Thoughts from Eric Rosenfeld and the Oregon Venture Fund

The most anticipated recession of our generation is supposed to arrive any month now. Which means it may not. Regardless, at the Oregon Venture Fund we are hoping for the best and preparing for the worst. We’ve been investing in startups since 2007 and here’s what we think may be new and different with respect to our market and strategy in 2023:

Eric Rosenfeld - November 2022

Predictive Indicators

Darwin wondered what nature was thinking when it created the peacock and its enormous tail. Why would nature saddle a bird with such a ridiculous disadvantage? A peacock’s tail hampers maneuverability and the ability to fly and makes the bird a sitting duck for predators – it certainly reduces the male’s odds of survival. Darwin concluded it was due to sexual selection. From a peahen point of view, a male must be particularly strong, fit, clever, and suitable to mate with if it can survive with such a ridiculous disadvantage. In other words, the size and quality of a peacock’s feathers are predictive indicators of valuable attributes much harder to quickly ascertain – the strength, smarts, and health of the peacock.

Risk, Reward, & Uncertainty

“Nothing ventured, nothing gained.” The correlation between risk and reward is accepted wisdom. The greater the risk, the greater the potential reward. That may be true with most forms of investing, but it may not be always true with venture investing.

Matt Compton – October 2022

Some of the most successful companies in the world are disrupting their industries because they found an effective way to unlock and make available an underutilized asset…

Airbnb unlocked underutilized residences to create a new supply of lodging.

Uber & Lyft unlocked underutilized people and vehicles to create a new supply of transportation.

Amazon unlocked and made available underutilized books, and then everything, including a new supply of web services.

Google unlocked and made available the world’s underutilized information.

TikTok unlocked underutilized teenagers & their inexhaustible creativity.

Deepthi Madhava - August 2022

Moore’s Law – where the number of transistors in an integrated circuit roughly doubles every 2 years and which has governed the semiconductor industry’s march of progress since the 1970s – was about to hit a brick wall. The lack of a photoresist – a photo-reactive ink – to work with next-gen extreme ultraviolet (EUV) lithography, meant that engineers could no longer develop chips with increasingly smaller transistors.

In April of 2022, Oregon Venture Fund (OVF) invested $1M in Kivo, leading a $3M round in the electronic document management and collaboration solution targeting the growing number of emerging biopharma companies. We were impressed with the Kivo team, their mission to support underserved small biotechs, and their broader vision for Kivo.

Fortunately, it doesn’t take a whole generation for most seed investments to bear fruit. In fact, the mean time to harvest for Oregon Venture Fund seed investments is just 4.5 years. Over the past 10 months, OVF and our region experienced a bumper crop of exits from recently planted seeds:

We want to thank our investors and portfolio executives for getting dressed, leaving the adorable cat/dog behind, and joining us in person to celebrate the achievements of our region’s top entrepreneurs!

OVF invested in Salt & Straw in 2019 to fuel their expansion and bring their artisanal ice cream to locations up and down the West Coast. We feel so strongly about the potential of the team, the strategy, and the product that we made a 2nd investment in 2020 to help them add additional scoop shops in Florida. We have been delighted with their progress – the company has generated consistent, impressive growth with new locations and customers from coast to coast. But selling handmade, super-delicious ice cream has always been only part of the equation for founders Kim and Tyler Malek (cousins). They are on a mission to create community gathering places in walkable neighborhoods and arts districts, as well as marquee entertainment destinations. A Salt & Straw scoop shop is a place where you can run into neighbors, spend time with family, or treat yourself.

It’s no secret that students’ mental health is in harm’s way. Young people the world over are feeling more isolated, anxious and disengaged, exacerbated by the Covid pandemic. In the last decade, there has been a 76% increase in adolescent suicide attempts. 76%! Suicide is now the second leading cause of death among adolescents. Chances are you know someone who knows someone who has attempted (or succeeded with) suicide. It has become harder and harder to just be a kid.

While the pandemic continued to generate hardship & angst for many, 2021 was a year for the record books for the Oregon Venture Fund’s growing community of investors and portfolio entrepreneurs:

OVF invested a record $11 million in local startups this past year. We are particularly proud to welcome Cloud Campaign, TrovaTrip, RISE Brewing, and Wayfinder to our portfolio and venture community.

Venture capitalists love metaphors. And nowhere is this more prevalent than when we talk about a good startup “pitch” – the first meeting with an investor where you get to tell your story.

We like to say things like, a good first meeting is like a good first date. You want the person you are meeting to remember you and think you are interesting enough to get a second date. No one should be getting married after a first date.

Eric Rosenfeld - September 2021

One of the areas where we’ve experienced confusion between investors and entrepreneurs is getting to a common vocabulary for the current stage of a company. An entrepreneur might say, “We’re raising a $5m Series A to build our product and run pilots with 10 customers,” which in many cases sounds to an investor more like a seed or pre-seed investment rather than a Series A.