Better Ventures: Backing Entrepreneurs Building a Better World

Abstract

This case centers on BV as it seeks to raise $20 million for its first standalone fund between 2014 and 2016. Wes Selke and Rick Moss, the two BV co-founders, had built their experience in impact investing when they founded and managed Hub Ventures (HV) (a smaller accelerator-type fund of $500,000) immediately prior to founding BV. Encouraged by the economic return and social impact from those early-stage, mission-driven HV investments, both Selke and Moss decided in late 2014 to raise a separate and much larger fund called Better Ventures Fund II (BVFII). This new fund would allow BV to make larger initial investments in its early stage portfolio companies and provide the needed capital to make add-on investments in subsequent financing rounds. The case discusses the challenges of raising capital for this new fund as well as BV's investment and impact theses, deal sourcing, and post-investment approach. The case eventually explores the next steps for BV, after successfully raising this first-time fund.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

You are not authorized to view Teaching Notes. Please contact your librarian for instructor access or sign in to your existing instructor profile.

Resources

Exhibit 1: Management Team

Figure

Source: Better Ventures

Exhibit 2: Hub Ventures Fund (HV) Portfolio Companies

Eko Devices

Berkeley, CA

Harnessing the power of smartphone computing and cloud data for diagnosis and treatment.

UCLass

San Francisco, CA

Connecting students and teachers to their counterparts around the world to improve social and economic mobility.

SunFunder

San Francisco, CA

A financing platform for off-grid solar projects in the developing world.

LeadGenius

Berkeley, CA

Human-powered lead generator and prospecting tool that employs workers around the world.

NBD Nano

Boston, MA

A nano-scale surface to enhance water condensation and collect water in most arid regions of the world.

SharePractice

San Francisco, CA

A clinical reference tool that helps doctors identify and understand the most effective treatments based on the success of other doctors.

Africa’s Talking

Nairobi, Kenya

Developing communications solutions for connected Africa.

Repat

Boston, MA

Creating fair wage employment by upcycling excess textiles into fashionable accessories.

StreetOwl

Oakland, CA

Smartphone platform that empowers consumers to find maximum discounts available based on their driving habits.

CheckInOnMe

San Francisco, CA

Proactive, automated personal safety system designed for mobile devices.

GivKwik

San Francisco, CA

Makes giving to non-profits easy, fun, and social.

Sisu Health (DIIME)

Ann Arbor, MI

Medical technology company tailored for Sub-Saharan Africa.

CloudPay

Santa Cruz, CA

Next generation managed services global payroll solutions for multinational businesses with complex payrolls.

TransitHero

San Francisco, CA

Utilizes crowdsourced data to guide more efficient transit choices across all transit options with its Urban Transit App.

Acopio

Oakland, CA

Social platform for professionals that allows like-minded professionals to network offline or online.

Hoop Fund

San Francisco, CA

An e-commerce and crowdfunding platform, used to run local small business networks.

Sources: Better Ventures, Angel List

Exhibit 3: Better Ventures Fund II (BVF II) Portfolio Companies (through November 2016)

SunFunder

Nationwide

A financing platform for off-grid solar projects in the developing world.

Localwise

Oakland, CA

Connects local people to jobs at local businesses, making stronger local communities.

Utility API

Oakland, CA

An enterprise software company that is accelerating the worldwide shift to renewal energy by making it easier and more cost-effective to switch to solar.

Augary

Oakland, CA

A software company that saves lives by using computer vision and artificial intelligence to help fleets drive more safely while capturing valuable visual information about the world.

Fluid

Oakland, CA

Invoice management software and short-term loan for freelancer economy.

NextRequest

San Francisco, CA

Information request software that improves government transparency.

Iris

Austin, Texas

Digital health start-up that provides advanced care planning solutions for patients facing chronic illnesses.

BrightCurrent

Oakland, CA

Customer acquisition platform for residential solar and other clean energy solutions.

LeadGenius

Berkeley, CA

Human-powered lead generator and prospecting tool that employs workers around the world.

K4Connect

Charlotte, NC

A technology integration company that makes life similar and easier for seniors.

Source: Better Ventures

Exhibit 4: Stage Definitions for Venture Capital Investing

Seed Stage Financing

This stage is a relatively small amount of capital provided to an inventor or entrepreneur to prove a concept. This involves product development and market research, as well as building a management team and developing a business plan, if the initial steps are successful. This is a pre-marketing stage.

Early Stage Financing

This stage provides financing to companies completing development where products are mostly in testing or pilot production. In some cases, product may have just been made commercially available. Companies may be in the process of organizing or they may already be in business for three years or less. Usually such firms will have made market studies, assembled the key management, developed a business plan, and are ready or have already started conducting business.

Expansion Stage Financing

This stage involves working capital for the initial expansion of a company that is producing and shipping products/services, and has growing account receivables and inventories. It may or may not be showing a profit. Some of the uses of capital may include further plant expansion, marketing, working capital, or development of an improved product. More institutional investors are more likely to be included along with initial investors from previous rounds. The venture capitalist’s role in this stage evolves from a supportive role to a more strategic role.

Later Stage

Capital in this stage is provided for companies that have reached a fairly stable growth rate; that is, not growing as fast as the rates attained in the expansion stages. Again, these companies may or may not be profitable, but are more likely to be than in previous stages of development. Other financial characteristic of these companies include positive cash flow. This also includes companies considering an initial public offering (IPO).

Source: NVCA Yearbook 2016

Exhibit 5: Portfolio Construction

Figure

Source: Better Ventures

Exhibit 6: Deal Sourcing

Figure

Source: Better Ventures

Exhibit 7: High Engagement Approach

Figure

Source: Better Ventures

Exhibit 8: Better Ventures Timeline

2006

Wes Selke joins Good Capital as an investment manager.

March 2009

Selke and Rick Moss meet at a Good Capital networking event.

Early 2011

Hub Ventures founded—an accelerator program within the Hub.

2011

Hub Ventures raises its first funding, $115,000 and kicks off its first cohort.

2011

Hub Ventures invests in three cohort companies: LeadGenius, Hoop Fund, and CloudPay.

2012

Hub Ventures raises its second funding round—$150,000 to fund seven cohort companies.

2012

Hub Ventures invests in Africa’s Talking, Repat, StreetOwl, Check On Mobile, and GivKwik, SusuHealth, and Acopio.

2013

Hub Ventures raises its third funding round into Hub Venture Central LLC.

2013

Hub Ventures invests in UClass, Eko Devices, SunFunder, NBD SharePractice, and TransitHero.

Fall 2013

Better Ventures spins out of Hub Ventures; Selke and Moss become managing directors of the new entity.

2014

Better Ventures Fund II holds first close on $6 million in commitments. The Fund makes its first two investments, in in Augary, and Utility API.

2015

Better Ventures invests in BrightCurrent and K4Connect.

2016

Better Ventures invests in Localwise, NextRequest, Fluid Financial, LeadGenius, and Iris Plans

December 2016

Better Venture Fund II closes with $21 million+ raised.

Sources: Better Ventures, LinkedIn

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles