A Q&A with Nathan Owen, General Partner of Grand Ventures LLC
NOTathan Owen moved from software development to venture capital a year ago. Owen previously ran Grand Rapids Blue software developer Medora, which he co-founded in 2007 and left in October 2019, months before the sale of a major business unit to California-based software virtualization giant VMWare Inc. After Blue Medora, Owen spent a year as the chief operating officer of Boston software company HYCU Inc., where last year he helped raise an 87 Series A funding round. .5 million dollars. Since March 2021, however, Owen has been firmly planted on the other side of the startup table, joining venture capital firm Grand Ventures LLC as a general partner. Owen recently discussed the transition from entrepreneur looking for funding to venture capitalist executive.
Why switch to Grand Ventures?
It’s really about challenging myself. I’ve been an executive at enterprise software companies for 20 years now, in one capacity or another, mostly startups. I was lucky enough to raise $120 million (in venture capital) for four startups. I’ve always been intensely curious about the business of venture capital and what it looked like, and for me it’s a whole new experience to try professionally and a way to challenge myself. I’m touched every day by all the things I don’t know yet, but I’m learning.
How did you come into contact with Grand Ventures?
I’ve always been interested in the other side and have been keeping tabs on Michigan-based venture capital firms for a while. (Co-Founder and Managing Partner of Grand Ventures) Tim Streit and I had known and spoken for some time, and at some point we decided that I would join as general partner of the fund.
How does your experience translate into venture capital?
In venture capital companies, two of the most common profiles are types of bankers or people with a financial background – bankers or investment bankers. The other profile you see is operators, and that’s where I’m at: former operators who started and left businesses. We mainly do early-stage investments, so we deal with many companies that are just starting to generate revenue and the founding team is often made up of engineers. Helping these portfolio companies understand how they’re going to add sales and marketing, complement their leadership, and provide assistance to help them scale the business is kind of the role I play in the fund.
What’s it like to be on the other side of the desk during a pitch?
I had to go through a period of transition where almost all of the companies that have presented to you are flawed. It’s a good idea, but maybe the team isn’t there. Or it’s a very good team, but just an idea. Maybe they have a few customers, but not much traction. I had to go through a period of transition where nothing seemed good enough because everything was imperfect. Over time, I realized that was the nature of this job. All start-ups have a lot of work to do to complement each other, so I went through a transition from being more forward-thinking. Probably the big difference of being an operator is assessing where you are today and focusing on metrics and traction. When you’re a venture capitalist, you spend at least half your time thinking about what this business could be like if it had more capital and hired the right people. You do a lot more future casting.
What are your tips for startups looking for capital and investors?
There’s a lot to be said for people doing the early work to prove what we call product-market fit. In other words, push this idea as far as possible so that someone actually wants to buy it or buy it or use it. There have been times in venture capital when this was not always a requirement. You could come up with a great idea, but it’s increasingly out of place – often to the benefit of the founders – to get proof that someone cares about this thing to pay for it.
Secondly, there is an ecosystem that did not exist 10 years ago in (business) accelerators, which is a place that offers a step before venture capital. You can take something very early and they will work with you. They’ll bring in a range of experts to help you with things you don’t know – a lot of people don’t know much about finance, or they don’t know much about marketing – and you can incubate your business a bit so you can show a bit of revenue and show a fit to the market. Then you’re better prepared to go talk to a venture capitalist and answer the questions that venture capitalists want answered.