Last fall, a new venture capital firm started making waves in Austin. It wasn't a Silicon Valley satellite office or a new fund assembled by Austin investors.
It was Flyover Capital, and, after months of introducing itself to the Austin startup community, the Kansas City-area venture capital firm helped back Austin-based ScaleFactor's $2.5 million seed round alongside Austin's Next Coast Ventures, Techstars Ventures and others.
Flyover Capital Co-Founder and General Partner Thad Langford and his team have been frequenting Austin ever since. In January, it joined Austin's Moonshots Capital and others in a $1.4 million seed round for Austin cybersecurity startup Threatcare.
So, it was about time Austin Inno chatted with Langford about its plans in Austin. In short, they're staying active in the 512 and looking to make additional investments.
Before Flyover, Langford was president and CEO of adtech startup Zave Networks, which was acquired by Google. Before that, he was at Sprint for eight years as wireless services boomed, including a stint managing Sprint’s innovation program and a co-founding role in Sprint Nextel Ventures.
Our interview with Langford was conducted by phone. Langford's responses have been condensed slightly here.
Inno: What is Flyover Capital’s investment thesis – and how does it differ from, say, Rise of the Rest and Elsewhere Partners, which are also focused on innovative tech outside of the Bay Area, New York and Boston? And what about size of the fund?
Langford: We started investing in 2015 and it was based on this core belief and through our own experience that we can build tech companies outside of the traditional tech hubs --and that there was little money being invested outside of Silicon Valley and the Washington D.C.-to-Boston corridor. Our thesis is based on serving those underserved markets.
Flyover Capital is working with a $45.7 million fund, and it has made 12 investments to date. It plans to make four to six more deals. So far, five are in the Kansas City area; two are in Champaign, Illinois; two are in Lincoln, Nebraska; two are in Austin; and one is in Madison, Wisconsin. [One of the Kansas City-area companies, EyeVerify, was acquired by Alibaba Group Holding Ltd.'s Ant Financial for a reported $100 million.]
Inno: When did Flyover first start coming to Austin? Where did you go first to learn about the ecosystem and meet the right people?
Langford: We’ve had an eye on Austin for a while. Our assumption was that it was a more served market than some of the cities we were covering at the time. As I spent more time in Austin, I found there was a lack of supply of early-stage capital and there was growing demand for it, meaning there are more companies looking for that early stage capital.
It was a welcoming community. I was working with Techstars as a mentor in Kansas City. That was a nice baseline to meet with Amos Schwartzfarb in Austin and mentor some companies down in Austin. We took a similar approach to Austin as we had in other cities. The best way to do it is have boots on the ground, spend time there and engage with some of the key influencers. That means accelerators like Techstars, Capital Factory and other investor groups and VCs in the area -- and family offices and even government groups. We also spent time at the universities to meet folks focused on entrepreneurship and engineering.
For Austin, I feel like we’re just scratching the surface. I want to spend more time there… and I feel like one of the best ways to get integrated into the community is to actually make investments. Our best referrals come from founders and teams we back.
Inno: What else should Austin founders know about Flyover Capital and what it's doing in Austin?
Langford: We want to find the best and brightest founders solving big market problems. We want to give capital to startups to reach the next level. And since we’ve operated our own tech companies in the Midwest, we want to lend a helping hand and an empathetic ear to compress their timeline to success.
Inno: How did you meet Threatcare?
Langford: We met Threatcare through Techstars Austin… we stayed in touch and they sent regular updates. They were too early for us at that time. But, as they matured, it became a fit for the stage in which we invest. At this stage, you’ve very much investing in the belief of the team to be able to go execute and make it happen.
Inno: How hands-on are you with portfolio companies?
Langford: We’ve had our own tech companies and are operators by trade. We do like to be active, depending on needs of the businesses and CEOs are working with. We're asking 'How do we serve founders to create the next generation of technology success stories in the region?'
The best way to let people know that you’re investing in an area is to actually make an investment there. Then people get to know us and hopefully those founders will refer us and talk positively about us and we become integrated into the landscape there.
Inno: Any plans for a satellite office in Austin?
Langford: As we grow as a firm, we will look at how to best serve the cities in which we invest. But, as we grow, we will look at opportunities that will be best for our founders. If it’s best for us to serve founders by having a satellite office… we’ll look at it.
Inno: Anything else folks ought to know?
Langford: We want to be more substance over flash. Regardless if we have an office there, we’ll do what it takes to integrate into the community and spend the time necessary to let people know who we are and how we operate.
