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

SUM THOUGHTS

Hello friends,

As we draw near to the close of SUM Ventures' first year, it's evident that our success is shaped not only by the capital we've deployed but, more importantly, by our collective strategic vision and the vibrant community we've fostered. Many of you have generously contributed your time and resources to our portfolio, and for that, I am profoundly grateful. I'm thrilled to report that we've strategically placed over $4M in 20 ventures, each with the potential to transform their industries. The early metrics? An impressive gross IRR of 41%. As many of you know, I assess our success not by AUM but by our IRR. For those interested in delving deeper into our investment philosophy and performance, I invite you to review our updated investment deck via the link in the Learn More section below.

We recently initiated the process to become an SBIC by submitting a pre-screen document to the SBA on August 2^nd. Next, we will meet with the SBA on the process timeline to discuss our fund and the next steps.
The Small Business Investment Company (SBIC) program, administered through the Office of Innovation and Investment at the Small Business Administration (SBA), provides growth capital to growing small businesses to advance job creation and economic growth. US Congress recently approved a new SBIC program effective August 17, 2023 – the Accrual SBIC – that fits venture capital and growth equity funds because of the accommodating repayment terms. Accrual SBICs permit fund managers to tap debt financing up to 1.25x the amount of private capital contributed to their funds.

In SUM’s case, targeting $10M in private commitments, tapping SBIC leverage could potentially increase the fund size to $22.5M, thus allowing more investment and increased returns to LPs. From 1998-2018, SBICs that benchmarked in the top half of private equity funds have delivered a 5- to 10-point boost in the IRR delivered to LPs as a result of SBA leverage. As of the last pricing date in March 2023, SBIC leverage costs 5.168%, a cheap financing source.

In addition to providing cheap financing for portfolio company investments and potentially increased returns to LPs, having an SBIC license also helps with securing new LPs given the rigorous underwriting (certification) process and also favorable investment treatment for the banking industry. The SBIC Program is a particularly attractive investment target for the banking industry for two reasons. First, it is exempt from the Volcker Rule, a Dodd-Frank Wall Street Reform and Investor Protection Act provision that prohibits banks from owning hedge or private equity funds. Second, investments in SBICs may qualify for Community Reinvestment Act credits since they are presumed to promote the economic development of all community members, including residents of LMI neighborhoods.

Our portfolio is filled with notable successes, frankly too many to encapsulate within this email. However, I've attempted to summarize the key achievements below.

Key Portfolio Updates:

1. Series A for Automotus: Automotus signed a Series A term sheet, which will mark up our $400,000 investment. Let's congratulate Jordan for closing a round in a very challenging funding climate.
2. PlantSwitch continues to scale impressively. They just launched their North Carolina facility, enabling them to meet the demands of larger customers like YUM Brands. More excitingly, they had their first million-dollar sales quarter in Q2! We anticipate sharing an exciting funding update on PlantSwitch in the months ahead.
3. DressX recently celebrated its third anniversary. Their impressive list of accomplishments in such a short period can be found here.
4. Paperwork successfully launched with Baxter Credit Union and has become a leading source of new customers by engaging them with their financial wellness application.   They are now well-positioned to scale rapidly through Credit Unions and their customers. 
5. Signed Termsheet with Eduworks: Following a tremendous call with renowned AI expert Akli Adjaoute and a rigorous two-month diligence process led by our Elizabeth Spears, we signed a term sheet with Eduworks. Eduworks, a leading EdTech company, has received over $15M in non-dilutive funding from NSF, SBIR, and DARPA. They closed last year as a profitable company, generating $7M in revenue. 
6. Signed a term sheet with R3 Score: We've hit a significant milestone with R3 Score, an innovative firm focused on offering advanced analytics and software platforms for individuals with records in the criminal justice system. Our Limited Partner Tammo Mueller was instrumental in this opportunity as they notified us about R3 Score's recent partnership with Aventiv Technologies, a development expected to significantly boost R3 Score's revenue through the widespread distribution of their software in prison systems nationwide. This partnership represents a profitable opportunity for our fund and an alignment with our mission to foster inclusive growth and social impact.

Learn More

• SUM News Feed, 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)

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, 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

Best,

Garrett Gilbertson

SUM Portfolio Updates

Automotus  (PropTech)

• 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
• Here is a recent report from S&P Global highlighting Automotus' business and technology.
• Terms: Closed $9M Seed Round featured in Tech Crunch here.

Pay Amigo  (FinTech)

• 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 (CleanTech)

• 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  (Web 3.0)

• 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 (PropTech)

• Industry: Real Estate
• Stage: Seed
• Metrics: Just signed a $4m revenue contract with Douglas Elliman
• Currently profitable with a team of over 40 (largely remote)
• 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 (CleanTech/ PropTech)

• 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: Real Estate
• Stage: Seed (now raising Series A)
• Terms:  We invested alongside Douglas Elliman at a $15m post-money valuation 
• Move Easy has now closed 4/6 largest real estate brokerages as customers and will soon add  250k agents through two new customers
• MoveEasy 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  (Healthcare)

• 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 generated from recent AAO conference
• 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)

 Paperwork (FinTech)

• 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 
• Launched a partnership with Insuritas to expand into the Credit Union channel
• Late-stage negotiations with a major credit union that aims to white-label Paperwork for members and corporate partners
• Featured at CES in conjunction with AARP 
• Paperwork 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 (eCommerce)

• 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. You can view a video of our D.D. call with Rogue and AOA here.

Living Popups (EdTech)

• 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 (Wellness)

• 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 (Healthcare) 

• 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 (FinTech)

• 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
• Q4 2022 was their best quarter on record. 10% MoM revenue growth through 2H 2022
• Reached over 600K total users (parents and kids)
• Exceeded $17M in total AUM
• Partnership with iHeartRadio began in February
• Laura Dern brand ambassador article
• Gross margin 3X since Q4 2021 due to the ongoing focus on efficiency

Skidattl (AdTech)

• Industry: AdTech 
• Stage: Pre-seed
• Terms:  $6m post-money valuation SAFE
• Filed IP to protect beacon technology
• Closed SXSW as the first customer
• Founder (Randy) has four prior exits, with his last company acquired by Apple

SUM Events

SUM Fund Materials

• SUM Ventures video 
• SUM Ventures July Mtg
• SUM Deck (password SUM)
• SUM Fund Summary
• 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 recent 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.