IVCA Feature: RJ Pahura of Venture Connects Talks About the 'New Age' of VC Investors under 40

IVCA Feature: RJ Pahura of Venture Connects Talks About the 'New Age' of VC Investors under 40

July 5, 2017

The future, as they say, is ever present, and new Venture Capital investors are consistently coming into the Chicago and Midwest ecosystem, The New Age – as Venture Connects CEO RJ Pahura calls it – is cyclical, and comes an almost predicable pattern. So who is the VC investor under 40 years of age, and how are they changing the overall environment? The IVCA talked to Pahura, who began Venture Connects as a response to the younger investor.

Venture Connects, LLC, was founded in 2012 with the goal of providing resources to startups and growth stage businesses seeking funding and investment advisory services in preparation for a new or future round of financing. The organization takes a two prong approach to connecting entrepreneurs and investors – an online platform and personal partnerships. Their program includes access to private investors, angel meetings, in addition to entrepreneur and investor events. RJ Pahura was the founder of VC Connects, and started it because of his experiences as an entrepreneur. The 36 year old CEO gives a perspective on the young investor, and VC Connects role in developing the "new age."

IVCA: You began Venture Connects six years ago, primarily to get a younger investor group into focus. What were the overriding reasons for establishing the organization?
Pahura: We started more so because we didn’t see a truly connected community. It’s been six years now, and it began with a few angel groups with different agendas, and I found that the VC community tends to have its cliques. We wanted to disrupt the model a bit, to establish something with accredited investors, but not having to make them join a certain group... call it investor agnostic. We allow any accredited investors whether they’re angel, VC, or family offices to attend and be part of our community. We work with the investors and the entrepreneurs towards a goal of funding truly vetted deals.
IVCA: What does deal-making look like for a younger person, and how does Venture Connects facilitate that kind of deal flow?
Pahura: I think we have what I like to call a ‘new age’ of capital, it seems like every three years we get a whole new ecosystem of people with capital. You have the players that who have already been in the space, and will always be there. And then you have the new folks coming in who are trying to figure out their thesis or investment models, and are focusing on making them work.
There is M25 Group, for example, the Managing Director Victor Gutwein started that fund when he was 24 years old, and I love how he has progressively grown the fund to what it is today. Their thesis was to invest in great opportunities at set amounts and diversify their portfolio without necessarily being the lead investor. There’s a lot more to it, but it’s a very structured and strategic rollout of a firm and a fund in my opinion.
IVCA: What is your feeling on the overall reputation of Chicago’s VC community, and how is the younger generation here trying to adjust that reputation?
Pahura: I still think there are the cliques, and I do think the environment is political. We stay out of politics. People are still not communicating and sharing information as much as they could be, and I believe it might work to everyone’s benefit in the long run... especially with newer investors and new entrepreneurs coming into the city.
One of the reasons our organization exists is to connect entrepreneurs and investors alike, but in the Chicago ecosystem and overall ‘signaling’ is real. I’d like to see people investing for the right reasons and not just because a big firm invested. Just because you have a big name on the cap table doesn’t mean the company is going to be a success. There are too many variables. Fund managers are there for a reason but all investors should do their own diligence and have a good gut check feeling prior to investing.
IVCA: There is great entrepreneurial action in the city, and it seems to be building every year. How do we make great – and younger entrepreneurs – stay in Chicago, in your observation?
Pahura: Many people come from elsewhere to attend the great business schools in the area, but are not firmly planted here, and then go elsewhere after they graduate. But the reality is there is plenty of capital here in Chicago and the Midwest. Being prepared enough to go to market as an entrepreneur is a key component to assure that they are dialed in and are ready for investment.
In my opinion, you only get one shot at this, and in the community there is plenty of capital to back up entrepreneurs. We advise entrepreneurs to do as much due diligence on the investors as possible, to truly establish the right fit for both parties. It comes down more to entrepreneur education that anything, because the capital is here. It just becomes about being prepared and finding those right fits.
IVCA: What is the background of a typical VC or angel investor who is independent and under 40? Is there any common type of background that you’ve noted?
Pahura: Not really. I’ve seen it all over the board. Going back to the M25 example, their Director, Victor, is one of the most structured guys out there. He is a University of Chicago Booth Econ grad, and has a very clear investment thesis.
On the other side of the picture, we sometimes meet individuals who have taken over a family office or are a recent hire as a “fund manager”, who have zero experience in Angel and Venture, and is throwing capital at deals without a plan. They often don’t last long. For the newer investor, we’ve seen both categories, but obviously the more structured firms are the ones that end up succeeding.
IVCA: What have been the most encouraging signs for VC activity in Chicago as we close in on the second quarter. What makes you optimistic in 2017?
Pahura: I think it’s the fact that people are moving more slowly and carefully because they know there are more options than ever before. And what that means is when they move more slowly, they’re not making snap decisions that could cause bad judgement, whether it’s the wrong investment, or on the entrepreneurial side, the wrong investor.
I think the accelerator and incubator models still have more learning to do, but the professional or more seasoned investor knows that there are many resources still available. My optimism is that there are many more resources available, but at the same time, people should move carefully and make sure they are getting “in” with the right people from the start.

For more information about VC Connects, visit www.VentureConnects.com