Braden Snyder of Updata Partners -- Venture Capital Profile

Updata Partners by Braden Snyder -- Venture Capital Profile

What is the history of Updata Partners?

Updata is a technology-focused growth equity firm based in Washington, D.C. The firm was founded in 1998 and was an early leader in the growth equity category. We have invested in more than 60 industry-leading companies and have built and sold businesses exceeding $3 billion in shareholder value.

What do you invest in?

As a growth equity investor, we invest in businesses that have reached between $5 to $50 million in revenue, that are growing greater than 25% per year, and that have a proven and capital efficient business model. Within the technology market, we focus our efforts on software, internet / digital media, and technology-enabled services companies. Our capital is used to accelerate growth by investing in sales and marketing, expanding into new geographies, developing complementary products, and / or financing a potential acquisition. We generally target bootstrapped or lightly capitalized companies and are flexible when it comes to deal structure. We invest between $5 and $20 million into companies in the form of both primary and secondary capital, and we partner with other investors on larger transactions. 

What do you not invest in?

Within technology, we stay away from hardware-based businesses.

How do you handle syndication deals?

We are typically the lead investor, but we welcome the opportunity to invest with partners that can add value. We are not typically part of large group deals. We also have strong support from our LPs, who actively look for co-investment opportunities and help support us on larger transactions.

Where do you invest geographically and have you invested in Texas deals?

We invest across the U.S. and internationally. We have had success targeting geographies with a strong technology ecosystem, talent pool and early stage capital sources, but lack a growth equity capital pool. We have experience investing in Texas, including Alert Logic, based in Houston, which was acquired by Welsh Carson, and Merlin Technologies, based in Dallas, which was acquired by Trident Capital.

What do you think about the Texas-based deals?

Texas has a strong history in our core software markets, producing leaders like BMC Software, i2 Technologies, Dell and others. We have been very impressed with the quality of the investment opportunities in Texas, and since raising a new fund, we have focused closely on enhancing our presence in Texas. We are excited about the opportunity to further these efforts and continue to evaluate the great opportunities in the region.

What kind of operational support do you offer your portfolio?

All of our GPs are former operators and entrepreneurs, which is a great benefit our portfolio companies can leverage. Having been in the seat before, we understand how to add value and develop a successful management team / board of directors / investor dynamic. Also, we open up an extensive network of industry contacts, experts, and companies our portfolio companies can access. We view our involvement as a true partnership and do everything we can to set up our portfolio companies for success. 

What is the history of Updata Partners?

Updata is a technology-focused growth equity firm based in Washington, D.C. The firm was founded in 1998 and was an early leader in the growth equity category. We have invested in more than 60 industry-leading companies and have built and sold businesses exceeding $3 billion in shareholder value.

What do you invest in?

As a growth equity investor, we invest in businesses that have reached between $5 to $50 million in revenue, that are growing greater than 25% per year, and that have a proven and capital efficient business model. Within the technology market, we focus our efforts on software, internet / digital media, and technology-enabled services companies. Our capital is used to accelerate growth by investing in sales and marketing, expanding into new geographies, developing complementary products, and / or financing a potential acquisition. We generally target bootstrapped or lightly capitalized companies and are flexible when it comes to deal structure. We invest between $5 and $20 million into companies in the form of both primary and secondary capital, and we partner with other investors on larger transactions. 

What do you not invest in?

Within technology, we stay away from hardware-based businesses.

How do you handle syndication deals?

We are typically the lead investor, but we welcome the opportunity to invest with partners that can add value. We are not typically part of large group deals. We also have strong support from our LPs, who actively look for co-investment opportunities and help support us on larger transactions.

Where do you invest geographically and have you invested in Texas deals?

We invest across the U.S. and internationally. We have had success targeting geographies with a strong technology ecosystem, talent pool and early stage capital sources, but lack a growth equity capital pool. We have experience investing in Texas, including Alert Logic, based in Houston, which was acquired by Welsh Carson, and Merlin Technologies, based in Dallas, which was acquired by Trident Capital.

What do you think about the Texas-based deals?

Texas has a strong history in our core software markets, producing leaders like BMC Software, i2 Technologies, Dell and others. We have been very impressed with the quality of the investment opportunities in Texas, and since raising a new fund, we have focused closely on enhancing our presence in Texas. We are excited about the opportunity to further these efforts and continue to evaluate the great opportunities in the region.

What kind of operational support do you offer your portfolio?

All of our GPs are former operators and entrepreneurs, which is a great benefit our portfolio companies can leverage. Having been in the seat before, we understand how to add value and develop a successful management team / board of directors / investor dynamic. Also, we open up an extensive network of industry contacts, experts, and companies our portfolio companies can access. We view our involvement as a true partnership and do everything we can to set up our portfolio companies for success. 

Texas Entrepreneur Network (TEN) Infographic -- Business Funding Texas

Business Funding Texas is a Texas Intrastate Crowdfunding portal. The state of Texas passed its Intrastate Crowdfunding law at the end of 2014, allowing any resident of Texas to invest in a startup.  Unaccredited investors are limited to $5K/person/deal/year.  The law is much simpler than the JOBS Act recently passed by the SEC which requires more reporting, more detailed income tests, and financial audits.  Accredited investors in Texas can invest as much as they want.

The Intrastate Crowdfunding raise works well for consumer facing businesses that have a large network of unaccredited investors.  Microbreweries, wineries, distilleries, and consumer product good companies are ideal candidates.  The fund raise is primarily an exercise in having your customers invest in your business.  The raise strengthens your business beyond just funding in that it builds a strong group of enthusiasts and advocates around your business who will then support and promote your business to others.

Also, the experience of running a crowdfunding campaign can teach a new company a great deal about sales and marketing.  Crowdfunding is essentially investment marketing.  One learns how to create and run a campaign which can prove valuable in building the skills to sell and promote the product.

Businesses which can raise funding from their customers/clients are well positioned to raise additional money from accredited investors as it demonstrates a loyal following for you and your business.  

Texas Entrepreneur Network (TEN) Infographic -- AngelConnect

Angel investing is a learned skill that is not taught in the university.   The ability to select a deal, analyze it, invest, and then follow up requires a certain skills drawn from both one’s investment and business experience.  My experience having help launch and grow three angel groups indicates that there are certain skills and experiences an angel investor should have when approaching the decision to invest.

The Texas Open Angel Network is a 501c3 non-profit dedicated to educating angel investors on how to invest in startups.  It’s a non-profit so there’s no profit incentive to promote investment opportunities or sell services.  I launched the program in Austin and held monthly lunch and learn meetings.  Speakers with experience in consumer product goods, gaming, life science, technology and more came to the group and shared their experience with other investors. 

In taking the program to the rest of the state, I encountered a scalability problem. The physical meeting format was difficult to maintain in multiple cities.  I decided to take the education series online and captured the content in the form of podcasts which I listed until the program name—AngelConnect. 

This turned out to be a much better way to capture the voice of the experienced angel investor.  The distribution was highly scalable as anyone can download the audio file and listen to it on their own time. In addition to key investors, we’ve held panel sessions in which a group of investors discuss topics such as exits, due diligence, and more. 

Texas Entrepreneur Network (TEN) Infographic--TEN Investor Network

TEN Investor Network

The Texas Entrepreneur Network over the past six years has grown to include many portals and programs.  The world of entrepreneurship is broad and varied with many different types of entrepreneurs.  TEN has many “crowds” to support those many entrepreneur groups.   

For seed deals, TEN has the Business Funding Texas portal that lets anyone in Texas invest in a startup—even unaccredited investors.  The majority of deals are going to market and are looking for angel investors.  Businesses with cash flow can also pursue revenue-based funding. Later stage startups can raise funding from Venture Capitalists.  

TEN also supports the Wilco Funding portal—the first hyper-local portal in Texas for funding startups in Williamson County or those startups moving there.  Communities like Williamson County can use crowdfunding to support their local startups through their Economic Development Corporation.  Texas has over 700 EDCs which foster business growth.  TEN brings startups to many of these EDCs.

The TEN Funding portal also has Family Offices, real estate investors, and oil and gas investors. 

Texas Entrepreneur Network (TEN) Infographic -- Texas Venture Growth Forum

About a year ago, I was reading the local paper and found a startup with an iPhone app who had raised $250K and was featured prominently on the front page of the business section. In turning to the back page, I found a later stage startup raising over $20M and receiving only scant attention. It seemed odd to me that a startup with almost no hires could gain such attention, while the later stage company providing many more jobs received a yawn. But in today’s, startup focused world, the new trumps the old. 

In talking with many in the community, the phrase “Series B” crunch came up often.  For some there’s ample seed and Series A funding, but little after that. Texas has no Series B funds.  In general, a Series A fund is $50-100M and writes $500K to $2M checks.  A Series B fund has $300M and writes $5M to $15M checks. 

I had a client go to the JP Morgan Healthcare conference and came back with some substantial funding.  It was a 1:1 style conference in which the participants sign up to meet investors, providers, and others.  The ability to hold many meetings in one week makes it attractive.  This is a new type of conference called the “appointment based event” which focuses on networking people together.  In the past, most conferences were more about the keynotes, panels, and large group discussions.  Appointment-based events are about 1:1 and small group meetings.

TEN launched the Texas Venture Growth Forum, in 2015, holding its first conference in Austin on October 7-8, 2015.  We had over 40 investors come from across the country to meet with 27 Texas companies who were later stage startups yielding over 125 1:1 sessions over a two day period.    

The overwhelming feedback was positive and focused on the ability to meet in 1:1 settings.  Investors and CEOs liked the event because they don’t want to just talk about fund raising.  They want to be doing it.

TEN is now planning for a Life Science version of the event in the spring of 2016. 

Texas Entrepreneur Network (TEN) Infographic--History of TEN

The Texas Entrepreneur Network started in 2008, after I finished starting the Central Texas Angel Network in the role of  Executive Director. I saw many startups going  through the CTAN process and not succeeding because they weren’t using the resources available in the city.  

We originally called it the Austin Entrepreneur Network and later expanded to cover the state and renamed it the Texas Entrepreneur Network.   We ran a citizen journalism website in the early which hosted over 50 bloggers.  We cataloged all the resources in the city for startups of which there were over 120+.  Our mantra was Networking, Mentoring, and Funding.  

We provided programs that brought the entrepreneurs together with mentors such as the First Look Forum in which the entrepreneurs learned out to give a Fast pitch on their business to a group of mentors who provided coaching.   We later decided to focus on fund raising since that was the greatest need by entrepreneurs.

In an effort to expand angel investing, we ran a funding forum series that ran across the state from Austin to Dallas to Houston to San Antonio, to El Paso.  Ten entrepreneurs would pitch to a panel of ten investors.  Initially, the investors liked the idea of seeing quality deals presenting, but later wanted to source the deals online. Entrepreneurs who participated in the funding forums raised over $100M in funding.  

In 2013, we moved the dealflow to an online portal and called it the TEN Funding Portal.   At that time, Williamson County commissioned us to build a portal exclusively for Williamson County companies. 

Sensing a need for more training of angel investors, we launched the Texas Open Angel Network which provided educational sessions for potential investors.  In trying to scale the program across the state, we decided to capture the content in a podcast series which we called AngelConnect.

Finding a need among later stage startups for Series B funding, we launched the Texas Venture Growth Forum to help those seeking Series B funding and beyond meet investors through a conference designed to foster 1:1 meetings. 

Texas Entrepreneur Network (TEN) Infographic -- TEN Funding Portal

The TEN Funding Portal helps entrepreneurs raise funding.  We help get the business ready, the investor documents ready, and the campaign ready.  The program helps any company at any stage raising capital.  If the startup business is ready to go then we focus on putting the documents together.  We focus on the executive summary, the pitch deck, and the five year financials together.  If the startup has a 50-page business plan, we’ll use it, but if not, then we’re probably not going to write one, because most investors aren’t reading it. 

For the campaign we look for a 2-minute pitch video. Those with pitch videos get 2x the viewership over those that do not.  We ask the startup to script out the video and send it to us in advance of making the video. Ninety percent of the time, we’re sending the pitch script back saying “this is a great product demo, now write one that tells the investor why he should invest.”  In general, the startup focuses on how the product works and not the broader picture of why the investor should put money in the deal. Investors go through the portals hitting the play button on the video.  They want the CEO to come up on the screen and in one minute or less tell us why he should invest in your business. 

I find in talking to entrepreneurs that they often has some key values in the business that make the opportunity compelling.  Those values are often buried down inside the executive summary but investors are not able to dig through and find it.  The startup has to put it out in front of them to make clear why someone should invest.

In running a campaign, the goal is to show movement and momentum in the deal. In my experience, investors are watching deals looking for signs of growth and activity. A carefully crafted campaign will give the investor a sense that the deal is making steady progress.  Going on the portal to raise funding is tantamount to going on stage in front of an audience.  You now have their attention. You must have something to say when you have it. 

The campaign program is similar to an investor relations campaign.  The startup is showing its progress on a regular basis to prospective investors.  Some startups invite TEN to continue the reporting to their investors after the fund raise is over.