Dan Conner describes the strategy of launching St. Louis-based Ascend Venture Capital as akin to a pharmaceutical company starting clinical trials.
Like clinical trials, Conner, general partner at Ascend, said the venture firm’s initial thesis was tested with a small group with hopes of widening its scope in the future. Ascend in 2015 launched its first fund after raising $500,000, using the capital to invest in four companies. It’s had promising results.
Ascend says its first fund is currently ranked No. 1 by investment research firm Pitchbook for distributed to paid-in capital (DPI), a measure of cash returns to a fund’s investors, for early-stage venture funds that launched in 2015. The Pitchbook data, which includes firm's first funds and is based on self-reported data, lists Ascend’s fund as having a DPI of 2.73, which would equate to investors receiving $2.73 for every dollar they invested.
Ascend, which was founded in 2015 and describes itself as a “micro” venture capital firm, has since raised two additional funds, each with $5 million, and hopes to soon close on its fourth fund. Its strategy centers on providing pre-seed and seed stage investment to data-centric technology startups. It has invested in more than 20 companies and its funds include family offices and high-net-worth individuals as limited partners, Conner said.
Ascend’s Fund I made investments in FreightWaves of Chattanooga, Tennessee; St. Louis-based Lumate; Portland, Oregon-based Exergy; and Infinite IO of Austin, Texas. Conner said the fund’s success has largely been driven by FreightWaves, a media and data firm focused on the supply chain and transportation industry.
Conner said Ascend’s ability to return capital to investors is particularly a point of pride given an industry downturn in recent years in the returns generated by venture firms.
“Amid that backdrop, we’ve really managed to go against the trend,” he said.
Ascend relies on an investment sourcing strategy Conner has described as encyclopedic in nature, saying the firm has reviewed about 30,000 companies to make its investments. He said that process creates an “unfair advantage” in finding companies to support. Conner said the review process completed by Ascend allows it to make targeted investments, rather than employing what he called a “spray and pray model” that would involve backing a number of companies in the hopes that a few find success.
“That’s a tricky model to run, especially if you consider the human aspect of it. You’re essentially looking for one winner you continue to be in touch with and then ignore 99 other founder teams,” he said.
