SUM VENTURES
 MONTHLY NEWSLETTER 
 "Helping founders is the best form of diligence."
 

SUM THOUGHTS

Happy New Year SUM Ventures Community!

As we welcome 2024, I am filled with gratitude and anticipation for the opportunities and challenges ahead. This update encompasses our journey so far, our recent milestones, and our vision for the future. At SUM Ventures, we invest in driven founders who are acutely aware of the key performance indicators (KPIs) driving their business and are intent on maximizing the impact of every dollar. These founders are judicious with cash, often hesitant to dilute equity in their startups, acknowledging the long-term value they're building. As a fund manager, I've adopted a similar mindset.

The principle of capital efficiency, central to Eric Ries' Lean Startup methodology and its 'build-measure-learn' feedback loop, is a cornerstone of our approach, both in evaluating startup CEOs and as fund managers. This method has been particularly pivotal at SUM Ventures, especially in a challenging funding environment. Our commitment to a lean, iterative process has led us to scrupulously manage our finances. In the first 1.5 years, our spending, covering all operational costs and the establishment of the fund, was kept under $100,000. This expenditure discipline aligns with Ries' guidance for startups to focus on developing minimum viable products, thereby conserving resources and allowing for rapid, market-responsive adaptation.

As a fund manager dedicated to maximizing value for our limited partners, I am acutely aware of the importance of each dollar allocated. Our approach is grounded in the recognition that each dollar not directly invested in companies could represent a potential $10 loss in future returns. This drives our commitment to judicious expenditure, avoiding extravagances such as lavish offices or excessive legal fees, and concentrating instead on high-yield investment opportunities.

In 2023, we excelled at leveraging strategic partnerships with entities such as Siemens, Distillery, Douglas Elliman UpTech Studio, and numerous angel investment groups. These alliances not only augmented our due diligence but also added significant value to our portfolio, thereby enhancing overall investment efficiency. We extend our gratitude to these partners and all of our LPs who support our portfolio companies.

Most importantly, our early results are promising. They indicate that we have successfully crafted a high-performing methodology for delivering outsized venture returns. Our strategy has gained momentum, achieving our initial fundraising goal of $10 million and anticipating favorable news regarding matching funds from the government through the Small Business Investment Company (SBIC) program. This success story exemplifies the importance of capital efficiency and working with incredible partners to ensure sustainable growth and maximize stakeholder value, a tenet that is paramount for both CEOs and fund managers.

Despite a challenging 2023 for venture capital, we navigated the downturn effectively. Our persistence in a tough market has positioned us advantageously in strong companies poised for growth. We anticipate a landmark year for tech mergers and acquisitions in 2024, with a significant increase in strategic sales and acquisitions driven by market dynamics and capital availability. Our portfolio companies are well-positioned to take advantage of these changing market dynamics.

Investment Highlights and Strategic Expansions:

• Since launch, we've deployed $7M across 26 companies (2 Series A, 12 Seed, and 12 Pre-seed).
• Portfolio Expansion: Increased investments in Pay Amigo, Brius, Paperwork, Automotus, and Plantswitch to $500k each. 
• Added Hyperspectral to our portfolio, many thanks to Harry Hopper and Elizabeth Spears for sponsoring this opportunity.
• New Investment Focus: Preparing to increase our positions in Irrigreen, YBVR, and THIA, and taking active roles in their development through our partnership with Siemens.
• Our Christmas Zoom gathering was a resounding success, featuring updates from 10 of our founders. This event highlighted the strength and potential of our community and investments.
• Key Partnerships and Growth: Our collaborations with top-tier firms and angel groups like Band of Angels, TCA, and Pasadena have significantly expanded our network and impact.
• Impressive Investment Portfolio: Our strategic investments have achieved a 41% Gross IRR, demonstrating our strong investment acumen.
• Peter Jun was named Venture Capital Ambassador to South Korea.
• Multiple Portfolio companies raised their next financing rounds, including DressX, Live Easy, Automotus, Plantswitch, Irrigreen, and Brius.
• Launched our SUM Ventures Website and YouTube channel.
• Featured at Barnburner Pitch Event in Boulder, Colorado.

First-Ever LP Summit:
We look forward to hosting our first-ever LP Summit on January 26th in Santa Monica

Our Investment Philosophy:
At SUM Ventures, we invest in transformative ideas and founders with grit and deep domain knowledge. Our focus is on generating impactful returns, prioritizing IRR over AUM.

Investing in People: The Heart of Our Strategy
Our belief is simple at the pre-seed and seed stages: We invest in the people behind the ventures. The qualities we seek in founders echo the values we celebrate in our veterans - grit, integrity, skin in the game, domain expertise, and the exceptional ability to lead and inspire.

Value Capital:
We are building a fund that delivers more than just capital. If you look through our portfolio, I'm pleased to report that more than half of our founders have granted our fund additional warrants or common stock in their companies because of the outsized value our team brings.

Commitment and Action
Our founders are visionaries who are not just dreamers but doers. They wake up daily, driven by the urgency to materialize their vision for the future. They are the relentless warriors of innovation who know the stakes and still choose to march forward.

Phasing into Investments
At the seed stage, we know a fraction of what a company will evolve into over time. It's the entrepreneur who bears the risk, forges the path, and pioneers through the wilderness of the unknown. Taking the time to work with and evaluate these founders leads to the best investment outcomes.

Learn More

• SUM Website, where you can see the latest news from our portfolio companies
• SUM Youtube Channel where you can view our monthly Mtgs and Founder Testimonials
• SUM Deck here (password SUM)
• SUM Executive Summary here (password SUM)
• Please view our recent Holiday Zoom event for our portfolio highlights

• We are excited to welcome Brent Celek, Derek Hu, Walter Woltosz, Brian Stephenson, Nick Tao, Owen Fong, Jamie Godon, and Shareef Jandali to our growing team of LPs and advisors, enriching our team with their diverse expertise.

Thanks to our growing team for sharing deal flow, supporting our founders, and helping with diligence. John Paglia, Mike Van Kempen, Peter Jun, Elizabeth Spears, Harry Hopper, Peter Mansfield, Marcus Yang, Sally Dewitt, Ian Sobieski, Ksenia Yudina, Mark Belinksky, Nachi Gupta, Ken Borkan, Martha Stein, Stender Sweeney, Adam Korman, Millicent Tracey, Tim Sabean, Frank Mastrangelo, Tammo Mueller, Jon and Jacob Walker, Andrey Kudievskiy, Dan Sachar, Jason Bennett, Kammron Taylor, Kevin Herzberg, Amy Wood, Hunter Ballard, and Aike Mueller. Another big thank you to our strategic partners who support our portfolio founders.

1. Douglas Elliman (Real estate brokerage)
2. Distillery (Software Development)
3. Quantiva (Software/Product Development)
4. UpTech (App Design and Development)
5. Grafted Growth (Lifecycle Marketing and Growth)
6. Pepperdine Most Fundable Companies Program (Deal Sourcing and Diligence)
7. Siemens Advanta

Thank you for being a part of our journey. Here's to a year of health, happiness, and unparalleled success!

Best,
Garrett Gilbertson
 

SUM Portfolio Updates

Automotus  

• Industry: Transportation + Smart Cities
• Stage: Series A
• Signed a contract with the City of Aurora's Onlight Aurora for a $2.1M 3-year contract
• Signed $70M 4-year contract with Miami
• 3000+ cameras under contract, each generating $7,000 per year in revenue on average. 
• The Pittsburgh City Council formally approved a two-year contract extension, expanding the Automotus partnership to three years and scaling their deployment to 200 zones. 
• Automotus has established public-private partnerships with Fort Lee, NJ; Durham, NC; and San Antonio, TX.
• A distribution agreement with RealTerm Energy is in its final stages, providing access to a wider customer base in Canada and Northeastern US cities.
• Awarded SMART grants in Philadelphia, San Francisco, and Miami-Dade County, translating to ~$500k in revenue over the next year.
• The Boston City Attorney's Office has approved a subcontract with Conduent to deploy 100 cameras over three years, with scale-up potential.
• Jordan Justus Automotus (CEO) was featured in Parking Today
• Terms: Closed $9M Seed Round featured in Tech Crunch here.

Pay Amigo  

• Industry: FinTech
• Stage: Seed
• Terms:  We invested in the seed at a $12m post-money valuation alongside the founders
• SUM Ventures is the only VC seed investor invited to participate
• Launched Pay Amigo in Brazil and will soon launch in Argentina
• $2M in revenue in the first six months
• Expanding to the Middle East and Africa this year
• Preparing for Series A raise Fall 2023

Plantswitch 

• Industry: CleanTech
• Stage: Series A
• Terms:  We invested $250,000 at a 10% discount to Series A in March.
• Received multiple term sheets and will soon close Series A.
• $307k new revenue, 38 new customers 
• LOI from manufacturing partner Westfall Technik
• Yum! Brands partnership discussions ongoing
• Dr. Aditya Jindal has joined the team as Senior Scientist to lead R&D efforts.
• Collaborations with ADM and Siemens promise advancements in technology and product offerings, including feedstock sourcing opportunities and supply chain monitoring.
• Q1 2023 sales finished up 139% YoY
• Repurpose is considering switching to their cutlery after they launch their new facility, an approximately $10M annual opportunity 

DressX  

• Industry: Digital Fashion 
• Stage Series A
• Series A announcement in Forbes
• Top selling digital fashion brand in Meta & Roblox outperforming brands like Prada 
• Warner Media and DressX Partnership Vogue article here
• https://www.voguebusiness.com/technology/metas-avatars-just-got-a-fashion-upgrade-with-dressx
• Link to CNN interview of CEO Daria Shapovalova here
• Mark Zuckerberg featured DressX at MetaConnect (video link here, minute 58:30). 
• Terms: SUM invested $500k alongside ten other funds/ CVCs, including Slow Ventures. Garrett currently serves as a Board Observer. 

Purlin 

• Industry: AI/ PropTech 
• Stage: Seed
• Metrics: Just signed a $4m revenue contract with Douglas Elliman
• Launched Maya AI chatbot in collaboration with the Eklund Gomes team.
• Received $2M investment commitment from Rice Park Capital (strategic customer/partner)
• Securing placement on upcoming Netflix show and investment from Eklund Gomes top-performing US real estate agents 
• Terms:  We co-lead this investment with Douglas Elliman at a $16m pre-money valuation. SUM Ventures received the Board Seat, and Douglas Elliman will serve as Board Observers. Redwood Trust and Eklund Gomes also participated in the financing.

Irrigreen 

• Industry: CleanTech
• Stage: Seed
• 600K per month in revenue
• Since seed funding CAC has dropped in half 
• Tech Crunch Feature
• Making significant progress on longer-range sprinkler systems for commercial use
• Online D2C conversion rates improving, driving down CAC 
• Terms: We completed our $200k investment alongside Ulu Ventures (lead investor). SUM was the last money in the seed round.

• Industry: PropTech
• Stage: Seed (now raising Series A)
• Terms: We invested alongside Douglas Elliman at a $15m post-money valuation 
• Live Easy has now closed 4/6 largest real estate brokerages as customers and will soon add  250k agents through two new customers
• Launching SAAS offering with 2 brokerages
• Live Easy recently closed their Series A financing with Travelers Insurance and Moderne Ventures co-leading the investment. They launched a fully integrated home platform that empowers agents to deliver greater value to their clients. You'll be able to read more here. 

Brius  

• Industry: Medical Device
• Stage: Seed + Series A
• Terms: We invested in the seed at a $10m valuation and the Series A-1 at $30M valuation
• Closed recent $10M raise
• Multiple patents issued on the device (self-driving braces that sit behind the teeth)
• Significant interest was generated from the recent AAO conference
• The new CEO is the only person to sell a lingual orthodontics company
• A strong network of co-investors, including Sonder Capital, Invus, GT Healthcare, and Woori (Formerly KTB Capital)

Eduworks  

• Industry: Artificial Intelligence 
• Stage: Seed + Series A
• Terms: We invested in the seed at a $15m valuation and the Series A-1 at $30M valuation
• Closed recent $1M raise
• $15M+ in non-dilutive funding from DARA + SBIR + AFRL
• Multiple patents issued on technology
• Secured $15M in nondilutive funding from reputable entities like DARPA and AFRL.
• Remarkable growth in recent times:
• Over $5M in revenue just a few months into their fiscal year.
• Already achieved half of their $10M target for 2023.
• Gained a $1 million funding boost for TIDES.
• Renewed contracts with aviation leader Boeing.
• Launched human performance language model, NLighten:
• Projects financed by the NSF and Chamber of Commerce foundation.
• Rolled out AI chatbot, Extension Bot:
• Endorsed by the State of California.
• Positioned to revolutionize human-AI interactions.

 Paperwork 

• Industry: Financial Wellness
• Stage: Seed
• Baxter Credit Union (BCU)
• Expect to sign a partnership with a 40M+ member organization (confidential for now), making Paperwork the app solution for members and their marketplace of record--this company is also an investor in Paperwork 
• Released case study with BCU
• Highlighted successful implementation of financial wellness program to initial company partners, including Cardinal Health
• Pilot phase attracted over 1,000 new members during a three-month period at a fraction of the cost of the acquisition of other channels
• The program is now being rolled out to more company partners, including HCA Healthcare (250,000 employees), Uber Fleet, and others
• Andrew Lendnal, previous head of Financial Wellness at Morgan Stanley At Work, joins the advisory boardPaperwork team in Chicago working on a release with BCU 300k members and partners (see press release). AARP is next up (40M members)
• Terms: We recently invested in their seed terms ($12m post-money valuation); other investors at these terms are Launchpad Capital and Kickstart VC. Founders previously sold their startup Jemstep to Invesco. 

ClearClub

• Industry: Healthcare
• Stage: Seed 
• Invested alongside Rogue Venture Partners, Sonder Capital, AOA, and NuFund.
• ClearClub will exceed $2M in revenue (50% subscription revenue) this year
• ClearClub is building the Dollar Shave Club for oral wellness and has 38k customers to date with 3,800 5-star reviews! They are the current market leader in their space, and we expect Pablo (CEO) and his team to build on their leadership position while achieving profitability in the next 6 months
• Onboarding strategic advisor and brand ambassador Kammron Taylor to spearhead sports guard marketing efforts
• Terms:  $6M Post-Money SUM receives a Board Seat. 

Living Popups 

• Industry: EdTech
• Stage: Seed 
• Terms:  We made a $50,000 pre-seed investment alongside strategic angels and received additional warrants (totaling 1%)
• Product Demo
• Preliminary Analytics: 95% of students responded that LP popups increase reading enjoyment. LP is currently running research in Marin County, CA, to further prove the efficacy of LP in increasing literacy comprehension, engagement, and attainment.
• Attended the CUE conference, where LP received positive feedback from educators and received new orders as a result
• LP welcomed new team members, including a fractional CFO and VP of Global Strategy and Operations
• Released a new beginning reader chapter book to support children's social-emotional wellbeing
• Upcoming event: Tina will attend the ASU GSV Summit in San Diego, and LP will be at the Texas Library Association meeting in Austin.

Sweat Pals 

• Industry: Health & Wellness
• Stage: Pre-Seed
• Terms:  We invested $ 50,000 at a $6M Post Money valuation alongside Sweater VC, Antler VC, and other strategic angels, including the founder of HotelTonight, early employees at Uber, Snap, and Google, and a syndicate of top CEOs and Fortune 500 leaders in YPO association.
• SweatPals is a platform connecting fitness enthusiasts and communities, streamlining events, payments, and content for a healthier, social lifestyle. SweatPals empowers leaders to organize and manage their communities in a centralized location while offering consumers a vibrant social experience to connect with each other.
• SweatPals has grown organically through word of mouth and referrals (with a $0 user acquisition cost), amassing 200+ active communities and over 8,500 active users 
• Monthly retention among community leaders is 92%, and all users are 63%.
• SweatPals is launching in Miami next month due to demand from users there, then Denver and San Diego. SweatPals aims to launch nine additional markets by early 2024.
• Last month, SweatPals generated $15K in GMV and has had $12K in revenue so far.

Grapefruit Health 

• Industry: SAAS Healthcare
• Stage: Pre-seed
• Terms:  We invested $50,000 $6M Post Money SAFE
• Closed $1.3M oversubscribed pre-seed
• Won $250k investment from Barnburner pitch competition, waiting to sign SAFE/wire transfer
• Potentially entering diligence on another $550k+ investment with two investors
• Finalist for AWS Latinx Impact Fund, potentially receiving $125k + $100k in AWS credit
• Sales pipeline at $6M, up from $5M
• Grapefruit Health Raises $1.3M Oversubscribed Pre- seed Round To Address The Massive Staffing Shortage In Healthcare
• Contracting with the University of Chicago Medicine, Ballad Health, Optu & San Francisco VA
• Expect to be in contract with 2-3 more by end of Q2

UNest 

• Industry: FinTech
• Stage: Series B
• Terms:  We invested in the seed at an $8m post-money valuation and rolled $150,000 of equity into the fund
• Reached over 600K total users (parents and kids)
• Exceeded $30M in total AUM
• Partnership with iHeartRadio began in February
• Laura Dern brand ambassador article
• Good Morning America feature

Berri Organics

• Industry: Beverage 
• Stage: Seed
• Terms: $18m post-money valuation 
• Scaling through Whole Foods and Target
• Presented to Band of Angels in September
• Near signing key brand ambassador

Rotender 

• Industry: Robotics
• Stage: Pre-seed
• Terms: $12m post-money valuation New customer Terranea resort in Palos Verdes, renting two units at $2,500/month each and a $7,500/unit branding fee
• Onboarding brand partners who will pay to wrap the machine
• Success in this deal can set a standard for selling branded machines to other venues.

Breakr

• Industry: Adtech
• Stage: Seed
• Terms: $20 m post-money valuation
• Check Out their Tik Tok
• Breakr Video Intro - 1 minute
• Featured In Billboard 

• Industry: Adtech
• Stage: Pre Seed
• Terms: $6 m post-money valuation
• Received approval to launch in the app store 
• Will soon launch a beta test with the University of Hawaii. View the demo here.
• Successfully launched SDK
• SXSW partnership will soon launch
• Launched IOS App at the University of Hawaii

SUM Events

SUM Fund Materials

• SUM Executive Summary (password SUM)
• SUM Ventures video 
• SUM Ventures September Mtg
• SUM Deck (password SUM)
• Summary of Terms

SUM Mission

Startup Mavericks Ventures (SUM) is a seed-stage venture capital firm founded by Garrett Gilbertson and Mike Van Kempen. At SUM our goal is to be the top-performing seed fund. To be clear, we have no desire to be the largest seed fund; we aim to have the highest IRR. This goal is only achievable with the support of our 50+ LPs, advisors, and strategic partners who have given their time, capital, and guidance to support our founders. Through our collective focus on identifying promising founders early, tracking their progress, and supporting their growth, we will continue to have a deeper insight into the companies we invest in.

Our approach leads to better investment decisions and timing because we identify upcoming inflection points before our peers. Finally, our check size allows us to participate in highly competitive rounds as we continue to build upon our reputation as a significant value add for founders. Please don't take my word for it; listen to our founder updates recorded during our Zoom holiday party here.

This newsletter provides commentary on our portfolio founders, the broader venture ecosystem, and upcoming events. I would love to hear your thoughts. Please feel free to contact me at Garrett@sum.vc with any questions or feedback.