One of Milwaukee's newest venture capital firms, Character Capital LLC, emerged from stealth mode Wednesday to reveal that it has closed on more than $30 million for its first fund and invested in six startups.
The firm was founded earlier this year by John Zeratsky and Jake Knapp, former design partners at Google Ventures, as well as Eli Blee-Goldman, a former general partner at Mequon's Capital Midwest Fund.
Character invests up to $1 million in seed-stage startups and then works with them to find and expand product-market fit using the design sprint model Zeratsky and Knapp developed at Google Ventures, which is now known as GV.
Inception Health — the innovation arm of Froedtert & the Medical College of Wisconsin — is one of the fund's nearly 100 backers, along with founders and executives from YouTube, Google, Slack, Uber, Mozilla and Coinbase.
The fund is also backed by "significant personal support" from Wisconsin-based equity asset managers and investment professionals at some of Wisconsin's global investment banks, Character said.
David Reeves — president of OpenGov Inc., which has a Milwaukee office — is also an investor in Character, Reeves previously told the Business Journal.
Character is headquartered in Milwaukee but calls itself a "remote-native" company that invests in early-stage technology startups anywhere in the U.S.
From its first fund, Character plans to invest in 15 to 25 startups over the next three years, contributing $500,000 to $1 million to each company at the seed stage. It's reserving half of its fund for follow-on investments in those companies.
Of the six companies it has backed to date, Character has only announced its investment in Phaidra Inc., a Seattle-based industrial artificial intelligence company.
The firm said its other investments include a sales intelligence tool, customer research platform, audio collaboration tool, health care startup and a mental health coaching startup. The founders of those companies live in Singapore, New York and San Francisco, among other locations around the U.S. and the world, Zeratsky said.
Zeratsky, a Wisconsin native, and Knapp perfected the design sprint model with GV portfolio companies including Slack, Blue Bottle Coffee and One Medical Group. They published a book on the topic in early 2016 called "Sprint: Solve Big Problems and Test New Ideas in Just Five Days."
But a few years after leaving GV in 2017 and realizing that the fund has since focused on later-stage startups, Zeratsky saw an opportunity.
"We’ve worked with companies of all sizes, but the sprint process always worked best at early-stage startups, which are relentlessly focused on testing hypotheses in pursuit of product-market fit," Zeratsky wrote in a blog post published Wednesday. "Running sprints as investors would allow us to partner more deeply with founders and provide even more effective help."
Prior to Character, the firm's partners engaged in angel investing. For instance, Blee-Goldman invested in Milwaukee-based personalized wine subscription service Bright Cellars in 2016, Zeratsky said.
Character is Inception Health's second investment in a venture capital fund, Inception Health director Mike Maschek said. It has also backed Chicago's Abundant Venture Partners.
