By SUSAN LAHEY
Reporter with Silicon Hills News
Rosa McCormick and Laura Kilcrease at the Herb Kelleher Center Speaker Series of the McCombs Business School at UT
Wild Basin’s managing director Rosa McCormick was the first speaker in the Herb Kelleher Center Speaker Series of the McCombs Business School at UT Tuesday night at the AT&T Executive Education and Conference Center. McCormick is also president of Key Light Capital LLC, the company’s venture firm. Laura Kilcrease, who is sharing the Entrepreneur in Residence spot with Brett Hurt, interviewed her.
Wild Basin started in 2007 with the idea of seeding three to eight Austin startups a year with amounts ranging from $50,000 to $150,000. In recent years, the company has switched to giving larger amounts to fewer companies, about three a year, partly because, as an evergreen fund, its portfolio has grown with companies it continues to support as well as new startups. An arm of Wild Basin, Key Light Capital, does larger deals and more direct investment. Key Light manages the legacy venture capital portfolio for the family’s future generations.
“We are industry agnostic and opportunistic…diversification is something we embrace as a strategy,” McCormick said. It also has a lot of flexibility in how investments are structured. But that means the company has to do due diligence on a number of different industries before making investments.
“One of the nice challenges about the job is you can dig in and learn something new, but that also makes it that much harder,” said McCormick. “And to a large extent you have to make sure you have validation from people with deep domain expertise. You need a third party to look at it and provide third party validation.”
As part of its strategy to invest in diverse companies, Wild Basin collaborates with other angels and funds that have deep knowledge of the industries where they invest. McCormick serves on the board of the Central Texas Angel Network
“Wild Basin will lead deals, but it takes a lot of effort to lead a deal. You need to make sure can devote the correct resources to it. We don’t take sole investor in a round position. That is in contrast to the strategies employed before by the principals where we were the first monies in or the only monies in. That was, on balance, a very successful financial strategy but it had hard losses. You are the only person at the table when something goes wrong.”
Their partners, she said are “people who have similar interests or similar business models.” Once they’ve partnered with an investment fund or angel, they may reconnect with that fund. A big question, she said, is how the other investor acts “when things go wrong…if they handle that well, you know those people are people you can do deals with in the future.”
Wild Basin structures deals in a number of different ways, McCormick said. In answer to a question she said the company has never done revenue based funding, but she thinks it’s an interesting idea. She also said they might consider working with a company that’s already partially funded, as long as there were not too many complexities in working out the deal with other funders—such as nonstandard terms.
Unlike some investors who are looking for a quick return, Wild Basin is investing in order to create wealth for generations of a family. Which makes the fund more risk averse than some might be but also gives it a long view.
“We constantly reevaluate a strategy and experiment. But you run an experiment and you don’t get any data back for a long time. We don’t know what good decisions we’ve made and what bad, and we won’t know for a while….things seem to be going well.”
Wild Basin is Austin-centric. And in the years she’s been dealing with startups, McCormick said, the quality of the deal flow has increased greatly.
“There are more and more folks who come into the entrepreneurial process with some grounding in being an entrepreneur….. There is a higher percentage of folks coming up to speed on terms and term sheets. Before we had be very careful to walk them through it. We needed them to understand what deal was going on. Now I think people are very savvy.”
The next Herb Keller speaker event will be October 15. The speaker will be announced about 10 days before the event.
