Moneta Ventures, a Sacramento-based early-stage venture capital firm, has quietly opened an Austin office and plans to invest about $20 million into Austin- and Texas-based tech startups.
The local office is led by Moneta Ventures Partner Aasim Hasan, a long-time Austinite with an extensive resume working with large tech companies. Hasan told me Moneta Ventures is looking to invest $500,000 to $2 million into edtech, health tech and enterprise and consumer tech startups that have reached $500,000 to $10 million in annual revenue.
The firm is poised to announce its first Austin investment in coming days -- a roughly $1.25 million investment as part of a $2 million round for QuickStart, an online IT certification education technology startup that spun out of 360Training before that company was acquired via private equity. (More on that in a moment.)
Moneta Ventures already has 22 portfolio companies. Its initial $25 million fund has been fully committed and, Hasan says, is on track for 20 percent internal rate return. The second fund has $50 million and will likely grow to $60 million -- with nearly a third of it focused on Austin and the rest of Texas.
"We’re the type to roll up the sleeves and get things done."
One of Moneta's key features it that it sets aside at least 1.25 times the amount of their initial investment for follow on investments as their portfolio companies reach the next stage.
“If we’re making an investment, we’re setting aside money for follow on investments," Hasan told me. "We anticipate there’s going to be a downturn and money is going to dry up pretty quickly.”
Hasan isn't alone in that thinking. Many investors believe frothy valuations for Silicon Valley startups, paired with some backlash against technologies, will lead to a market correction that could result in early-stage startups struggling to get subsequent rounds of funding to grow in the next three or four years.
Hasan said that Moneta's own investors include roughly 140 LPs, including leaders at a variety of companies across several industries that can help portfolio companies find expertise, strategic partners and potential exits. Moneta's management team also consists of former founders and executives who have spent more time launching and scaling businesses than managing funds.
“We’re entrepreneurs, we’ve had successful exits," Hasan told me. "We’re the type to roll up the sleeves and get things done. I think we work really, really hard to take into consideration the aspirations of founders and truly be their partner in that journey.”
A New Startup Springs From a Big Exit
In February, 360Training, an Austin-based online training platform for regulated industries, was acquired in a major investment by New York-based PWP Growth Equity. Financial details of the acquisition weren't released, but 360Training founder and CEO Ed Sattar characterized it as a "sub $100 million exit."
But, before that big move could take place, Sattar told me he had to deal with an underperforming segment of the business -- a segment that would one day become his new startup, QuickStart.
360Training's IT tech training product line was losing money. So, in January 2017, Sattar carved it out with a separate leadership team and transformed into a cognitive learning marketplace training the IT community. It had the effect of making 360Training more profitable for the private equity firm acquiring it, and it gave Sattar his next project.
So, how do you convert a losing product line into a startup carved out of another company -- and then turn it around and raise venture capital funding two months before and two months after closing on an acquisition to break even after losing millions?
Sattar said it's all about having the time and discipline to focus. He loves to use the analogy of an airplane: At 145 MPH, you are airborne -- but at 135 MPH, you're just a fast car. That translated in to Sattar spending a lot of time focused on specific tasks and not spreading himself too thin.
QuickStart has been investing most of its time in building out its cognitive learning platform. The platform uses artificial intelligence to provide recommended training courses based on each users habits and likes. It can track formal and informal training to understand how they prefer to learn -- through hands on instruction, self-paced courses or other avenues.
“Really the passion is around how do you convert training into a high impact and personalized learning experience?” Sattar said.
QuickStart's $2 million investment was led by Moneta Ventures, in which Sattar is a major investor. It also included funding from Sattar's own Sattar Ventures.
"I don’t have the need to raise money," he said. "But it’s a good signal to the market to get validation from a venture firm and that they’re willing to invest in a company that’s very futuristic.”
Sattar said he expects QuickStart to grow from about 20 people today to 44 in coming months. He said the company will probably grow to about 90 people in the next year or so and potentially be poised for a strong exit by 2021. QuickStart will also likely look for rollup opportunities using the new funding.
So far, QuickStart is off to a quick start. Among its enterprise clients are Boeing, Microsoft and Starbucks.
Editor's Note: An earlier version of this story provided a slightly different timeline for how QuickStart spun out of 360Learning. That has been corrected.
