A Q&A with Nathan Owen, general partner at Grand Ventures LLC
Nathan Owen transitioned from software development to the venture capital world a year ago. Owen previously led Grand Rapids software developer Blue Medora, which he co-founded in 2007 and left in October 2019, months prior to the sale of a significant business unit to California software virtualization giant VMWare Inc. After Blue Medora, Owen spent a year as the chief operating officer at Boston software company HYCU Inc., where last year he helped to raise an $87.5 million Series A capital round. As of March 2021, though, Owen has been firmly planted on the other side of the startup table, joining venture capital firm Grand Ventures LLC as its general partner. Owen recently discussed the transition from company leader seeking funding to venture capital executive.
Why make the move to Grand Ventures?
It’s really about challenging myself. I’ve been an executive in enterprise software companies for going on 20 years now in one capacity or another, mostly startups. I had a chance to raise $120 million (in venture capital) for four startups. I’ve always been intensely curious about the business of venture capital and what that looked like, and for me it’s kind of a whole new experience to try out professionally and a way to challenge myself. I’m humbled every day by all of the things that I don’t know yet, but I’m learning.
How did you connect with Grand Ventures?
I’ve always been interested in the other side and have been keeping an eye on Michigan-based VC (firms) for a while. (Grand Ventures co-founder and managing partner) Tim Streit and I have known each other and had been talking for quite a while, and at some point we made a decision that I would join as a general partner of the fund.
How does your background translate to venture capital?
In VC firms, two of the most common profiles are banker types or people who have financial backgrounds — bankers or investment bankers. The other profile you see are operators, and that’s where I fit: Ex-operators who have built and exited companies. We do early-stage investing primarily, so we deal with a lot of companies that are just getting into revenue and the founding team is often engineer types. Helping those portfolio companies figure out how they’re going to add sales and marketing, round out their leadership, and provide assistance to helping them scale the business is kind of the role I play within the fund.
What’s it like being on the other side of the desk during a pitch?
I had to go through a transition period where almost every company that pitched you is imperfect. It’s a good idea, but maybe the team isn’t there. Or it’s a really good team, but just an idea. Maybe they have a couple customers, but not a lot of traction. I had to go through a transition period where nothing looked good enough because everything was imperfect. Over time, I realized that that’s the nature of this business. All early-stage companies have a lot of work to do to kind of round out themselves, so I’ve gone through a transition of being more forward-thinking. Probably the big difference of being an operator is evaluating where you are today and focusing on metrics and traction. When you’re a venture capitalist, you spend at least half of your time thinking about what this company could be down the road if it had more capital and hired the right people. You do much more future-casting.
What’s your advice for startups that are looking for capital and investors?
There’s a lot to be said for people who do the early work to prove what we call a product-market fit. In other words, get that idea as far along as they can so that someone actually wants to buy it or purchase it or use it. There have been periods in venture capital where that wasn’t always a requirement. You could come up with a great idea, but it’s increasingly shifted — often to the founders’ benefit — to get some proof that someone out there cares about this thing for them to pay for it.
Two, there’s an ecosystem that wasn’t there 10 years ago in (business) accelerators, which is a place that offers a step before venture capital. You can take something that’s very early and they will work with you. They’ll bring in a series of experts to help you with things you don’t know — a lot of folks don’t know much about finance, or they don’t know much about marketing — and you can incubate your business a little so you can show a little bit of revenue and show a market fit. Then you’re more prepared to go talk to a venture capitalist and answer the questions venture capitalists want answered.