Peterson Ventures, a 12-year-old, Salt Lake City, Utah-based seed-stage fund, has long operated fairly quietly, but many of its bets have become known brands in the respective worlds of consumer and enterprise software investing. Among these is the shoe company Allbirds; the men’s clothing company Bonobos (acquired a few years ago by Walmart); and Lucid Software, which closed its newest, $52 million round back in April.
Thanks to a newly raised $65 million fund — more than double the size of its $33 million second fund — Peterson has even more money now to write checks in the range of $250,000 to $1 million in a wide variety of startups.
We were in touch this week with Peterson partner Ilana Stern, whose own consumer startup, Weddington Way, raised money from Peterson before selling to the Gap in 2016. Stern, who joined the outfit last fall and is based in San Francisco, shared a bit more about the firm’s newest fund and where it’s looking to shop. Our exchange has been edited lightly for length.
TC: Peterson is part of a bigger platform called Peterson Partners. How many asset classes is Peterson Partners funding?
IS: Peterson Ventures is part of the Peterson Partners platform with funds that invest in lower-middle-market private equity and search funds. There are over 30 people firm-wide, including a four-person full-time investing team [on the venture side]. We’ll be looking to add one to two more members in the next year.
TC: How does the firm think about consumer versus SaaS, and is this different than in past years? For example, First Round Capital used to invest half its capital in consumer-facing startups, and that’s not the case right now, as Josh Kopelman told us a couple of weeks ago.
IS: Our first, $25 million fund, was close to a 50/50 split; in the second fund, we shifted to 65%/35%, focusing more heavily on B2B SaaS than consumer. Going forward, we expect to be investing around 60% to 70% SaaS and around 30% to 40% consumer.
The bread and butter of the Utah market is SaaS, and we expect to continue to back great SaaS companies in Utah. That said, there is a growing ecosystem of compelling e-commerce and consumer companies, including in healthcare and financial services where we see a continued ‘consumerization’ of those two sectors.
TC: What are two of the firm’s most recent bets, and what do they say about the way your team operates?
IS: Via and Tava Health are two of our new seed investments. Via connects businesses to their consumers on their favorite messaging and voice platforms. Commerce infrastructure is an area where we’ve been very active over the last five or so years, [including because it’s a] perfect cross section of SaaS companies selling into e-commerce and retail. Tava Health is a telemedicine platform for mental health for employees paid by employers, and healthcare SaaS is an area that we’ve also invested in a lot. In fact, its founder, Dallen Allred, is someone whose earlier company, Artemis Health, is another portfolio company.
TC: Out of curiosity, how did Peterson get involved with Bonobos?
IS: Co-founders Andy Dunn and Brian Spaly were students of our founding partner, Joel Peterson, at Stanford GSB. GSB is a key area of deal flow for us. Joel has been teaching there for almost 30 years. Ben [Capell, a partner with Peterson since 2010] has been involved in backing over 20 companies in the last eight years led by Stanford GSB alumni, and I’ve been guest lecturing there for seven years.
TC: You don’t invest exclusively in Utah, but you spend much of your time with local startups. How has the Utah scene changed since Peterson swung open its doors?
IS: Peterson dates back to 1995, so we’ve been fixtures in the Utah market for 25 years as a firm. When we started Peterson Ventures in 2008 investing Joel’s personal capital — it’s now a mix of institutions, family offices and high-net-worth individuals — there were no seed-stage firms. Now there are three institutional seed-stage firms, several Series A firms that will also invest in seed-stage startups, and active family offices and angel investors.
Also, where the firm used to have to work hard to convince coastal firms to invest in Utah we now have an abundance of mid- and late-stage investors from both coasts spending significant time and
investing meaningful dollars here.