CC032: Kate Shillo Beardsley of Upslope Ventures // scaling early stage investments across the country

Kate Shillo Beardsley 0:00
To me, I love, love finding something, like, it’s treasure hunting, you know. Find something undiscovered. No one else wants to trust it yet. I’m like, oh, yeah, I’ll do that. Because that’s honestly what we did at Lear; a lot of times we, we weren’t looking for external validation, we were using our own, know-how gut and also network to build it up. So, like, I was a first institutional investor in Billie, the dollar shave for women, out of Denver when they had a ton of New York connections.

Jay Clouse 0:32
The startup investment landscape is changing and world class companies are being built outside of Silicon Valley. We find them, talk with them, and discuss the upside of investing in them. Welcome to Upside.

Jay Clouse 0:59
Hello, hello, and welcome to the Upside podcast, the first podcast finding upside outside of Silicon Valley. I’m Jay Clouse, and I’m accompanied by my co-host, Mr. Italy-Vacation himself, Eric Hornung.

Eric Hornung 1:11
I had so much gelato and so much wine, Jay. I think I left Italy being 50% gelato, 50% win, and 50% pasta because I went there as 100% of a person but I left with a little bit extra.

Jay Clouse 1:25
I can see that.

Eric Hornung 1:28
You can see that? Like, I thought it was just gut, thighs, you know, trunk. No, you’re saying in the face it even showed up?

Jay Clouse 1:36
I think the listeners can see it.

Eric Hornung 1:38
They can they can hear it. They can just, they can hear the excessive amounts of gelato stuck in my throat.

Jay Clouse 1:43
It’s in the enunciation. Now I’m kidding. I don’t see it. I just wanted to make you feel a little bit self-conscious.

Eric Hornung 1:48
Now I feel 100% self-conscious.

Jay Clouse 1:49
What was — what was the reason for your visit?

Eric Hornung 1:51
Well, my dad, up until last year had never left North America, and he decided to give my mom a trip to anywhere she wanted to go in the world because he was going to be adventurous. So last year, we went to Greece, and he absolutely loved it. It was a great family time. There’s six of us in my family. We all went, we did Athens, Santorini, Mykonos. Fantastic time. This year, the decision was made to go to Italy. So I’m hoping it’s becoming an annual thing. I’m not certain that it will be. But we went to Italy this year. And part of that was tied into the fact that my mom, her family is from Italy. So my grandma’s Italian. My mom’s grandfather is from a little town in Italy called Amelia, which is about an hour and a half southwest, sorry, northwest of Florence.

Jay Clouse 2:41
And you have some sort of, I don’t know, deity in the family? Some sort of like saint?

Eric Hornung 2:46
That’s what we were told there’s — but I don’t think it’s a saint, I think it’s the one step below a saint. We couldn’t find any information on that, unfortunately. We did, however, find the birth certificate of my grandfather, which is what we went there for.

Jay Clouse 2:58
You’ve been saying this on the pod for a little bit. You’ve been saying that you had a family member who was up for sainthood, and that’s proven to not be proven?

Eric Hornung 3:04
Well, we don’t — we haven’t — It’s not proven, but it’s not not proven. So, and I’ve hedged it in past episodes. I said, allegedly, we have this thing, but the last name Silvestri is big in the town that I was in. There’s a castle Amelia castle, which is beautiful. And there’s a cemetery which has a lot of sylvestres in it that I walked around. It’s pretty cool. But the town is literally dying, Jay, it’s in a very weird way. I forget the exact stat, but there’s under 200 people that are under, like, 10 years old in the entire town.

Jay Clouse 3:36
Whoa. Weird. Crazy. What’s the, like, what do you people do there for fun besides eat gelato

Eric Hornung 3:42
Mostly we ate gelato? No.

Jay Clouse 3:44
A lot off old people, a lot of ice cream.

Eric Hornung 3:48
Yeah, it’s beautiful. So do you know what Cince Terre in Italy?

Jay Clouse 3:51
Of course I don’t know what Cince Terre is.

Eric Hornung 3:52
Of course you don’t. Great. So, there’s a UNESCO World Heritage Site right up the coastline from where Amelia is. It’s called Cince Tere. It’s supposed to be like one of the most beautiful places in Italy. It’s getting super touristy now. But if you go down the coastline, you’ll hit Talaro, and then if you bend around the peninsula, you’ll hit Amelia. And so it’s just this beautiful, rocky, beachy, beautiful coastline in Italy. So I think if you were to stay there longer, you would go boating, you’d go to the beach, you just have a very nice experience.

Jay Clouse 4:27
Well, speaking of very nice experience and lots of activities. Our guest today is from Denver, Colorado, which is also a destination for people who like to do outdoor activities. Today we’re speaking with Kate Shillo Beardsley, the Managing Partner of Upslope Ventures. Formerly Galvanize Ventures, Upslope is an early stage venture capital fund that invests in startups across the country. They believe exceptional teams can originate from any location. In fact, they’ve invested in ten markets now Austin, Boulder, Boston, Denver, Los Angeles, New York, Ontario, Portland, San Francisco and Seattle. And Upslope was founded in 2013.

Eric Hornung 5:01
We went on a hike called the Bride’s March, which is, according to legend, this bride was from Talaro, and she walked to Amelia to get married, which, you know, sounds like okay, what it’s a little two mile walk, no big deal. No, Jay, this thing was intense. There were rocks. It was a mule path. My heart rate was spiked. I had my Apple watch on. On the way back, my brothers and I tried to run it and beat my family. They were taking a bus. So we we made it in like under 30 minutes, but my heart rate was like a constant 170, 180. So I couldn’t imagine walking through the 95 degree heat to get married in your wedding dress, let alone doing it in shorts and a t-shirt.

Jay Clouse 5:40
Walking up a slope. Let’s walk into this interview with Kate Shillo Beardsley of Upslope Ventures.

Eric Hornung 5:49
Jay, this summer, we had some fantastic interns, but we were spoiled, because we didn’t have to do as much work. So if we wanted to hire someone, I don’t even know what we would do.

Jay Clouse 5:59
It would be really hard to find the quality of interns who really just came to us this summer. I’m already thinking, how are we going to find interns like this again? If we ever want to hire a full time employee, Eric, how are we going to find somebody that high quality?

Eric Hornung 6:12
You know, there’s probably nothing out there, to be honest.

Jay Clouse 6:14
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Eric Hornung 6:28
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Jay Clouse 6:53
Basically, if you’re hiring, Integrity Power Search is your go to. They are the plug, Eric. And so here’s the plug for them, go to Upside.fm/integrity, and learn more about how Integrity Power Search can help you with your hiring needs.

Jay Clouse 7:13
Kate, welcome to the show.

Kate Shillo Beardsley 7:15
Thank you for having me.

Eric Hornung 7:16
On Upside, we like to start with a background of the guests. Can you tell us about the history of Kate?

Kate Shillo Beardsley 7:22
The history of Kate, I think I have an interesting background in getting in VC, which every VC who you ever interview will probably say that, but I have an English degree from Middlebury College, which is weird for being a VC. Like, don’t have a business degree, i’m not technical. None of this, like, makes me qualified, I would say, traditionally to be a venture capitalist. And yet I am one. I’m a partner at Upslope Ventures, formerly Galvanize Ventures. So yeah, how I got there? Didn’t want to be an English teacher at a private school, which was basically what I was qualified for. After graduating, worked in sports marketing for a second because I played college basketball, I thought that would be a good idea, it was like working in the movie office space. Terrible. Moved to New York City, randomly got a job working as Martha Stewart’s Executive Assistant, which we could do an entire podcast on that. She’s amazing and as cool as you see her with new, like, she’s just the best. So that was really fun and lucky. And from there, I got to work with Kenny Lerer in the early Huffington Post days. So I was a Huff Post employee. Also didn’t have a journalism degree, so that was even like adjacent. Ken and his son, Ben Lerer, started doing some angel investing, they kind of were before I joined them in 2008. And it kind of rolled into venture. Angel investing turned into a fund in January 2010. And I didn’t know what I was doing. Truthfully, like, you know, Ben and Ken didn’t either, but they had exceedingly amount of confidence and know-how and had already started two companies. And just, you know, we just did it like a startup. We just started figuring it out as we went. And now I’m really proud to say that that’s Lerer Hippeau ventures, the most active seed fund in New York, which is just amazing and also bonkers to think back to how hilarious it was, like putting all the legal docs together and being like, googling things, because no way, I was like, I don’t know what this is. And then I joined Galvanize in the early days as a ninth employee, started their venture fund. And I’m still managing that fund now; it’s called upslope ventures. We separated the fund two years ago, and yeah, fast forward ten years later from January 2010, I’m still in venture and early stage, early meaning, like, idea preseed all the way through series A.

Jay Clouse 10:01
Can you talk about that first move from, okay, you’re working with Kenny Lerer, and now he’s starting a venture fund. What does your role, how did it become a venture role versus supporting someone who’s running a venture fund?

Kate Shillo Beardsley 10:13
It’s great question. I get that a lot, especially from young women who are trying to get into venture, and they see that I went from being an Executive Assistant to Martha Stewart to, like, an EA Chief of Staff role to like Director of Operations. Those are like my official titles. But I have to say, anyone who’s been at a startup or even reporting to someone like Martha Stewart in a fortune 500 company, like, there’s no structure, even with a company as structured as MS Hello, Martha Stewart Living Omnimedia. Yeah, everyone else in the company got like a employee review. And you know, like, what was I gonna do? Marty, it’s time for us to sit down and talk about me and my career…Yeah, it’s not happening. It certainly happened on the fly. And I would say, if I wasn’t doing a good job, I would have been fired. That was evident. And that’s true. I think in those positions, when you’re an EA chief of staff, you’re so close to that individual who’s essentially even Kendra’s chairman of the Huffington Post. So, I mean, we’d have those discussions, you know, I would, you know, spend time. But he was excellent at being a mentor and a teacher. Martha was, too, but I would say that, Kenny, as the evolution of the focus on what our work was, it became evidently more clear as to what my job was going to be as we started to have a company. And the transition was honestly me just telling Ken I wanted to do something different. Or, you know, at one point, I hired an EA to replace the normal EA stuff. And then I kind of took on larger venture things. That was around fund two when Eric Hippeau came on, and we really needed some organization, and there’s so many hours in the day. So it was just having open and candid conversations. And Kenny also is really generous. He, you know, he told me, at one point, I could do whatever I wanted at the firm if I just, you know, stuck with him. And I took that to heart. And he always honored it whenever I said, hey, remember, you said I could do whatever he wanted? And he was like, oh, yeah, okay. And it was a sense of fun, that wasn’t sort of pinned around.

Jay Clouse 12:24
So it sounds like it was more of a function of you being interested and you taking initiative and going out and starting to do things and kind of being like, well, I’m this now and not him saying, hey, can you do this?

Kate Shillo Beardsley 12:34
Yeah, I remember one day, I was sitting with our accounting team, which, you know, I had, like, formed essentially, because we needed one. And I’m like in piles of Excel sheets, and we’re like, going through the financials of like, the 20 companies that we own 100% of because someone had to, you know, pay attention to the bottom line for those. And, you know, it was awesome, really interesting. And he walked in, and he just looked at me, he goes, what are you doing, like, who gave me this job, and I was like, someone had to do it. Like, there’s no one here, you know?I mean, like, things have to get done. And that’s just what that really what that environment was. So I honestly, I’ve always operated in the context of, here’s a mountain of work, because we want to accomplish x goal, just start, like, picking away at that pile. I was always less concerned about my title, you know, anything…I mean, I feel like when you go into roles, now, most people are really aware of what salary equity, how that’s structured. I’ve just always been one of the only people, if not the first on the ground floor, and I, I’ve never pushed for that out of the outset because you just don’t know what you’re going to get. And it’s kind of an evolution. So I’m much more of a do-er and a builder than, you know, I need to come in and be at this level and achieving this, etc.

Eric Hornung 13:55
When I think about English majors and English teachers, I generally think like structure, right? Like, these are the sticklers of grammar. Jay’s parents are both teachers, one of them’s an English teacher, and Jay inherited that, like, grammar- I’m-going-to-critique-you-when-you-use-the-wrong-there sticklerism. So did you struggle at all going from this world of structure and English and basketball and regiment to moving into something that you said had no structure with Martha?

Kate Shillo Beardsley 14:27
No. I realized actually, when I was at Martha, I’m equally left and right brained, and very creative. I almost was a double art in English major, which, you know, would have also been useless as a degree, but fun and interesting, creative. And then I equally like structure, Excel sheets, math, so I almost get antsy if I spend too much time doing one thing. So I think the startup environment is perfect for that, because you have to go back and forth between the two. Martha’s equally left and right brained. And so I was able to kind of follow her in a sentence, you know, if she would move from something obtuse to really detailed. And not only that, but like, that’s how I think, so it’s, it’s a little bit of a blessing and a curse, especially — And that’s why I think I’m well suited for early stage because you will have to sit down and do the actual detail work but then be able to think big picture, long term, you know, and gonna get some creative new solutions there. So it’s something I realized I was good at, and it’s also my preference.

Jay Clouse 15:34
Something you said when you just started this, you kind of qualified your position and said, I don’t know if I’m qualified, or I wouldn’t traditionally be considered qualified to do this, which I feel is like an attitude most people we talked to in VC have. What does it even mean to be qualified for something? When would you know that you feel qualified to be in venture?

Kate Shillo Beardsley 15:53
I would definitely say with a ton of confidence I’m qualified now. And I say this being a — how old am I — 37, I have two kids, I’m married, I’ve been doing venture for ten years. And now when I meet people who are in venture, especially early stage, and I’m like, oh, I was one of the first investors in venmo, people are like, holy, You know, like, I was like, yeah, I’ve been around for a while. So that experience makes me feel more qualified. And that’s something that…I mean, I remember Kenny saying all the time, you know, where he would say, I just go off of my experience, you know, I look back and say, well, you know, what was, what do I know? You know, and that, and that, essentially, is qualification enough. I mean, I think, traditionally, venture capital, around the .com-bust, was men experienced in you know, they had technical degrees coming from MIT, Stanford, Harvard; they also had a financial background, maybe they spent some time private equity. You know, it was this really interesting combination of highly, highly skilled individuals who had had the years of experience and maybe even started a company themselves, and then they were qualified to be a VC. It’s changed dramatically, drastically now. And, you know, I, coming from Martha Stewart Living Omnimedia, with my consumer background of just understanding what the female consumer wanted from that company, and sitting in these meetings with Ken and Ben, I was qualified to evaluate Birch Box and Balibar, some of our early investments, because the user was a young female. And that gave me confidence around my ability to evaluate new kinds of companies that were coming through. And that was, you know, in 2010. And honestly, a guy from MIT with an engineering degree would be like, I don’t, I don’t know why this is important. So I think it was a good time for me to be right place, right time.

Eric Hornung 17:53
What was your first investment? Like, the one that you kind of took on and you were like, I’m all in on this.

Kate Shillo Beardsley 18:01
I’ve got a couple. I’d say the first one I did for Ken, because it wasn’t my money was Paperless Post. This was before we had a fund, and my job — along with helping him on a day to day basis, evaluate, you know, businesses, and a number of other things that we were doing, especially this is when I was working for the Huffington Post — was to find him just cool stuff to invest in, literally that’s what he said. And I was like, okay, I don’t know what that means. And a friend of a friend was starting Paperless Post. And honestly, this was solving my own problem. Ken was an amazing advocate for political candidates. And he used to have these amazing events to try to obviously raise awareness. And we had to send out physical invitations to 100, 200, 300 people. I used to hand address Martha’s holiday cards, and I would start in October. So the plight of the admin, where, you know, hand addressing cards and invitations made no sense. So the idea of sending electronic invitations was brilliant, from my perspective, because I was the one who was gonna have to do it. And I remember the moment I, Kenny and I were standing talking to each other, and he said, yeah, we really need to do this for this event. And I was like, can we just use people’s posts, I don’t want to even address stuff. And he’s like, what is that? I was like, oh, it’s a friend of a friend of mine, like, you know, company that they’re doing and, and I showed him in the envelope opened, and it was, like, magical, you know, this is like, probably 2008. And that felt so much more sophisticated than Evite did at the time. Evite was a wonderful, technological solution. But paperless post was beautiful. And that was where I understood the consumer product had to sit between function and desire. You wanted to obviously have that, but then, you know, someone like Martha would be more interested in using or someone who cared about aesthetic, like she did, would want it to be beautiful, customizable, look like it was from their sort of brand, if you will, and this was any woman from the Upper East Side to, you know, a boutique store looking to communicate like Ralph Lauren, or something like that. So that was something or when I showed it to him, he was like, get them in here, like, this is amazing, I want to talk to them. And so that’s where I was like, okay, like I understand, you know, what gets you excited. And, and then I was working in Betaworks on a day to day basis because Kevin’s chairman of Betaworks. So the environment I was in was for engineers, John Borthwick, Andy Weissman, who now works as a partner at Union Square. And it was, like, the six of us every day, and then Ken as well. And I was the only woman in the office and the only layman, you know, besides Ken. So the guys who were there were, are now off doing some cool stuff. But you know, Todd Levy, who’s the CTO of BuzzFeed was the first engineer on Bitly. And Bitly, came out of Betaworks. And so this was this environment. I’d go to lunch every day with these guys, they we’re my friends. And they honestly taught me a ton about the internet, because I had no idea, like, what environment I was working in on a day to day basis. So they would also give me confidence around what was interesting from a technological perspective, and what was standard what was on the cutting edge. You know, these guys were data scientists, like it was before data science was a thing.

Jay Clouse 21:21
Yeah. So catch us up to today where we are with Upslope in how you moved into Galvanize and how that became Upslope?

Kate Shillo Beardsley 21:29
Sure. So I left there in February 2014. And two weeks later, started at Galvanize. Had this idea, I’d really, you know, with Ken and Ben and Eric, lived through the growth of the New York tech scene. It really wasn’t, no one cared at all what New York was doing technologically from 2008. You know, it was just like, there’s nothing there. After, you know, those few years, all the way through 2014, like, I remember people coming up to me and saying, oh you work at Lerer Ventures, like they knew what it was. And these were people who are not, you know, doing startups, and I was like, oh, wow, like it’s, it’s become a brand, like, people now. And we didn’t have to pound the pavement as much for deal flow. It was all coming to us. We were on our third fund. And we’d done 200 investments, like it was really, we had a team of 12. Like, it was very different than the days of basically me and a pile of stock certificates. And from that perspective, I knew I could stay. And it would be awesome. I loved the team, it was the best, best team. But I had this thesis of, okay, there’s going to be growth pockets happening across the country. As I was visiting places like Colorado and Austin, you know, visiting friends, I could see them happening, and I was like, this is going to happen all over the country. New York is going to continue to get massive. And I, I just saw an opportunity and honestly wanted to explore. And I was kind of done personally with New York. I’d been there for 10 years, and I wanted to move. So I was looking at where do I want to, you know, live. And my best friend was from Denver, and she was the one who hooked me up with the Galvanize team. She was an investor. She’s also my Middlebury College roommate, so I kind of owe her a lot. I will send her this podcast later and make her listen to it. But she’s a limited partner in they’re fund. So she knew what I was doing. And she’s the one who hooked me up with the Galvanize team early on. And to me, when I walked through the doors, I was like, ah, like, this is what I want from a co-working space that we don’t have in New York. We had We Work at the time, and our companies at Lerer were working in them, but they didn’t like it, and it was largely because it lacked community. And this was still kind of early days for We Work in terms of expansion. I was taking out suites in our Soho office to just let our companies exist there. And it was brutal, because I didn’t want to be a landlord. It was this whole other, like, tiered structure like people using desks and ugh, I hated it. So I hooked up with Galvanize, and I was like, please build one in New York, I will, I have 200 startups in New York that will just office with you, like, when can this happen. And so that was how this conversation started. And once I got to know the team a little bit better, they decided they wanted to raise a fund. And I was like, oh yeah, you just put this on top of your co-working structure, and you’re going to meet these companies and get to know them. And, you know, it’s not an incubator. It’s not an accelerator, it’s just familiarizing yourself with the teams. And I really liked where their plan was to be in terms of footprint, you know. New York, San Francisco, eventually, but it started out Denver, Boulder, Austin, Seattle, and n Phoenix. So all these pockets that I just didn’t have a network into. And I was like, I like this. I like this a lot. And so that was the strategy. So I joined them. And we raised a $10.2 million dollar fund and just seed investing in those markets. And it was great. You know, I think in the beginning of Galvanize, we had 30 members in Denver, I was working remotely still in New York. So it was a little bit slipped, I was telling companies in New York about our brand, and they were so excited, like, when are you moving to New York, when is the, you know, location opening. And then by the time I changed the fund from Galvanize to Upslope, we had over 4,000 members, I couldn’t keep up with the inbound emails coming in from our membership that wanted venture funding. So it worked. It just, sadly, co-working started to become…just so present. I think Galvanize was like the third co-working space in 2014 in Denver. There’s now like 130, which is just unbelievable. So you can see how, you know, the core brand started to stumble a little bit in terms of its offering. And that’s part of the reason why it’s now Upslope. We want to do more venture related activities, and Galvanize Inc. wants to focus on co working and education, and that’s totally fine.

Jay Clouse 26:05
Now that you’ve separated Upslope, and I’d like to hear how and why you did that, what does Upslope, where does Upslope plant their flag to say, this is the type of companies we’re looking for?

Kate Shillo Beardsley 26:18
Sure. So there’s a difference between a fund and a firm. And I think you’ll see that when you’re looking at new funds coming out that are, they either do one or two funds, or they’re on the road to becoming a firm. When we started Lerer, it was an experiment, and I’m so psyched to see it be a firm now, which is, which is really amazing. I’d like to build a firm. And that was, I think, the difference between the experiment that was Galvanize Venture fund one. And I always kind of knew, being the bird on the hippo, if you will, that we had $10 million, Galvanize had raised over 100 million, you know, obviously, the focus was not venture. So essentially, me running a small portfolio, testing out how this relationship was going to work for the long run. And my partners, Jim Deters, co-founder of Galvanize, and Lawrence Mendez, co-founder of Galvanize, have since left to go start new businesses. And we all left with the idea that we want to continue venture investing. And Galvanize Inc. is going to continue to do co-working and education. And so at that point, it was like, you know, obviously Galvanize Inc. owns the name, I had to change the name legally. But this is my career, I only want to do venture investing. And building funds is something I love to do. I didn’t realize that, but after doing it for Lerer, I was like, okay, I really understand the operational background, and how everything needs to flow together, running the management company, just sort of big picture thinking. And this is what we’re planning on doing is expanding Upslope Ventures into a firm over time. Obviously venture’s a long game, so this takes some time. But that was the reason for the separation. And what we’re looking for now is still early stage companies, again, from pre-seed idea through series A, across the country, especially in undeveloped markets. I know that a lot of coastal VCs are excited about these newer cities, but they’re excited later, they’re excited when there’s probably even a large seed round put together. But when it’s two people and a dog, and they’re trying to kind of get their wheels going, that’s when they really need — especially if you’re in the middle of the country, and you’re not as well connected, because maybe you spent years working in this other area, building that great business that’s disruptive in your sector, you didn’t spend your time networking in VC, networking in, you know, these service provider connections, you’re sort of new to it. And that’s what I’ve lived through in New York, I’ve lived through that in Denver. And I think it’s just going to happen in every city, we’ll have a pocket, and we’ll have a community that will connect them to the larger US-space network. So it’s just a matter of time. And that’s where I want to spend most of my time is working with those entrepreneurs.

Eric Hornung 29:17
How underdeveloped of markets are you looking to get into? Are you looking at the Austin, Columbus, Denvers, or are you looking at the Tuscaloosa, Des Moines, Boise?

Kate Shillo Beardsley 29:28
All of the above? I think Denver is actually pretty well…Colorado, let’s say because Denver and Boulder I think of as the same ecosystem. You know, the amount of new funds that have popped up is awesome. And the amount of later stage capital that’s coastal that’s now circulating in Denver, I would say that, you know, it’s going to continue to expand, which is great. So certainly, it’s my backyard, like, you know. In Austin to, like, I have relationships there through the Galvanize network. But I want the new frontier, which is going to be the next, if I’m looking at, you know, what our next fund cycle will be, it’s going to be the next deployable, what, three, four years. So who’s developing in three or four years that’s going to give you interesting and new returns. That’s just how it goes.

Eric Hornung 30:14
Any hot takes on favorite markets?

Kate Shillo Beardsley 30:16
I really like Minneapolis right now. It’s interesting because I think the environment is certainly ripe for some activity. You’ve got some major, major companies there. And just like a Seattle where you have people turning off of some of those larger companies with ideas, it’s obviously easier now than ever to start companies very remotely. You can use that as your jumping-off point to then go travel around, build relationships, come back, build your company, where you need to. Everyone, I mean, that’s just so normal these days in my perspective. So I think there’s a lot of activity that’s going to start happening out of that market, for sure. And then this might be obvious, but Canada, and that’s unfair to say, Canada. But you know, from a US-based investment perspective, I know that funds are obviously going up to Vancouver and Toronto, like, a ton. But I just did a conference called Alberta Innovates last — in June. And it was a second year, and the amount of growth that happened between year one and year two…really, really interesting. There’s a ton of, t’s very similar, or I should say analogous to a city of Denver, oil and gas, real estate. If you walk downtown, there’s a ton of Open Office opportunities that, you know, and it feels like Denver, Boulder in terms of Edmonton, you know, and Alberta. I think markets like that will be really interesting as well, because the city wants it, the entrepreneurs want it, the family offices want it. So you have all the right DNA. And I think those types of environments where you’re not fighting up against stream of people who don’t get it. But now, you know, the US is so supportive of startups as an ecosystem. I don’t think there’s any market that won’t have the ability if it wants it.

Jay Clouse 30:16
I was at Invenstures last year in Alberta, and was blown away by how clean and like, affluent, the city felt. And I got the same impression. I talked to some folks who were like, this is an oil and gas town, and we’re realizing that we can’t be an oil and gas town forever. And so I felt that shared well, too. Question I had for you, you know, you’re going early, early stage and you’re going to undeveloped markets, which to me just sounds like you’re asking for more and more risk. And with the history that you have, it seems like you don’t necessarily need to go into the riskier zones of investing. Why have you chosen for Upslope to take on this extra risk instead of saying, you know, we’re going to be a series A or Series B firm?

Kate Shillo Beardsley 32:41
Yeah, but I don’t…there’s so much money hanging out at series A and Series B, it’s not my jam. And that must be a casual way of answering. But I’m just really good at the early stage. I like it. And I think, every VC has a thing that motivates them. It’s such a psychological career. And I think when you’re evaluating — this is probably where my English degree comes into play — when you’re evaluating teams, it’s essentially you’re evaluating people, you’re evaluating fictional characters based on reality. And to me, I love, love finding something…like it’s treasure hunting, you know, find something undiscovered, o one else wants to trust it yet. I’m like, Oh, yeah, I’ll do that. Because that’s honestly what we did at Lerer, a lot of times we, we weren’t looking for external validation. We were using our own know-how gand also network to build it up. So like, I was a first institutional investor in Billie, the Dollar Shave for women, out of Denver when they had a ton of New York connections. But I also had a thesis around that area for probably two years and told a bunch of venture friends, and I was like, I want to do Dollar Shave for Women, someone send me all the teams you’re seeing that’re doing it like, this has to exist, I just I think it needs to. And met Jason and Georgina, and I was really pregnant, about to deliver my first baby. And it was just kind of a done deal on our first phone call. I don’t think I met them in person until, like, my kid was six months old. But I was like, yeah, we’re doing this, I don’t care, like, where you are, we’re doing it.

Eric Hornung 34:16
Is that how you generally think about potential investments where you formulate a thesis and then look for people that fill that thesis? Or when you’re treasure hunting, are you looking for people or a team or a market? Like how do you how do you kind of come to an investment?

Kate Shillo Beardsley 34:33
It’s all the above. I think you have to be, like we we’re talking about, you know, the creative. You have to be open to things just falling on your plate, like, within an hour. Oh, this rounds closing, all these great investors are in, like, that’s every family office’s dream is to be invited into an exclusive round for some reason. And even like an early stage investor, right? I didn’t have to do any work, like the terms were set, great lead, cool. Like, I’ll be…the least heavy, heavy lifting I have to do, love to do those. But it also doesn’t really demonstrate my ability to take something that no one else is seeing and build it up, which is essentially the job of an early stage investor. And how, you know, we did that at Lerer multiple times, so that gains confidence, you know how to run syndicates, like, you kind of grow into the role of leading. So it’s, it’s all the things, right? Certainly, when you’re evaluating an early investment, it’s largely team, it’s largely the space, you know. But the biggest thing that no one can factor in or have anything to do with is market timing. You know, that’s, to be honest, like, as much as all, these things have to line up. It’s so crazy when people tell their stories about how they invested in this kind of company, and they’re lying if they told you they knew it was gonna happen, there’s no way you know? I mean, we could have a market downturn tomorrow, and that could crush all these early things that we’re betting on, given where the market is today, public and private. So I think it’s just a little bit of, you know, licking your finger and holding it up to the wind and saying, like, I hope this works. And a lot of it can be manufactured relationships at the right time. You know, there’s, there’s trust, but you know, it’s also rolling up your sleeves, too. So it’s great to have warm introductions, it’s great to evaluate the team, it’s great to have a wide open sector, a lot of firms will say they want to find the new category creator. I think that’s probably where commerce is today. You know, it’s probably, it’s like, you can’t do like the Warby Parker of deodorant anymore. Like that’s not going to get attracted VC funding. So what’s the next category creator that’s really going to impress people and push a sector like commerce to the next level? So there’s all those components, I think, that go into it. And for early stage especially, its tip of the spear as much as I try to be formulaic, like, it’s always going to be really fluid. So I have to be open to a lot of different ways that something would come to me. And in a perfect world, I I have multiple thesis, theses for, you know, the fund. But honestly, that stuff sort of like wakes you up in the middle of the night, and you’re like, oh, what if you know, and it’s just how much time I would have to go down a rabbit hole and explore it and push it.

Eric Hornung 37:15
You said you try to be formulaic. Do you have a rough outline for that formula?

Kate Shillo Beardsley 37:20
For sure. And this is, like, the art and science, right You can be incredibly formulaic and have a whole strategy of how you’re going to deploy the cash, and what sectors, and I do that just to ease my own anxiety. But it all goes by the wayside because, again, market could tank, like, it could do well, you could find something that is way outside your strike zone in terms of price, you have to do it because it’s one of those beautiful rounds that you wouldn’t, you wouldn’t want to miss. And so it’s as much of, okay, here’s my best case scenario plan, and then you have to be able to just go with it when it comes through because those, those rounds are not replicated easily. And if it doesn’t fit your thesis, it’s just a thesis.

Eric Hornung 38:05
What’s the biggest thing that’s changed in how you invest now versus how you invested at Lerer Ventures?

Kate Shillo Beardsley 38:13
Competition. The private market is massive now. There’s so many players. We, we started their Hippeau ventures, or Lerer Hippeau now, when funds had frozen their assets, like they were not deploying cash in New York City. And San Francisco didn’t care about New York yet. So if you were two, three guys starting a compan… I mean, our first check into Venmo was like $25,000, it was, you know, because they didn’t need very much and they weren’t raising a ton. You know, I don’t see rounds at 750 seed anymore, like, that, that would be a friends and family experiment. You know, and we’re announcing multiple seed rounds. I mean, one of my seed rounds was like, the post was 50 million, that’s insane. That’s like a B round. But, you know, so this, like, it’s hard to use this terminology, because it doesn’t equate. I think there’s sort of a set price for the middle of the country and like set prices for the coast. But the the private market’s so so jammed now, there’s so many players, you can see these rounds of, you look at the cap tables, and there’s just so many new firms, it’s now like celebrities are becoming VCs, which I think is great, because they have different expertise, but it’s just, it’s a different dance. And finding the right groups to back that company who are going to be well suited to take it to be successful is…it’s just more complex now.

Jay Clouse 39:41
We also see this proliferation of a lot of micro-VC and a lot of very, like, thesis specific micro-VC, you know, we’re investing in exactly this type of company, which means that, kind of categorically, they’re not being open to things that you’re saying you have to be open to. And a lot of them don’t have this history where in the late 2000s, early 10s, they were investing in things like venmo. So do you see them as a threat? Are they putting like dumb money into the ecosystem? Is that a problem? Or does it not matter?

Kate Shillo Beardsley 40:14
I don’t think it matters because there’s so many different types of companies out there that I really like that there’s different offices for cash, you know. If everyone needed to pitch Sequoia in order to be validated, that would be unfortunate, because Sequoia has their own thesis. Yeah, I like the specific sectors. There’s a cool fund called Lever that’s only investing in alternative meat sources, which is, like, great, I know what to send you. And they also know how to vet a company like that in a way that I don’t. So I would enjoy partnering with specific micro-funds, just because it’s, it’s kind of like everyone’s got their own swim lane. And I think I do that for firms that are traditionally SAS that might not have faith in consumer, just because that’s something you know, I don’t explicitly do consumer, but I think that’s where I would lean on a fund when I do an aerospace deal. That’s more aerospace, you know, so it gives me more diversification in my fund, which is what we look for as a generalist. But I would say something that I feel more comfortable in is consumer myself if that’s the thing that VCs are looking for me to help validate for them.

Eric Hornung 41:21
I guess one last question for me. Is there anything that we’re not asking that we should be asking?

Kate Shillo Beardsley 41:27
You know, it’s, it’s an interesting time in venture capital. I really like now that there are so many women a part of it. When I started out, I didn’t even really know that I was in venture capital, right? Like, I wasn’t looking for my peers, I wasn’t planning on a career. I was just head down doing work. And I think in a couple…like four years in, I met a couple women who were more senior than I was, and I was like, oh, okay, like, there’s some ladies. And we had a female partner at a fund to fund that had participated in our fund at Lerer that acted as a mentor for me for a little bit in terms of, like, structuring our fund on how to be more buttoned up. That was nice, you know. And so now, fast forward, a friend of mine, Jessica Peltz and Sutian Dong, put together the Women VC directory, and I’m just thrilled that something like that exists, and there’s so many women that we have a directory, because I think it’s necessary. And it’s, it’s not so much like a gender thing, but I’m just psyched to be doing deals now that…like I did an aerospace deal with another female partner and like, like, I can’t believe that happens, you know? Like, and that’s so cool. And it’s, the directory is amazing, because, you know, I just got an email maybe 48 hours ago from a woman who’s like, hi, we’re part of the directory, I’m coming through Colorado, I’d love to, you know, have coffee with you. And I was like, that’s exactly what it’s for. And of course, I answer because I send those notes out to other women saying, hey, like, you know, I have a question for you on this or this deal that you might be interested in. And it’s we’re all on a slack channel, and like, I don’t, I don’t have a network like that, that’s forgot for people. You know, so I’m just thrilled that Jess Sutian took the initiative and put it together because it’s great being in the middle of the country having access to a larger network that’s interested. And you know, gender might have been the sort of vehicle that got us there. But the activity is so robust that I’m, I’m just really impressed that that’s where we are in the current market.

Jay Clouse 43:29
Awesome. Well, shout out to Jessica for connecting us as well. We appreciate her for that.

Kate Shillo Beardsley 43:34
She is a super connector. I love her.

Jay Clouse 43:36
Kate, if people want to learn more about you or Upslope after the show, where should they go?

Kate Shillo Beardsley 43:40
Upslope.vc is our website. You guys can hit me up on Twitter, or I’m just kate@upslope.vc. Very simple with a K, not a C.

Jay Clouse 43:53
Eric, one of our favorite questions is what sucks? And do you know what sucks about podcasts?

Eric Hornung 44:00
The fact that we don’t know who’s listening to us?

Jay Clouse 44:03
Exactly. The analytics in podcasts are terrible. And so, I think I came up with a solution of how we can get a better feeling for who our listeners are.

Eric Hornung 44:13
Well, do tell.

Jay Clouse 44:14
All we need you to do, dear listener, is go to upside.fm/survey, and answer a short one to three minutes survey so we can get a better understanding of who you are, which helps us serve you better. We love feedback on the podcast, don’t we, Eric?

Eric Hornung 44:28
Oh, we love feedback. All about the feedback.

Jay Clouse 44:31
All about the feedback. And so if you would humor us, please go to upside.fm/survey. let us know a little bit more about you so that we can better serve you and make this podcast even better. That’s upside.fm/survey.

Eric Hornung 44:46
We promise the survey won’t suck.

Eric Hornung 44:55
All right, Jay, we just spoke with Kate from Upslope Centures. What did you think about going out west?

Jay Clouse 45:03
We’ve been kind of on a trend of going out west lately, and I’m enjoying it. It strikes me that there was this magical time in the late 2000s when a lot of people got really good starts into tech and entrepreneurship and especially investing. You know, she mentioned a couple of investments they got into with Lerer Ventures. Tlk about a unique path into VC, as it seems we see a trend in it as well. A lot of people in VC don’t know how they kind of ended up there, but they just did. Starting as Martha Stewart’s Executive Assistant, then working as an Executive Assistant to Kenny Lerer before the fund started. A lot of fortuitous timing,

Eric Hornung 45:40
You know, people say like, oh, there’s this magical era of VC in Silicon Valley in the 90s. And then Boston was in the 90s, as well. And then in thousands you have New York and Boston and Silicon Valley. And everybody who was brought up at that time has these really unique experiences. And I often think about, I wonder if we’re living in that for the rest of the country right now. Because it feels like there are more and more venture kind of expansions. There’s all VC, there’s all this stuff that’s happening outside of those three areas, now that isn’t just refining what they created in the 90s, but kind of changing it flipping it on its head. I mean, in Ohio alone, you’re getting more and more venture firms. Chicago is getting more and more venture firms. Denver is getting more and more venture firms. And this is all kind of moving. So is it just hard to recognize because we’re in this magical moment, and we just don’t really feel it? Or is it different somehow?

Jay Clouse 46:30
That’s a cool take. I’m not sure. I think the main difference is if you think about the late 2000s or 2007, you know — I think first iPhone was 2007 — think about how much has changed the last 12 years, going from first iPhone to this proliferation of all kinds of software because it’s so much easier to make and develop things now. Will we see the same proliferation of software in the next 12 years? Or will, you know, if you think about about that phrase, software is eating the world, it seems like most of the low hanging fruit of software innovation has happened or a lot, so much has happened. Does continued innovation have to be in more regulated industries, does it have to be in hardware? I just wonder if we ever reach the end of startups, software startups, pure software startups just making processes better?

Eric Hornung 47:21
Jay, when’s the last time you were in a fortune 5,000 sized office?

Jay Clouse 47:26
Boy, I don’t know. Probably last couple weeks when we we’re doing some some film interviews.

Eric Hornung 47:30
Okay. And did you get to use any of their processes or systems?

Jay Clouse 47:34
No. Other than ever working through them to get approval for things like B roll.

Eric Hornung 47:39
There are 70 publicly traded enterprise SAS pure plays, some of which have been acquired, since 2004. I think that there is probably 10 times the amount of value to be created, just looking around the businesses that I’ve sat in, the companies that I’ve consulted for at my full time job, and the processes that I hear from my friends that work at some of the Fortune 100 and 500. Every single kind of platform that’s out there is probably a billion dollar opportunity, like travel expenses, and HR management systems, and none of that is broken into. So I think we’re just kind of ticking the beginnings of what will be a huge push into software for corporations, because you’re used to like Slack and Zoom and everything that you use in your, like, entrepreneurial focused life. And maybe that feels a little saturated. But my guess is that at larger corporations and companies, people don’t operate with the same level of saturation of good, user-friendly, intuitive, well thought out developed products.

Jay Clouse 48:43
I think that’s more of a pace of implementation and acceptance, though, than they don’t exist. Like the two things you just named, there are some huge softwaress playing in that space for corporations. Concur, Expensify, Gust, Zenefits. So I wonder, though, it’s just acceptance in those firms because they’re probably on the… they’re across the chasm in terms of adoption curve. But yeah, I don’t know. I’m probably a little bit too Doomsday on it. It just seems that, you know, in the early days when there were not distribution mechanisms for getting your product into users hands pre-App Store, there was so much more opportunity to quickly get in front of people. And now, either that opportunity is taken, or you’re up against so much noise. And so, I really look at people who were able to come up in the late 2000s, early 2010s, getting experience with these upstarts and some of the first classes of Y Combinator and things like that, I feel like that is an incredible mint year or bottle year, what is the year of…what’s the relevant year in wine terms, Eric?

Eric Hornung 49:47
Vintage.

Jay Clouse 49:48
Incredible vintage year to come up in VC. And it seems like Kate hit that.

Eric Hornung 49:52
Yeah, I would agree. She’s definitely been around for a lot of the magical times in the United States venture capital history, specifically early on in New York, which is pretty cool.

Jay Clouse 50:02
I like your point, though, about enterprise software. So maybe we’ll get an investor on the show here to talk about enterprise SAS and what that landscape looks like.

Eric Hornung 50:10
Yeah, that’d be awesome. I think just one final point I want to make on Kate and Upslope. I like that they’re kind of playing in this one field, where they’re like, hey, we do early stage, and that’s what we do well, kind of like what Benchmark does. They found their niche and they stay in it. Upslope found their niche, they’re staying in it, they’re not going to move up series A, B, C, and all the way up the chain.

Jay Clouse 50:31
And the way she phrased it, when I said, it seems like you’re inviting a lot of risk with your track record, you don’t really have to. And she was just kind of the mind of, well, that’s what I find interesting, and I don’t want to do anything else, which is bold. I like it. You know, you and I talked a lot about all this specification of venture firms to form VCs to go out and raise on. And she said, that’s a positive perk, she knows where to send people. But it seems like she does not want to go and start one of the specific funds. And I still wonder about the viability of those funds long term. Alright, guys, if you have thoughts on this episode, you can email us hello@upside.fm or tweet at us @upsideFM. And we’ll talk to you next week.