Innovation hub Rev1 Ventures is welcoming a new partner in investment fund Tamarind Hill Partners. Tamarind Hill will move into Rev1’s space at 1275 Kinnear Rd. bringing an infusion of early-stage capital to Columbus.
The Midwest’s capital gap is not just a perception but a reality backed by the fact only 4.3 percent of venture capital investments came to the Midwest in 2017. Of the $3.1 billion invested in the region, Columbus netted $120 million – approximately 3.8 percent.
The numbers are improving, though, and Tamarind Hill will be crucial to further closing the gap in Columbus and beyond.
Founded by partners Mark Shary and Ben Trumbull, Tamarind Hill primarily invests in two ecosystems: healthcare information technology and supply chain, representing overlapping interests with Rev1’s portfolio, and strong industries in the Central Ohio region.
Tamarind Hill focuses on Series A rounds – the stage immediately following Rev1’s favored seed stage investments. In the sequence of raising capital, there are concept investments – the ideas on the back of napkins – then seed investments – validated businesses that are still refining as pieces fall into place. Next comes Series A – Tamarind Hill’s sweet spot – that ranges from about $2 – $10 million raises centered around venture funds. As businesses evolve they might continue on to Series B, C or D rounds.
The benefits of Tamarind Hill’s Columbus location and partnership with Rev1 are many. As Shary says, “Investing is a team sport.”
“This concept of us co-locating together is just part and parcel of who we are,” says Tom Walker, CEO of Rev1. “We believe in the interactions, in collisions that can happen in a hallway, can make a positive difference for both parties.”
The two organizations will share best practices, market intelligence, information on company development, networks and more.
“There is an awful lot of synergy that comes from just sharing good information about markets and company strategies,” Shary says. Working together can make companies better primed for future investments.
The sequential stages also represent an important opportunity.
“It’s good for the companies to have a more predictable pathway through their own capital formation,” Shary says, especially when it comes to making the jump from Seed to Series A.
“That capital does not travel very well,” Walker says, referring to Series A. “Most of that has to be created in your region.”
Shary explains that, “Capital doesn’t like to travel when the risks are intangible.” Intangible risks like developing leadership, navigating nascent markets, developing the messaging around a product, those are things that require mentorship and coaching – something best achieved by investors that are nearby.
That concept defines Tamarind Hill’s geographical investment area, looking at companies and cities within about a day’s drive. Otherwise, Shary says it’s impractical.
However, Shary explains that having a strong, industry-focused lead investor other funders can count on for more engaged mentorship can attract more capital. He expects that as they develop a base of Series A funding locally, more dollars will follow from the outside.
The gap that Tamarind Hill looks to fill is critical for multiple reasons. As businesses evolve out of Series A and on to additional rounds, risks become more tangible – getting margins right, improving sales productivity – and capital will travel in from the coasts.
Also, the markets that Tamarind Hill invests in, primarily businesses to business enterprises, are seeing exponential growth.
“What’s happened is the companies that these software businesses are serving…are acquiring and implementing technology at a much faster pace than they used to,” Shary says.
Startups demand more capital to be able to grow faster.
“It’s a pretty banner day when we can promote the creation of a new fund in our region,” Walker says. “We view it as continuing to grow our economy and providing new resources for our startups.”