After finding success as a Chicago entrepreneur with her creative marketing agency Spool, founder and CEO Catherine Merritt wanted a seat on the other side of the table.
She recently launched Spool Ventures and Spindle, which will serve respectively as the new venture capital arm and startup-focused practice for the company that are both geared toward supporting, investing and working with startups founded by women and people from other underrepresented groups.
Spool Ventures will make investments of both capital and sweat equity — that is, labor and time — in startups but is set up a little differently from a typical venture capital firm as it will also use Spindle, the startup arm of Spool, to offer marketing support and other services.
As of today, Spool Ventures has invested in more than 25 startups and is a limited partner in four venture capital funds, including Silicon Road Ventures, Supply Change Capital, Portfolia's Food and AgTech Fund, and Portfolia's Green and Sustainability Fund.
Some of the startups Spool has invested in include ones Merritt has discovered because her kids liked the product.
“We invested in a coconut water sports drink called Coco5 that was on my radar [through my kids],” she said. “We were contacted to provide marketing services for them, and we were able to then structure and put [together an] agreement so that part of our work was fulfilled through sweat equity.”
Another startup Spool invested in was Blue Blazer, a ready-to-drink cocktail brand based in Chicago.
“I reached out to them and we, similarly to Coco5, provided marketing services and set it up so that part of our compensation was through sweat equity,” Merritt added. “We will continue to look for different startups and companies that we can work with in a similar capacity. That's what’s exciting and how Spindel comes into the mix ... to work with early-stage startups and provide some services from an investment standpoint. We will also consider making capital investments into startups as well.”
She believes that her experiences of trying to fundraise as an early-stage startup founder will help shape the type of investor she wants Spool to be.
Prior to Spool, Merritt launched Mumzy, the Kickstarter for Moms, and Finnbin, a startup that provides a cardboard box sleeper for newborns with hand-selected products for new parents.
