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How Venture Capitalists Are Finding Entrepreneurs

January 28, 2022

During the latest Small Business & Startup Stories DSM podcast, Matt Kinley, co-founder and manager of ManchesterStory Group, a venture capital firm based out of Greater Des Moines (DSM), spoke about how the company assists startups in the following sectors:

Insurance
Healthcare
Financial services

In leading investment deals for startups, Kinley focuses on early-stage through growth-stage companies. Throughout his 21 years as a venture capitalist, Kinley has found encouragement with DSM business leaders and mentors, including Suku Radia and John Pappajohn.

Finding Entrepreneurs

Kinley said the crux of his job is to find ideas from the best entrepreneurs who can build great businesses. Kinley works with early-stage startups and looks for exceptional founding teams that can go after a market using new technology and scale to be a leader in their specific sector. Success depends on the portfolio and, ultimately, investment returns over the long-term, building value over time.

Common Pitfalls for Startups

When companies approach ManchesterStory, or any venture capital firm, they need to make sure they are ready. One challenge for a fund like ManchesterStory is figuring out where to spend your time. You can’t spend time on all of the companies that pitch to you, so which companies will you spend your time on? Therefore, when it comes to a company’s pitch, the intro and first meeting are one of the most important pieces. In the competition for time, you have to be ready to tell your company’s story. Know the basic questions that venture capitalists ask and prepare accordingly. In doing this, you’re more likely to get that second meeting.

Investing in Solving Industry Challenges

The healthcare industry is so large that there are many opportunities — you can find a small problem, but build a fairly large company. FinTech and InsurTech are similar. Kinley recounted a story about an early investment in nonemergent medical transportation that grew to be a large company and become a leader in the market.

Recommendations for Students or Young Professionals Interested in Investing

Kinley said it’s tough to get started. The key is raising capital successfully long-term and building a track record. You can invest small dollars and track it, or you can put together a Special Purpose Vehicle (SPV), assembling capital from various people and track it. Kinley also touched on angel investing and seeking out a network, including friends and family, as an initial learning tool.

Internships can also help those looking to start in the industry, which Kinley highly recommends, although they are hard to get. However, ManchesterStory currently has a Venture Capital Intern position open for applicants right now. There is also a venture program in Kansas City called the Kauffman Fellows that is a successful program worth looking into.

Topics also discussed included the sales cycle, the state of venture capital in Iowa, private equity firms, positioning the state as a global leader in specific sectors and more.

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