Miami University’s Tim Holcomb was initially skeptical when prominent alumni Jim Ryan, then-chairman and CEO of Fortune 500 W.W. Grainger, pitched in 2014 a seemingly fanciful idea for a new venture fund.
Ryan, he said, was looking for opportunities to potentially invest in Miami-alumni startups as he neared retirement from Grainger, a $10 billion Chicago-based industrial distribution company, where he spent the entirety of his career. Holcomb, who had just landed in Oxford that fall, was concerned largely about deal flow, or the rate such a fund would be able to make investments.
Those concerns seem now a moot point. Miami University grads are part of a rising tide of founders celebrating recent multimillion-dollar fundraises, company exits and IPOs. Hoping to catalyze that momentum and better engage its network of graduates, 1809 Capital, a new venture fund for Miami University alumni, officially launched this month.
1809 Capital, a name that serves as a nod to Miami’s charter year, has made the first close on its inaugural fund, raising $2.7 million of its $10 million goal. The firm also has its first investment under its belt, with a goal of adding five or six companies to its portfolio this year, Mark Richey, partner and co-founder of 1809 Capital, said.
Richey, a 1980 Miami alum, resides in Cleveland, where the fund will be technically based, but has a long history in Cincinnati. He’s spent 20 years as an investor, serving as a Cincinnati-based partner for Pittsburgh’s Draper Triangle Ventures before co-founding Sycamore Township-based West Capital in 2011. Before that, he founded Synchrony Communications, a local software firm, in 1997, which raised $38 million before being acquired in 2001.
Besides Richey and Ryan, the 1809 fund management team includes other experienced venture investors and Miami grads, including Kimberly Walker, chief investment officer at Washington University in St. Louis; John Gardner, partner at NGP Capital in Palo Alto; and Kevin Mendelsohn, a partner at JumpStart Inc. in Cleveland.
Additionally, 1809 Capital currently has 27 limited partners, or additional investors, scattered all over the U.S., including Austin, Louisville, Milwaukee, Indianapolis, the Bay area and more.
“We intend for this to be a very long-term program,” Richey said. "1809 Capital engages a national network of alumni back into the Ohio ecosystem."
The Miami way
Holcomb, now chair of the department of entrepreneurship and director of Miami’s Altman Institute for Entrepreneurship, closely tracks the professional successes of the university’s graduates.
The wins have come in droves, particularly in recent months:
- Trey Kelly, a 2010 Miami graduate, is taking Cincinnati-based Griid Infrastructure public through a SPAC, a special purpose acquisition company, a deal valued at $3.3 billion.
- Sean Lane, who graduated from Miami in 2002, and serves as founder and CEO of Olive AI, Columbus’ first unicorn company, raised a fresh $400 million in funding in July.
- And Oliver Zak and Selom Agbitor, 2019 alum, pitched their company, Mad Rabbit Tattoo, on Shark Tank last March, landing a $500,000 investment from billionaire Mark Cuban.
Holcomb said prior concerns about deal flow went to the wayside before those deals hit, via a series of similar “ah-ha” moments:
- Money magazine, in 2016, listed Miami third nationally among schools with the most alumni in Fortune 500 CEO roles.
- A deeper dive into Pitchbook data also showed Miami alumni are among the most active leaders in the national startup ecosystem. Holcomb said over the last 10 years, Miami alumni have founded or lead companies that have raised more than $53 billion in funding. Over the past 24 months, graduates have raised almost $3 billion and have created more than 10,000 jobs.
- Miami alumni sit in leadership positions at more than 300 venture capital and private equity firms in the U.S. alone.
“My guess is that number measures up favorably with top universities around the country,” Holcomb said.
1809 is not legally linked to Miami, but will work in collaboration with Holcomb and the university, Richey said. They plan to make 12-15 investments overall using Fund I.
The average check size will be between $250,000-$500,000, Richey said, with a maximum deal of $1 million per company.
The firm is targeting growth-stage startups led by university alumni, or Series B or later. But 1809 also will co-invest alongside venture funds with Miami alumni on their management team. That includes big-name groups like Drive Capital in Columbus, Hyde Park Venture Partners in Chicago and NGP Capital, or local groups like Refinery Ventures and EGateway Capital.
The latter focus is how 1809 landed its first investment in Bay Area-based Coda.io, which raised a $100 million Series D in July. 1809 participated alongside leading West Coast VC syndicate partners, leveraging its connection with NGP. Coda, which has developed a platform that unifies documents and spreadsheets, carries a more than $1.4 billion valuation.
“It’s part of our strategy,” Richey said. “It’s a good example of how we can write a small check in a large round. It gives us insider access to top-tier deals that we normally wouldn’t have access to.”
The goal, just like any classically structured venture fund, is to generate a return for investors. But 1809 will also pay a majority of its carried interest, or profits interest earned by fund managers, directly to the Miami University Foundation.
Richey said that makes 1809 different than some other peer models, like Chicago’s IrishAngels, which was founded as a Notre Dame-affiliated fund but has since expanded to non-Notre Dame-linked investments.
While the fund is formally based in Cleveland, 1809 Capital plans to establish offices in College@Elm, the Miami University/city of Oxford innovation hub slated to open in early 2023.
Miami University students are already working with the fund. Holcomb said it’s another opportunity for them "to get their hands dirty" and do things that ultimately build on the learning experience they get on campus.
1809 will also aim to better engage alumni – typical ways in which universities look to loop in graduates don't often resonate in the same way with entrepreneurs, the firm said.
“It’s an opportunity to catalyze the entire network,” Holcomb said.
