Earlier this week, High Alpha’s Venture Studio announced a $100M fund raise to continue to fuel our mission to partner with incredible entrepreneurs to conceive, launch, and scale enterprise software companies. We are excited to begin investing this capital to fulfill our mission, and a key part of our success will be our ability to focus by starting and investing in companies that fit our investment criteria and thesis.
Since creating High Alpha Studio in 2015, we have started 11 new enterprise cloud businesses. Launching High Alpha Studio II has prompted us to reflect on and reevaluate our thesis for starting new companies. To that end, we wanted to share our investment criteria and thesis so entrepreneurs, investors, and others in the startup ecosystem can understand the types of ideas and companies we are able to most effectively support in the coming years.
First, some background on High Alpha. High Alpha is a new model for entrepreneurship that unites company building and venture capital. High Alpha Studio is a startup studio backed by Emergence Capital Partners and Foundry Group that partners with entrepreneurs to conceive, launch, and scale enterprise software companies. High Alpha Capital is a venture fund that invests in High Alpha Studio companies and outside entrepreneurs building enterprise cloud companies. This post will focus on High Alpha Studio, and I will publish a post about High Alpha Capital in the near future.
High Alpha Studio seeks to partner with incredible entrepreneurs to create, launch, and scale next generation enterprise software companies. People frequently ask how we come up with ideas for the companies started in the Studio. There are four primary sources:
- Internally-generated ideas based on problems or opportunities we’ve seen in our own experiences
- Ideas from entrepreneurs who want to start businesses with us
- Venture firms who see a market opportunity that no one is tackling
- Corporations who want to innovate outside of their own core business — (learn more about our corporation innovation practice here)
We take the most compelling ideas from these four sources and run them through a process we call Sprint Week which has become our forcing function for starting new businesses. Once we have sufficient conviction to start a new business, we provide funding and resources from our team of SaaS finance, HR, design, marketing, and engineering experts so the entrepreneur & company can focus on building the product, selling to early customers, and successfully serving those customers.
Characteristics of businesses that we start are:
- Business to business (B2B) — we work with companies that provide solutions that help businesses run more profitably and efficiently
- Software-as-a-service (SaaS) — this has become the dominant delivery model for software and is our area of expertise
- Midwest focus — we believe the Midwest and specifically Indianapolis has a competitive advantage in talent, cost of living, and a business-friendly environment
We are interested in any business that fits the above three criteria regardless of industry. To-date, we have started companies in sales, marketing, human resources, education, legal, and IT. A few examples of Studio companies are:
- Zylo — a SaaS optimization platform that raised a Series A investment from Bessemer Venture Partners
- Lessonly — training software for sales & customer service team backed by OpenView Venture Partners
- Pattern89 — a platform for paid social ads that uses data science to improve results
The final component of our investment thesis is the types of technology we work with. While we are open to most businesses that fit the investment criteria above, areas where we have particular interest or expertise are:
- Artificial intelligence — we believe that technology will continue to enhance humans’ ability and efficiency at work. Our friend and investor, Gordon Ritter, has a thesis on Coaching Networks and we are excited to build companies in that space.
- Fresh tech — the cloud revolution is 20 years old. There are a number of legacy SaaS companies that successfully disrupted on premise software incumbents but are now subject to disruption themselves either through the application of new technology (see AI above) or changing business models.
- Non-incremental innovation — the biggest opportunities are usually un-obvious, and more difficult to spot. While many great companies are built incrementally improving on existing business models or technology, every once-in-a-while, a truly innovative company comes along and changes everything.
We are thrilled to begin High Alpha Studio’s next chapter with the best entrepreneurs and investors in the world. If you think you have an idea or company you’d like to share with us, please contact us at [email protected].
