What
is the background of Grayhawk Capital?
We’ve been around for about 20 years based out of
Phoenix investing primarily throughout the Southwest US. We also have investments in Kansas City and the
Bay Area, but mostly we invest in the southern California to Texas
corridor.
I originally came out of Banc One in Dallas. In
1995, I moved to Phoenix to help run the first fund. Since then we’ve expanded the team. Brian Burns has been with us for about 15
years now. Brian Smith joined in the
latest fund about four years ago. We
each have 20+ years of experience in the industry.
What
do you invest in?
In terms of our investment profile, we are looking
to invest $1M to $5M in early growth stage software companies. For first rounds, we’ll generally come in for
$2M. We invest across various sectors, including
healthcare IT, Fintech, Big Data, Cybersecurity,
IoT, and enterprise/business productivity. In Fintech we’ll invest in B2C models.
How
big is your current fund?
Our current fund is $70M under management. We have 9 companies in the current fund with
dry powder left for about 6 more deals.
What
criteria do you look for in deals?
We like to come in when the company is looking for
capital for sales/marketing execution.
We want to see a completed product that is in the marketplace. Most companies we invest in typically have
$1.5 to $2M in revenue run rate all the way up to $8M in annual revenues.
How
do you handle syndication?
We’re not a large fund so it’s not atypical that we
help round out the raise with a syndicate. We are comfortable leading
deals. With round sizes getting larger,
we’ll probably lead fewer going forward.
The landscape has changed quite a bit over the last ten
years. We are always looking for new syndicate partners. In Texas we have looked at deals with S3 and Mercury. In SoCal, we are working with Avalon and
Anthem. Kickstart, Growtech, and Boulder Ventures are regional funds we have
worked with. We have also invested with
Bay Area firms such as Trident, NEA, and others.
Most
groups offer Innovation Days and other expertise—how about Grayhawk?
A lot of it comes down to chemistry. Investing in early stage is like getting
married. You have to be really
comfortable with each other. We add
value in various ways. We can help with
the capital markets, i.e., if the company needs more equity/debt. We have
expertise in the M&A arena. We have on the HR side a lot of connections so
we can help fill gaps in the team. We also help with strategic connections and general
strategic guidance.