The idea that profits fund growth did not used to be so unusual. At its heart, sustainable growth in based on a deep understanding of customers and how to help them succeed. Successful customers invest in the suppliers who got them there.
Quartz: The fundamental problem with Silicon Valley’s favorite growth strategy, 2019-Feb-5 by Tim O'Reilly
Indie.vc’s search for profit-seeking rather than exit-seeking companies has also led to a far more diverse venture portfolio, with more than half of the companies led by women and 20% by people of color. (This is in stark contrast to traditional venture capital, where 98% of venture dollars go to men.) Many are from outside the Bay Area or other traditional venture hotbeds.The 2019 Indie.vc tour, in which Roberts looks for startups to join the program, hosts stops in Kansas City, Boise, Detroit, Denver, and Salt Lake City, as well as the obligatory San Francisco, Seattle, New York, and Boston.
Where conventional startup wisdom would suggest that aiming for profits, not rounds of funding, will lead to plodding growth, many of our Indie.vc companies are growing just as fast as those from the early-stage portfolios in our previous OATV funds.
Nice Healthcare is a good example. Its founder, Thompson Aderinkomi, had been down the traditional blitzscaling path with his prior venture, and wanted to take a decidedly different approach to funding and scaling his new business. Seven months post-investment by Indie.vc, Nice was able to achieve 400% revenue growth, over $1 million in annual recurring revenue, and is now profitable. All while being run by a black founder in Minneapolis. Now that’s a real unicorn! Some of the other fast-growing companies in the Indie.VC portfolio include The Shade Room, Fohr, Storq, re:3d, and Chopshop.
OATV has invested in its share of companies that have gone on to raise massive amounts of capital—Foursquare, Planet, Fastly, Acquia, Signal Sciences, Figma, and Devoted Health for example—but we’ve also funded companies that were geared toward steady growth, profitability, and positive cash flow from operations, like Instructables, SeeClickFix, PeerJ, and OpenSignal. In our earlier funds, though, we were trying to shoehorn these companies into a traditional venture model when what we really needed was a new approach to financing. So many VCs throw companies like these away when they discover they aren’t going to hit the hockey stick. But Roberts kept working on the problem, and now his approach to venture capital is turning into a movement.