Co-Investor Spotlight: Alchemy Fund
Co-Invest News
Introducing our new Spotlights Series focused on co-investors!
Due to the warm reception of our Board Member Spotlight Series, we decided to add a new Series focused on introducing some of MVF’s co-investors.
Our first installment features the Alchemy Fund. We connected with Kevin Sanborn and below he shares a few more details about the fund.
Maine Venture Fund has invested alongside over 400 angels, venture funds and institutions in bringing growth capital to high potential Maine companies. If you are an accredited investor interested in MVF’s deal flow, please take our brief survey to let us know what type of co-investment opportunities you are seeking.
Alchemy Fund
Can you share a little bit about why and how your fund was started?
We are venture investors focused on early-stage start-ups based in New England, but outside of the Boston and NYC tech hubs. Like much of the country, our region is a greenfield for venture capital investment, under-indexing major tech hubs by 10-50x per capita. This is largely because it lacks the polished, ready-to-invest deals that venture investors in larger markets are familiar with. From another perspective, however, it is overflowing with opportunity, since it contains many of the ingredients which make up great ventures: smart people, technology, business ideas, capital, mentors, and infrastructure.
Alchemy’s innovation is to combine local ingredients into national-quality ventures. We take talented founders, help them upgrade their business model, add differentiating technology, provide seed funding, and assign veteran executives as coaches. This yields high-potential deals with attractive returns for investors, de-risks the deals during their critical formative stages, and creates a genuine partnership with the portfolio companies we serve. It also catalyzes local economic development.
Does your fund have a specific focus (geography, stage, industry, type of entrepreneur, etc)?
We invest in early-stage start-ups at the pre-seed and seed stage. We are industry and technology agnostic and will invest in whatever we find that has local roots and a clear shot at being a $100M+ company. We’re also practical. We look for ventures which can get to positive cash flow using seed stage capital available within our region, which is typically $1-3M per venture. This creates an option: keep growing the business using smaller cash infusions, stay organic, or go to a tech hub in search of institutional rounds. This strategy gives us access to capital markets but doesn’t tie us to tech investment fads. We can be contrarian, in other words, rather than having to chase the next blockchain.
Have you made an investment in a Maine company? What are you most excited about in considering further investment into Maine?
We have not yet made an investment in a Maine company, but we think the Alchemy model will resonate with Maine founders and entrepreneurs and are excited to expand our portfolio into Maine.
Besides your fund parameters, what is the most important thing that you evaluate in your diligence process?
We evaluate all the elements that a typical venture investor looks for in a start-up, including market size, product/market fit, uniqueness of the product/service, IP/barriers to entry and the quality of the founding team.
The unique thing about Alchemy is how we deal with the central problem of seed investing: that few of our projects start out being investable. So instead of being picky while combing through a large pile of deals, which isn’t an option in our market, we think of projects as starting out with some subset of the right ingredients: team, product/market, operating model, and capital strategy. When we see compelling puzzle pieces, we lay out a testable hypothesis on what the rest of the picture might be, then get to work filling it in. This is when we conduct “behavioral due diligence.” We typically work collaboratively with the founders for several months before we make an investment. We get to know the team, their strengths and weaknesses and help them with their strategy and business model. Their coachability and willingness and ability to engage with us in this way is a significant driver of our investment decisions.
If a company feels like they are a fit for Alchemy Fund, what is the best way to get in touch?
Alchemy is excited to expand into the Maine market and ecosystem. We would love the opportunity to speak with early-stage founders that have a great idea and the willingness to engage with us in this way. If you are interested, please reach out to Kevin Sanborn at kevin@alchemy-fund.com. You can also learn more about our approach and portfolio at alchemy-fund.com.
About Maine Venture Fund
Maine Venture Fund invests in Maine businesses that have the highest potential for growth and impact. For more information, visit maineventurefund.com.
Inquiries:
Terri Wark
Maine Venture Fund
(207) 305-0006
terri@maineventurefund.com
