then HP, and worked as an associate at vSpring Capital, which is how he and Christensen met.
While the fund is focused on seeding startups based Utah and other mountain states, it does have a few other requirements – most of which are par for the course (large market, have momentum, invest in people, etc.). But the fund is not tied to one particular vertical – instead, the team is interested in “strong technology backed by intellectual property as long as it has a clear, capital-efficient path to market,” but is “technology sector-agnostic.”
Christensen adds that while that’s true about Kickstart’s “agnostic” nature, the fund’s core emphasis is on Internet and software companies, which comprise around 50 percent of the fund. The other 50 percent is fairly diverse.
Kickstart, whose first fund was backed by local VCs, angel groups, corporations and universities, was formed “to fill both the capital and leadership gap at the seed stage here,” says Christensen in today’s announcement. Fund II, however, is a now a more formalized effort.
“The big thing that’s different is that, to make Kickstart work the first go round, it was really just me. I was working for a local VC here called vSpring with half my time, and doing Kickstart with the other half ” he explains. “With Fund II, I’m full time. We brought on Clarke as an equal partner, and then Alex as CFO. And we actually separated the fund from any affiliation with any venture fund,” he adds.
Vspring’s only involvement now is that it was an LP in Fund I – but it’s not an LP going forward. The composition of LP’s is also a little different in Fund II. Kickstart still has strategic LPs, like universities, but it has more institutional capital and investment from high net worth family offices.
Around 85 to 90 percent of Kickstart’s deals are in Utah, while the rest are in wider mountain region. There’s one exception to this, though – Kickstart just invested in its first Bay Area startup, with a deal in enterprise cloud service RackWare.
“We were waiting for another fund to come in,” says Christensen, but the SEC filing already went live. He says Kickstart’s investment in this $2 million seed round is not going to be the norm, however. Instead, it was a close friend who brought them the deal, he explains, and they didn’t want to miss out. “It fit our model of scrappy entrepreneurs, big market, and traction,” he notes. (VentureBeat wrote up the filing here).
Going forward, Kickstart will be involved in three deal types: the classic deal where it sources the deal and write a check of around $500K for a $1-2 million round; a “Labs” investment, which similar to the betaworks model, partners with an entrepreneur(s) to help build a company with a $25K to $100,000-200,000 investment; and “Kickstart Lite,” which lets the firm get in on deals it might not have spotted first, but are more “best of Utah” type companies. Needle and some half dozen others today are “Lite” deals.
Today, Kickstart has invested in 27 companies, though only 24 are listed on the website. RackWare is one of the new ones, and others will be announced soon.
[Note: this post was updated 1 pm ET, with more details about investment types, RackWare funding]