Just because dry cleaning might be considered a "boring" industry by venture capital standards — and often rejected as too capital-intensive and too difficult to scale — doesn't mean there isn't value in it.
Vijen Patel learned that firsthand when he launched Pressbox with Drew McKenna in 2013.
After selling the Chicago-based on-demand dry-cleaning service to Procter & Gamble in 2018, Patel wants to add a new player to Chicago VC, one focused on industries that are often overlooked by investors.
The 81 Collection, an early-stage venture firm, launched its inaugural $41 million fund this week focusing on investing in "hard industries" such as manufacturing, real estate, retail and construction.
Patel told Chicago Inno that while the firm's first fund was oversubscribed and could have raised more, he felt $41 million was the right amount to execute The 81 Collection's strategy.
The fund is named after the notion that 19% of GDP attracts more than 50% of venture capital activity. That other 81% will be The 81 Collection's sweet spot. "Hard" businesses see a 15:1 funding gap compared to asset-light, cloud-based businesses, according to The 81 Collection.
"All these other neglected industries are ripe for innovation," Patel said. "I'm even more excited now than I was six months ago because if I think about what's going on in the world right now with raw material prices and supply chain ... we have to solve some of this [through] innovation."
More than two-thirds of the funding raised in the inaugural fund came from current and former company founders in these industries. The firm’s founding members include Grubhub co-founder and Fixer founder Mike Evans, Industrious Chief Commercial Officer Anna Levine, Protege CEO Jackson Jhin, Farmer’s Fridge CEO Luke Saunders, Tovala CEO David Rabie, CarmaCare CEO Jamie Ahern, ShipBob co-founders Dhruv Saxena and Divey Gulati, Alex Kirshenbaum, and Cubii co-founders Amav Dalmia and Shivani Jain.
The 81 Collection also raised capital from multiple institutions around the Midwest, including DNS Capital, the Chicago-based investment office for the business enterprise of Gigi Pritzker, Michael Pucker and their immediate family.
The 81 Collection has made eight investments to date, with initial checks ranging from $500,000 to $1.5 million, in Bonside, Cambium Carbon, CarmaCare, Dentologie, Goose, Maestro, Mezo and Parentaly.
