An institutional investment expert, a paratrooper and an archeologist form a venture capital firm.
Sounds like a set up for a joke, right?
What’s no laughing matter is the $150 million third fund ATX Venture Partners closed as of June 30, or the more than $300 million in assets under management the VC firm boasts.
Launched in 2014 as ATX Seed Ventures, Danielle Weiss Allen, Chris Shonk and Brad Bentz rebranded the firm and co-founded ATX Venture Partners in 2016.
The firm focuses on early-stage technology startups and typically aims to obtain about 20% of companies in which it invests. It launches a new fund roughly every two and a half years. The firm plans to launch its fourth fund during this year’s fourth quarter.
While all three partners learned their respective crafts at larger, premier institutions, none possess a lineage to any Austin firms or funds.
“ATX is usually the first institutional funding a company receives after they exhaust their friends and family, etcetera,” Weiss Allen said. “We launch tech companies, analyzing and structuring investments, maintain board of director seats — and, we create exits. We also train and lead teams.”
ATX Venture Partners is the “only female-founded VC firm in Austin with assets over $75 million,” Weiss Allen said.
The firm also offers investors a platform that enables them to “invest additional capital” into companies they like in the ATX Venture Partners portfolio.
That portfolio includes Austin-based companies such as emergency-communications company AlertMedia Inc., purchasing-automation software developer SourceDay Inc., ZenBusiness Inc., which helps people start businesses, and situational-awareness tech startup Slingshot Aerospace Inc.
The firm already has made 14 investments from the third fund, including in ZenBusiness and Slingshot Aerospace. Those investments began in June 2019, Weiss Allen said.
“We’ll continue to invest the vast majority of” the fund “in Austin and the Texas ecosystem, creating hundreds of jobs,” Weiss Allen said, adding that the firm also invests in companies based elsewhere in the country.
Bentz said total investments from the third fund could be 15 or 16. ATX Venture Partners usually lead investment rounds. Investment size could range from $250,000 to $8 million. Shonk added that the firm also routinely makes additional investments in portfolio companies when the partners find that advantageous.
“Over the lifetime of the investment, we could invest up to $10 million,” Bentz said.
And, Weiss Allen said, “We pride ourselves on being founder friendly. Serial founders return to us when they are ready to launch their next company. They enjoy collaborating with us, and see us as huge allies in introducing customers, capital and talent to them.”
Shonk said he thinks at least six have a legitimate shot at becoming unicorns, or privately-held startups to achieve valuations of $1 billion or more. That ratio would be higher than the traditional startup investor strategy, where the hope is that one in 10 investments enjoy a large exit.
The partners have created their portfolio with a strategy that, “if each company becomes what we think it can become, every time a portfolio company exits, the return would equal the size of the whole fund,” he said.
The firm avoids markets that already have “too much capital, and where we don’t have a competitive edge,” Shonk said. Those markets include California, Massachusetts and New York. “We like good ol’ middle America — or companies on the coasts, where we know the founders.”
Shonk described Austin as “the most major non-coastal legacy market.”
Weiss Allen described the partnership of the three co-founders with such diverse backgrounds as “a three legged-stool.” Each individual brings value in a different way to the firm, its investors and its portfolio companies.
Prior to co-founding ATX Venture Partners, Weiss Allen spent about 15 years in New York. There, she held positions including vice president at investment bank and financial services company JPMorgan Chase & Co. (NYSE: JPM); associate director at MacKay Shields LLC, an investment management firm with about $158 billion in asset under management; and assistant vice president at Nomura, a Tokyo-headquartered financial services group.
Weiss Allen handles the firm’s strategic initiatives and its investment platform.
“I view client service as a touchstone, not an ornament,” she said. “I pride myself on giving investors first-class, white-glove institutional service.”
Shonk spent five years as a U.S. Army special operator, rising to the rank of staff sergeant before leaving the service in 1999. Shonk in 1996 earned the Army’s award for the special operations soldier of the year.
After departing the service, he joined the former investment and wealth management firm Merrill Lynch as a consumer tech and services analyst. Charlotte-headquartered Bank of America Corp. (NYSE: BAC) acquired Merrill Lynch in 2009.
That launched Shonk’s second career as a serial entrepreneur and investor. He co-founded and was managing director of Virtus Capital Partners, an Austin real estate private equity fund and investment bank. He also co-founded EZ Money Pawn, a pawn and secured lending business based in Arizona and Sneaky games, an Austin-headquartered company that developed social and casual games. And, Shonk was managing director at Liahona Ventures, an Austin investment firm where he oversaw its private equity portfolio.
“Chris has operator/entrepreneur background that is especially useful to help these emerging companies get to the next level,” Weiss Allen said.
Shonk said, “We are engaged non-stop with our portfolio companies, whether it is interviewing talent, meeting with customers, raising capital or a coffee talk about building the business."
Bentz earned a bachelor’s degree in anthropology from the University of California at Berkeley, then pursued a doctorate in archaeology from the University of Pennsylvania, where he conducted field research in Bulgaria, Pakistan and Syria.
In what some here in Austin might describe as a pivot, Bentz became a self-taught software developer in the 1990s. That led to a role at Database City, the former Texas capital web hosting and application-development company.
Bentz and Shonk met each other at Austin’s Acton School of Business, where both earned MBAs in entrepreneurship. Shonk recruited Bentz to work together at Virtus Capital Partners, where Bentz spent two years. (A mutual venture-capitalist friend introduced Shonk and Weiss Allen.) He later worked at Massachusetts-headquartered market-research firm International Data Group Inc., which does business as IDC, as a senior research analyst, web developer and financial modeler. Prior to returning to Austin to work with Weiss Allen and Shonk, Bentz was a senior programmer and analyst at Boston Consulting Group.
