Mat Sherman, a self-described “founder junkie,” is working to connect more of the people building startups to the early stage capital that can help them scale.
Sherman, a Scottsdale native and Arizona State University alum, created Seedscout, a platform that helps investors find early stage startups looking for money, to help founders outside coastal, venture capital hubs build their companies.
“Around 2014 or 2015, I discovered the startup world. I discovered Y Combinator, I discovered what venture capital was, and I really just fell in love. I can't tell you exactly why,” he said. “I think it's the idea that like these companies literally create industries, and they change industries. And there's so much influence that that can be had.”
Seedscout is still primarily a one man show, though Sherman has someone helping him on a contract basis. The platform has facilitated connections that have led to a combined $1.7 million in investments. Seedscout currently has more than 2,000 founders using the platform from six of the world's seven continents (apparently Antarctica's startup ecosystem has yet to gain traction).
Sherman previously co-founded a company called PubLoft in 2017 but he struggled to connect with investors in bigger markets. Sherman did eventually earn an investment from famed angel investor Jason Calacanis, after sending him regular updates on the business.
PubLoft eventually closed its doors, after which Sherman went on to start a podcast and then Seedscout. I caught up with Sherman to find out about what he has planned. The conversation has been edited for content and length.
What made you want to start Seedscout?
I started this podcast, Forward Thinking Founders, where I interview founders before they get big, and I did 700 interviews. I realized on this podcast that I was not the only person with the problem that I had. There are actually hundreds, if not thousands, if not millions of founders that are just not born into the right network, and they have a great company, but they don't have a way to communicate that company to people with money.
I kind of have built Seedscout around taking what I did for myself, which was monthly updates, updating an investor that isn't on my cap table yet, and I have productized that. So now I have thousands of companies on Seedscout that are sending monthly updates and data to investors for them to evaluate. And that's ultimately how I landed on Seedscout was solving this problem with a solution that worked for me and I'm thinking maybe it could work at scale for other people too.
There's been more VC deals cut this year than ever before. How has that impacted Seedscout?
There's more venture capital than ever, by far. But the challenge is that, just because it's more venture capital doesn't mean it's going into more deals. And in fact, it's going into fewer deals, which means my job is harder, because you think this capital should be dispersed among more founders, but it's not. So it actually led to more of a problem for outsiders like me and all the founders on the platform.
I mean, it's a good thing that there's more capital going into the private markets, but there really needs to be a way to spread where that capital goes, instead of just putting all that capital into the same 2,000 deals or 5,000 deals, that really should be going into 100,000 or a million deals, but no one knows they exist. That's the part that we want to solve.
What makes the Phoenix startup ecosystem special?
The first thing that people don't realize in regards to the Arizona startup scene is that there are so many talented people starting out here. I think that Arizona is a hotbed for talent.
The one thing that Arizona has historically had a challenge with is keeping the talent here. But I think with what's happened with Covid, is that Arizona is — I truly believe — very much so on the rise.
In addition, I think that Arizona entrepreneurs are just good business builders. And I think if you fuse a little bit of the business building mindset with a little bit of a venture capital mindset, then you build something special. So I'm a fan of Arizona, there's a reason I haven't left. Obviously there's things that need to be improved here, like any ecosystem, but recently I've been more bullish on Arizona than I was when I first got started in 2015 or 2016.
The Innovators is an ongoing profile series from AZ Inno that explores the interconnected people, places, organizations and companies that make up Arizona’s startup community. Have a story you think we should know about? Email reporter Andy Blye at ablye@bizjournals.com.
