IVCA Feature: New Member Profile of KDWC Ventures

IVCA Feature: New Member Profile of KDWC Ventures

July 20, 2016

The expansion of the Illinois Venture Capital Association (IVCA) is rapid and on-going, and allows its membership the advantages and opportunities that this growth provides. New membership brings new perspective for the Venture Capital and Private Equity industries in the area, and new possibilities for networking, among all the advantages of being part of the association. One of the latest new members is KDWC Ventures, a new fund that began in November of 2015.
 
The following is a Q&A profile with KDWC Ventures, which explores the firm’s background and their expectations for interacting with the IVCA.
 
New Member: KDWC Ventures
Representative: Justin Smollar, Partner & CFO
 
IVCA: What is a brief history and background of KDWC Ventures?
 
KDWC Ventures: The founders of KDWC have known each other for years, having had overlapping professional careers in the asset management industry. In recent years, the partners began making venture-type investments both individually and through their own separate funds. In many cases, they invested in many of the same deals, often with great success.
 
In mid-2015, at the suggestion of some trusted advisors who would eventually become significant investors in the Fund, the would-be team began discussions regarding the formation and objectives of a new venture fund. It was clear to them that the start-up scene in Chicago and other cities in the Midwest was becoming robust. The amount of wealth in Chicago alone has made finding seed or angel capital relatively accessible.
 
However, as start-ups move from proof of concept phase into their expansion phases, they find that the sources of growth capital that can write checks north of one million dollars are significantly fewer. KDWC intends to work primarily with companies transitioning into that next ‘growth’ phase, investing one to seven million dollars in each initial investment. KDWC’s pipeline of investment opportunities confirms this thesis.
 
IVCA: There was a picture upon the launch which featured founders Bill Wolf, Dick Kiphart and Terry Diamond, all looking the part of suit and tie VC pros. Chris Kapps – Kiphart's son-in-law – is decidedly younger and less conventional. What does his unconventionality bring to the table?
 
KDWC Ventures: Chris Capps is unapologetically unconventional, and, more importantly, is incredibly sharp and full of energy.  Having led the Kiphart’s Family Office, and been responsible for many venture investments over the past ten plus years, Chris is a respected leader in the Chicago venture community.  As a millennial, Chris relates very well with the leaders of many start-ups.  During internal meetings, Chris can be counted on to bring a fresh and often contrarian perspective. 
 
IVCA: In launching the fund with the four veteran dealmakers, how does strategy get determined and how does that benefit potential start-ups that could benefit from the fund?
 
KDWC Ventures: Our experience has proven that investing at the Series A and B phases can produce attractive risk-adjusted returns. Our partners have extensive operational experience at both at the board level and in the trenches helping companies grow. We can be hands off when things are running smoothly, or deeply involved when a company hits speed bumps. 
 
We’ve seen it all, and we’ve developed the fortitude to outlast tough situations without cutting bait at the first sign of trouble. One of our mottos is ‘The road to success is most often non-linear.’ We also have a Rolodex that is second to none, so we can connect our portfolio companies with new customers, additional capital or perhaps just some great advisors.
 
IVCA: The focus for investment is Chicago and the Midwest primarily. What advantages are there to this local focus?
 
KDWC Ventures: We love Chicago and we’re excited to be a part of the technology revolution that is occurring here. More specifically, we are excited that we have a part in building an industry that will be responsible for keeping more graduates from our outstanding Midwestern schools in Chicago. We also see an opportunity to leverage the large base of corporations that call Chicago home. They are natural customers for our portfolio companies and our experience to date shows that they are eager to help young, local ventures.
 
IVCA: What does KDWC Ventures hope to achieve in their interaction with the IVCA?
 
KDWC Ventures: We are rarely investing alone in our deals and benefit from the participation of other VC firms in our portfolio company investments. We receive new opportunities every day that have been referred by other firms, and we refer deals to others as well. In that way, we view joining the IVCA as natural way to be part of the VC community. We also need the IVCA to have an effective voice in Springfield, and in Washington, D.C.
 
For a further background article – in Crain’s Chicago Business – on KDWC Ventures, which includes the photograph referenced above, click here.