Interstate Fusion Ventures Q2 2023
We hope you are doing well and had a great summer! Below, we have provided a quick update on both funds, some commentary on the venture space and markets in general, as well as a full quarterly report.
Our 2nd close for Fund II and the newest SPV offerings are underway! Please reach out if interested and we are always open to qualified referrals. Also, look for a notice of our live overview of both funds and contributions from several portfolio companies and advisors. We are targeting Mid-October and will send out a registration link soon.
Fund Updates (all net figures through June 30 and reconciled with Carta)
AFV (Fund I)
- TVPI (Total Value to Paid In Capital): 1.52X
- Deal IRR: 23.5%
- Fund IRR: 11.88%
- 100% Capital Called
- 21 Total Investments
- TVPI: 1.15X
- TVPI: 1.15X
- TVPI: 1.15X
- Deal IRR: 11.78%
- Fund IRR: 11.85%
- 8 Total Investments
IFV (Fund II)
- $867,000 Invested
- 5 deals
- 25% Capital Called
- No current capital calls scheduled
Our View of the Markets
It goes without saying that the last 12-18 months have been challenging, but it has also presented some unique opportunities. The second quarter saw a fairly significant uptick in venture funding. While we are still a long way off from the hay days of late 2021, it appears the overall venture market found a floor, in the first half of this year.
With this in mind, we are shooting to hit $10M by year end and need your help to get there! The fundraising environment remains tough, but for several reasons we feel very well positioned to benefit from a shift in the VC investing landscape. While the west and east coast still dominate, venture funding in other regions, including the Midwest is seeing an uptick. In addition, Ohio led all states in the Midwest fundraising, per data provided by Carta (please refer to the following chart and the Carta Q2 State of Private Markets Summary).
Connections Newsletter #2
Venture funding on Carta inched upward in Q2. Startups combined to raise more than $15.4 billion in funding during the second quarter of 2023, up 26% from Q1. In several other areas of the venture landscape, such as early-stage valuations and late-stage deal counts, the story is similar: Numbers were trending back up in Q2 after significant declines in recent quarters.
Portfolio Company Updates
BIOHM (Fund I)
The mission of BIOHM is to empower individuals to take charge of their health through solutions that harness the power of microbiome data.
A few highlights from the past few months:
- BIOHM Health officially launched in Walmart in July!!!
- Three amazing SKU’s were specifically created for this launch, and it’s exciting to see over a year of effort finally come to life.
- In addition, the team received an incredible honor by capturing the Microbiome Modulation Product of the year!
Pod Foods (Fund I & II)
The team at Pod Foods has been busy!
- 6 new grocery brands (18 items) launched in Sprouts within the last month.
- 12 new grocery brands (36 additional items) are launching through October.
- They now have a relationship with the innovation buying team and are getting set to be their main innovation partner, due to superior speed to shelf and specialization in emerging brands. Other Innovation brands include Cravings by Chrissy Teigen, Big Picture Foods, and Big Spoon Roaster (all will launch in October).
- 54 independent retail accounts have been transitioned from Pod Express to Pod Direct
- On the operations side, they recently announced a strategic partnership with Flowspace, as well as the launch of three new distribution centers (DCs), with more to come.
Society Brands (Fund I & II)
We are thrilled to announce the addition of Wolf Tactical and its founder to the Society Brands portfolio. Tim Wu is joining the team as founder and Brand President of Wolf Tactical. They are renowned for exceptional design and development of high-performance tactical gear. His commitment to quality and innovation has earned Wolf Tactical a stellar reputation within the industry and we are honored to have him as part of “The Society”.
Secondly, the portfolio of Society Brands had an exceptional performance on Prime Day this year, with a remarkable growth of 36% compared to last year!
Wastebits (Fund I)
Wastebits’ expertise in waste data analytics and tracking technology makes it a valuable partner in disaster response efforts. In the case of the East Palestine train derailment, Wastebits is ready to work closely with emergency responders to streamline the cleanup effort. By leveraging Wastebits Modules, users can track waste materials and manage their disposal efficiently, minimizing the risk of exposure to hazardous substances.
Discussions have expanded to propose the Wastebits platform being utilized across the state of Ohio. An effort is being led by Senator Ruhle, and his team, to make this part of Ohio’s legislation budgets for the upcoming year. Here’s a candid photo from their on-site meeting and lunch, from earlier this summer.
Wastebits met with Senator Ruhle and other East Paestine emergency response leaders. Together, they toured the train derailment site and discussed how Wastebits can help bring transparency and efficiency to chemical and waste shipments moving through Ohio.
UGen (Fund II)
- UGen marks the 4th investment for Fund II since its initial close. UGen is a healthcare technology company, based in Virginia Beach. They have developed an end-to-end solution, with movement sensors, to enhance motor learning and improve motor retention, in real-time, for the physical therapy market. The following provides some new details, as they continue to build the brand.
- On 9/1/23 they welcomed Michael Aguirre as the new Chief Revenue Officer. He has a proven track record of building new territories, expanding business with existing clients, and developing/training other team members. He will be responsible for leading the sales team and growing business.
- They have also finalized the brand language, identity, voice, and positioning and will be very active on social media, starting in September.
Restore (Fund I)
RESTORE-Care is their newest platform, with the goal to optimize restorative care programs, within customer facilities.
The platform offers tools for assessment, care planning, documentation, and progress tracking, allowing restorative care teams to manage and track resident progress effectively. By streamlining restorative care interventions and documentation, RESTORE-Care helps improve resident function, independence, and overall quality of life. Watch what’s happening at RESTORE here: Introducing RESTORE-Care!
Medasync (Fund I)
MedaSync is a predictive financial intelligence software platform for Post Acute Healthcare focused on reimbursement management. Today, the team is on pace to build off of last year’s traction and more than double again this year by reaching $1.3M in CARR (Contracted Annual Recurring Revenue). They have undeniable traction with more than 160+ paying clients, 2-3X growth potential over the next few years, and scalable unit economics.
In addition, Medasync is kicking off a new equity round with a target to raise $1.5M at $6.48M pre with an 8% accumulating dividend. We will share this round for a potential SPV investment opportunity.
We are excited to announce two new great SPV opportunities for our LPs!
The first is with Preface Ventures Fund III investment, and Farooq Abbasi. If you missed our Zoom with Farooq, you need to try and carve out 38 mins to do so. Here’s the link: Farooq – Preface Ventures (Passcode: ^0fQK?Qa)
A couple of highlights:
- In Farooq’s 16-year venture career, 6 of his 80 companies have gone public (including Spotify)
- Over 95% of his investments have generated a positive return
- Since launching his first fund, performance is in the top 5% and his risk ranks in the lowest 1%.
He is deeply committed and passionate about working together and creating big outcomes, especially in the Midwest. It should also be noted that we are THE ONLY fund with this relationship and his typical minimum investment is $500k. Our SPV starts at $5k. An investment in our SPV gets LP’s access to all his sidecars. We are very fortunate to have this opportunity!
Our 2nd opportunity hits pretty close to home.
Many of you know Michael Allio and his wife’s battle, and subsequent loss, to breast cancer. During her treatment, she suffered from a common and painful side effect of chemotherapy called Hand-Foot Syndrome. As a result, they set out to create a therapeutic application to relieve pain, and St. James Therapeutics was launched! Early samples proved to be effective in nearly every patient and Stanford is getting ready to run the clinical trials this fall.
They are currently raising a SAFE round and seeking investors who can get behind their mission of bettering the lives of cancer patients and also have an affinity for early-stage healthcare startups, with extremely high upside. Their list of investors and advisors includes Steve Marks, Bob Cooper, and Joe Kanfer, of GOJO, who is also serving on the advisory board.
This is a unique company with strong leadership and a potential game-changing product. This SPV is still open and additional details are available for your review including the Zoom recording.
Here’s the link: Michael Allio – St. James Therapeutics (Passcode: WQt2?4Zc)
During the last few months, we have added new advisors and an internal staff member to help with our mission of connecting the coasts.
Nathaniel Krasnoff has spent most of his professional career developing technology in the spaces of augmented reality (AR) and transportation. “Unlike many Corporate Venture Funds that don’t have the risk tolerance to get deals done in today’s environment, IFV has an innate ability to understand what innovation looks like and the relationships to make connections and build business opportunities for their founders,” said Nathaniel.
Farooq Abbasi is the Founder and General Partner of Preface Ventures based in NYC. “I’m thrilled to partner with fellow Midwesterner Bill Manby and IFV, helping unlock the exceptional local entrepreneurial talent that will shape the future. Through the success ofits partners across the industry, IFV places itself in a favorable position to accelerate innovation within Ohio and beyond. I am very much looking forward to what is to come,” said Farooq.
We are pleased to announce that Colleen Kelly has joined the IFV team as Operations Manager. Colleen is a dynamic professional who brings operations expertise and a track record of delivering exceptional results across various industries including Private Equity, Technology, and Franchising. Her main role will include supporting Bill in managing IFV’s portfolio companies including monitoring key metrics and providing operational assistance. In addition, she will handle much of the communications with LP’s and portfolio companies. She has already proven to be a huge asset.
As we discussed earlier, we have been featured on the Lay of the Land Podcast in August. During the interview for the podcast, we delved into various aspects of the founding of Interstate Fusion Ventures and the questions that drove our venture.
We explored the motivations behind our efforts and the validations we have achieved. Additionally, we discussed the vision we had for the future, specifically focusing on our goal of “connecting the coasts to the NEO.”
Here’s the link to listen to the podcast, that we hope you will like and share with all your friends! Lay of the Land – Bill Manby
Throughout the summer, we were busy telling the story of IFV with appearances on the above podcast and at July’s Greater Akron Chamber Morning Buzz Roundtable.
The conversation was about Investment Opportunities in Greater Akron. The panel featured Dan Hampu, President of the Burton D. Morgan Foundation, Jessica Sublett, President of Bounce Innovation Hub and Bill Manby.
We also just recorded a podcast with the Greater Akron Chamber entitled “Dreamers, Drivers, and Doers”. You can listen to the episode here: Navigating the VC Landscape with Bill Manby
In addition, Apurva and Bill were recently part of a podcast with Project Medtech. Finally, we have a feature article from our friends at Pease Bell CPA’s who produce a magazine called Edge which features local and regional business stories from Northeast, Ohio. Once the issue is released, we will be sure to share it with you.
There’s an old saying that imitation is the sincerest form of flattery. Our investment model is starting to be copied, but our coastal partners are strong and committed to us. We are punching above our weight class and are unique in our vision, execution, and ability to deliver. We also have made an impact with our commitment to portfolio companies and venture partners. Rolling up our sleeves and jumping in the trenches is common for us, not out of necessity.
This could be an unprecedented opportunity for venture investments. We hope you are enjoying the updates. Finally, thank you for being part of our journey and we hope you won’t keep us a secret!