Great North Ventures is an early-stage VC firm located in Minneapolis. The firm has raised two funds since its 2017 founding. On May 24, early-stage VC firm Great North Ventures closed on $40 million for its second venture fund for investing in startups from Seed to Series A stages. The fund’s investing and support are network-driven, with connection density in Minnesota, through the Upper Midwest, and extending beyond.
Fund II will address three key themes: digital transformation through AI, community-driven applications, and solving labor problems.
We spoke to Rob Weber, Founder and Managing Partner of Great North Ventures, about the fund.
Three investment themes with this fund. One of them is solving labor problems. Can you speak on that?
Weber: Solving labor market problems is a primary theme and it’s market-driven. We see tremendous obstacles to growing businesses of all types across industry segments, whether skilled or unskilled labor. There are labor shortfalls that are causing slower growth in the economy than we might otherwise have. It’s typically the number-one problem businesses face. They can’t hire and retain the people they need to grow.
Describe the theme of digital transformation.
Weber: My brother and I came from the digital media space, where we were very much on the forefront of new technology. But in many cases with the industries we see, it’s almost like the internet hasn’t happened yet–Web 2.0 and online communities or let alone people talking about AI and blockchain. So we really like the idea of providing new ways to transform issues in these sort of legacy industries.
Why the interest in community-driven applications as a theme?
Weber: We found a void in the Great Lakes area. Many funds don’t understand consumer, social, or online communities. If you have a run-of-the-mill SaaS company, other funds know how to invest in that. Consider Facebook. When Facebook got funded, they had built the community first. And so we really want to plant the flag that if anyone’s building some form of online community in the world, but especially in the Great Lakes region, give us a call.
How many VCs do we have in flyover country? Probably in the hundreds now, but the world gets smaller when you take that list and look at the funders who have actually been a part of building social apps and selling them.
This is Great Northern Venture’s second fund. Is the investor mix different on this one from your first fund?
Weber: If you’re launching a second fund, you hope many of your first fund investors come on board and invest more money. But it’s totally discretionary. With the second fund, we were really pretty blessed that a lot of our Fund I investors thought highly enough about what we’ve been building the last four years to join us again. But we also have some new investors.
The returning investors must be gratifying.
Weber: Our investors have given us a vote of confidence by coming out strong for Fund II, with a 70% increase in fund size, and we are grateful for their continued support. Our strategy as a thematic, network-driven investor focusing on opportunities in underserved markets is resonating, and we see this successful Fund II raise as proof of this theme and our ability to execute. It’s really humbling when someone trusts you with their money to make investments.
What other benefits will you offer with the new fund?
Weber: We have an Innovator Network of former founders, skilled operators, and successful investors that have a track record of execution. It’s a key resource for helping with sourcing opportunities, diligence, strategy insights, referrals for team additions, and mentorship for the core team.
If you tap into the right community and create the tools that they need, you can have pretty special outcomes. I think helping people help other people can be very powerful.
Most recently, Fund II invested in Cleveland fintech Wizest. Can you tell us about that?
Weber: Wizest is a platform and app that takes a community approach to investing. Its vision is to reduce wealth inequality and make investing more approachable and transparent We contributed to its $1.7 million seed round.
In your opinion, how have you seen Minnesota rise to challenges during these uncertain economic times?
Weber: To paraphrase Paul Romer, the noted Stanford economist: “A recession is a terrible thing to waste.” I’ve been through the dot-com bust and then the financial crisis in 2008. Now I’m an entrepreneur and investor in Minnesota. What I’ve seen is people in the middle of the country are just used to operating with less available capital. I think in these more difficult economic times, we’ve really seen some scrappiness out of the flyover states. It’s really well suited for the kind of founders and startups here that pride themselves a bit more on capital efficiency.