Over the past few years, San Francisco-based Homebrew VC has built up an impressive roster of investments in seed stage companies focused on the “bottom-up economy.” Co-founders Hunter Walk and Satya Patel met working at Google, and have a particular interest in seeing businesses advance in tech and value-added location services. The fund has faith in beacons, for instance, and backed Estimote earlier this year.
Walk will be among the featured speakers at Street Fight Summit West on June 7th in San Francisco. We caught up with him recently to discuss how Homebrew helps entrepreneurs, what it takes to be among the 8-10 investments the startup makes per year, and why the “bottom up” economy is the way to the top.
How does coming from a big pioneering company like Google help shape your vision as entrepreneurs?
The value of working at a place like Google, or any other high-performing company, is that you have an expanded notion of what’s possible. Larry and Sergey, Google’s founders, always stressed the importance of “moonshots,” working on projects which feel almost impossible — because otherwise you’ll never break free of perceived constraints.
What is the bottom-up economy and how does it pertain to local businesses?
At Homebrew we believe there’s increasing ability for businesses of all sizes to benefit from technologies which prior were too expensive, too complex or just didn’t exist. This means that smaller businesses — which many local businesses tend to be — have access to tools that before you needed to be a Fortune 500 company to access. Customer analytics, inventory management, cloud software services as just some examples. We call this the “Bottom-Up Economy” in comparison to large technology systems which historically have been sold top down.
What kinds of “local” and location marketing solutions are interesting to Homebrew?
The local and location marketing solutions we’re most interested in tend to focus on building something the consumer wants, not just thinking about how to sell into advertisers and businesses. If you optimize only for the business’ needs and fail to create value for the consumer, there’s a short half-life before your brand erodes and consumers tune you out. For example that’s why we invested in Estimote’s beacon tech and platform — because they are 100 percent focused on developers and enabling developers to build solutions of value around location.
When you see a promising startup, what might be some of its attributes?
We start off thinking about quality of team and [what] problem they’re solving. In a founding team we want to see a combination of aptitude and attitude. It’s not enough to just be smart or accomplished, you have to bring a commitment and endurance to building a startup. In terms of problem, we like to ask “Is this problem (a) large, (b) urgent and (c ) valuable?” If it’s all three, then you have a chance to build a venture scale business.
What is Homebrew focusing on right now, and how does that compare from its focus say, one year ago?
Good question, because timing is so important. At seed stage we want to be investing into the front-end of an innovation wave, not a maturing market. So I’d say a few years ago we were very interested in local consumer marketplaces but less so today (unless we meet an entrepreneur with a compelling and likely contrarian idea). We’re always interested in how traditional business verticals are benefiting from the introduction of high quality, collaborative software. For example, one of the really exciting companies in our portfolio is BuildingConnected in the commercial construction space.
What are some issues pertaining to small business and in particular, location-based marketers that you’d like to address at the upcoming Street Fight conference?
I always enjoy hearing from business owners themselves, versus just the startups trying to sell into them. One of our portfolio companies, Bond Street (a SMB lending platform), does a really nice job creating content that tells the stories of their customers, not just their own marketing message. I’d like to hear what technologies are really making a difference in the lives of business owners and what problems has technology not solved for them yet.
Where do you see the biggest area of growth not only in your business but in the startup economy at large?
We’ve got an evergreen interest in seeing traditionally offline businesses (financial services, real estate/construction, legal, healthcare) benefit from collaborative, mobile, consumer-quality software. In terms of forward looking technologies, we think a “sensor-based economy” — the outfitting of objects with sensors and cameras, has great opportunities for entrepreneurs. For example, we are investors in autonomous vehicle company Cruise which recently was acquired by GM for more than $1 billion.
Nicole Spector is a Street Fight contributor. This interview has been edited for length and clarity.
Hear more from Hunter Walk at Street Fight Summit West on June 7th in San Francisco. Click on the icon below for tickets!