There’s a new seed venture capital fund in town.
Michael Kocan has raised $3 million for the fund OutBound Capital in Saratoga Springs. Kocan plans to stop fundraising at the end of the year with a goal of reaching $5 million.
Unlike some of the other funds based in upstate New York, this region is not Kocan’s focus. Instead, he wants to give private investors from this area opportunities to invest in startups emerging from places like San Francisco, San Diego, New York City, Denver and Atlanta.
"I'm not focused on upstate New York, necessarily,” Kocan said. “That doesn't mean I wouldn't invest in a company in upstate New York, but what I really want to do is bring the best startup investment opportunities from the premiere startup hubs in the United State to investors in upstate New York.”
Kocan said he’s more driven toward finding the best startups in the country, and upstate New York doesn’t catch his eye as much as some of those top cities.
"I think there is probably a lack of opportunities to invest in upstate New York, meaning that the types of startups I see coming out of what I call the premiere startup hubs in the United States are a much different quality than those coming out of upstate New York, and I don't know the reasons for that, exactly. A lot of it comes down to ecosystem.”
Kocan and his wife, who's from Clifton Park, moved to Saratoga from New York City in 2015 when they decided to have children.
He has an engineering background and started his career working for the U.S. Army. He then went back to school for an MBA.
"Ultimately, working for the government wasn't super exciting for me. I've also had more of an entrepreneurial streak,” Kocan said.
While working for consulting giant Accenture, he and a partner started a hedge fund called Trend Discovery. They carved out a part of the fund to invest in startups, which Kocan led. For nearly five years, he built a portfolio of 10 startups all over the U.S. Between them, there was an IPO and an acquisition, and several others continued to raise money. He left that fund in late 2019 and began raising money for Outbound in early 2020.
Outbound has already invested $1 million in five startups this year, three based in California and two in Denver. The fund typically joins larger rounds of fundraising led by firms with deeper pockets, he said. He plans to invest in 15 startups over the next 10 years. He's mainly interested in business-to-business software startups focused in the fintech and aerospace industries.
Kocan raised the initial $3 million from about 20 investors, half of them from upstate. They’re mostly business owners and company executives who each have a net worth that exceeds $1 million. Their contributions to Outbound were the first time any of them had invested in a private fund, Kocan said.
“A lot of people really haven't been pitched a venture capital fund before. So a lot of what I'm doing is educating potential investors,” he said. “Getting to the $3 million has been a long process, but I think a good one in terms of bringing awareness of the asset class to the region and getting people some exposure to private, early-stage startups.”
