Found In The Rockies

Clay Gordon (Stout Street Capital) // Bringing founders and investors together

April 06, 2022 Les Craig Season 2 Episode 16
Found In The Rockies
Clay Gordon (Stout Street Capital) // Bringing founders and investors together
Show Notes Transcript

In today’s episode, I am talking with Clay Gordon about a VC fund who is going outside their own firm, and hosting conferences and job fairs to help startups and job seekers in underrepresented regions of the country. Clay talks about how he got started in Venture Investing, what he sees in not only Colorado, but all areas of the country, and even in Canada. We get into what is going on with venture in Arizona. Clay highlights the UNMET Conferences and all the great connections they facilitate for founders and investors. 

Here’s a closer look at the episode:

  • Clay’s background and time on the East Coast
  • How their approach to investing is unique
  • How not being a previous founder influenced Stout Street’s early days
  • Going outside Colorado to make investments
  • The history behind the Stout Street name
  • Clay highlights 65 investments spanning 25 states and two countries
  • The importance of reputation
  • The growth of VC in Arizona
  • The beginnings of the UNMET Conferences
  • The goals of UNMET to expedite fundraising for founders
  • What Clay thinks lies in the future in the Rockies

Resources:

Website: https://www.stoutstreetcapital.com/

Clay’s Linkedin: https://www.linkedin.com/in/clay-gordon-1380ab54/

Clay’s Email: clay@stoutstreetcapital.com

Stout Street LinkedIn: https://www.linkedin.com/company/stout-street-capital/about/

Stout Street Twitter: https://twitter.com/StoutStreetVC

UNMET Conferences: https://unmetconference.com/

UNMET Twitter: https://twitter.com/UNMETConference


Clay 00:00

What is missing, and we felt like what was already established. And an opportunity is, you know, we felt like there was a gap for companies raising institutional seed and institutional series A in the middle of the country or the Rocky Mountain region specifically. And so that's where the name came from, it was filling an unmet need of raising capital in the middle of the country.


Les 00:24

This is Found in the Rockies, a podcast about the startup ecosystem in the Rocky Mountain region, the founders, funders and contributors and the stories of what they're building. I'm Les Craig from Next Frontier Capital. And today, we are talking about a VC fund who is going outside their own firm, and hosting conferences and job fairs to help startups and job seekers in underrepresented regions of the country. So matter of fact, they've invested in 25 different states across 65 portfolio companies, in two funds. Pretty impressive. Meet Clay Gordon from Stout Street capital, who is going to tell us all about his fund, and how the UNMET conferences were created. Hi, Clay. Thanks so much for joining us today.


Clay 01:11

Yeah, for sure. Les, thank you so much for for having me.


Les 01:15

To start off, why don't you tell us a little bit about who you are kind of your story and your background?


Clay 01:22

Yeah. You know, I'm still trying to figure out who I am as a person. But you know, we'll go from there. 


Les 01:29

Aren’t we all, aren't we all? 


Clay 01:31

Yeah, so I've always been interested in the startup community, I was working in startups in college, really, like I would say, the more unstructured productivity focused approach that startups or the startup environment provides. So I knew that I was ultimately going to end my career with some startup in in some form or fashion in the startup community, mostly in Colorado as well. I did graduate from University of Colorado, Denver. And I did move to the east coast for I would say some more corporate experience, I was looking to have a more big picture approach by leaving the state. I lived and worked in Washington, DC, in North Carolina with the same firm where I ultimately was a fundraiser for a nonprofit. And part of that was community building as well. It was a wonderful experience as a young professional, but knew that I wanted to move back to Colorado, Colorado is really booming for young professionals in the in the state at large. And I started working at family office, which is where I met my partner, and I'm going to tie in some of his background because I would say it is vital to the story. Part of the family office had had very bad luck or just a really bad approach investing direct into companies. And so my partner was kind of hired to say how can we have more success investing into startups more broadly. And then ultimately, he came up with the strategy, which he felt better about a less risky approach to venture investing for an asset class to a broader investor, where public or public sector, bonds, real estate, oil and gas, all that kind of stuff is taken care of. But this I would say high risk, niche asset class. And so we did a lot of back testing to say, you know, obviously, a lot of startups fail, is there any kind of common characteristics of startups that might be able to help de-risk investing into this asset class, and whether it is an imperfect science, and I'm sure you've had a lot of guests talk about the art versus the science approach to venture investing as well, we felt a little bit more comfortable falling a little bit on this science, if you can call it that. And so part of that was looking at companies that improved efficiency. And so the easiest way that I can tie this in is, so we invest in companies that sell into a red ocean, they're not looking to truly disrupt society as we know it, which I think we've seen wonderful transformative technology, mostly coming from San Francisco. But we feel like there is huge technology risks with starting these types of blue ocean type businesses. And so we found, I would say established markets that were undergoing efficiency plays either to reduce costs or to increase revenues. And what was facilitating these productivity improvements or efficiency improvements. And we ultimately found software was really transforming society at large. And so we ended up looking at software companies in markets still at seed stage, and part of that was just given our check size and our access to capital. Because that is a constraint for I would say all funds, especially Stout Street as well. And my partner who is established finance background wanted to invest in at least 30 companies per fund. And so we did that. So we started in early 2017 from scratch and started our venture investing, I guess,


Les 05:21

Fun. I love the strategy. It's great. And having been one of those former one of those founders, I should say former I was about once a founder, always a founder. But having been one of those founders that started a blue ocean business, I am well aware of the risks and pitfall pitfalls and whirlpools in that ocean. So I like I really like your strategy. It's cool. And, you know, you said a couple words there, like efficiency, reducing costs. You don't hear VC say that very often.


Clay 05:51

Yeah, I think, you know, to talk more broadly, or big picture, because I think it's going to come up quite a bit. And we communicate this quite a bit with founders as well, whether it's East Coast or West style investing, you know, are you betting on a person to figure it out at the end of the day, are you investing in the business model, and then at the end of the day, the people are somewhat replaceable not to be as ruthless as that. But I feel like that's a little bit more New York style, we would probably fall more on like the New York business model approach, as opposed to believe strongly on the bet, everything solely on the team, like the team is obviously the most important part in an early stage company. And to a large extent, they are the product, but we do want to see the business model. You know, is there some clarity around average contract value, total addressable market, lifetime value, some things like that, that would make us feel a little bit more comfortable, as opposed to one person being able to figure it out, which I would say is historic venture, and there's been a lot of success with that model. And to your earlier point, and to be honest, you know, my partner, and I were not former founders. So it kind of puts us in a in a weird position, because I feel like that is the historic roadmap to starting a venture capital fund is to relate with the founders. And so, again, we're very transparent and upfront about that. But we almost feel more finance driven with our approach, which might be less traditional for venture investing.


Les 07:28

Well, and as I've gotten gotten to know you a little better as well. I mean, you're also you and your partner, both have tremendous networks. Right. I mean, you definitely bring the network to the table, which is, which is, I think, equally important, perhaps even more important than some of the operating experience for regional regional companies, companies in well, I would say regionally say, in between the coasts,


Clay 07:50

Right. Yeah, well, first I play I appreciate the, you know, the compliment. I appreciate that. I think even to kind of elaborate going back to like, when we launched South Street capital in early 2017. We did start from scratch not being founders. And so like, what is the process of starting a venture capital fund it? Because that ties very closely to like, what is the process of a founder starting a company, and there is similar processes, but everyone has a different experience? And so our experience was very interesting. You know, I would say there's positive parts about it and negative parts about it as well. And we, I would say, we didn't approach venture back in early 17, you know, necessarily the right way, like, what does a appropriate amount of diligence look like? What is the appropriate amount of time to make a decision look like? And then what is the check size and involvement post investment look like in a company, we had to figure all that out on the job. And then ultimately, part of the job, in my opinion, is, you do need to make investments in order for people to believe that you deploy capital. And so you do need to deploy capital to do your job to a certain extent. And so we quickly grew from Colorado, and we felt like we felt like we wanted to do more outside of Colorado. I feel like to some extent, it was harder to break into the Colorado market, which is a theme and I don’t know in depth we need to get on this subject, but


Les 09:26

So tell me, tell me, tell me about so you know, Colorado, the theme here for me is Colorado called you home, there was something great about it that got you there. And then but what you really it seems like what you've really recognized as a firm is more of a macro strategy, more of a macro opportunity. That is, it's it's more than just Colorado. Is that, is that fair to say? In terms of the opportunity to do? Yeah, you do?


Clay 09:49

Yeah, um, exactly, I feel like just put some big themes on it, I felt like other markets were a little bit more welcoming to us and more capital coming in. And Colorado has become very competitive. And I would say it's maturing very quick. And all that is a very good thing about the venture market in general. But I would say to a certain extent, we were forced to look outside of Colorado to build our reputation and to break into quality deals. And so the easiest place to do that is through the surrounding states in the Rocky Mountain region, which you guys do a lot in as well. And so we went to Utah went to Arizona, we checked out other markets. And I would say we quickly gravitated towards people that were comparable to us. And these were very small funds with younger GPS that were looking to break into the market and really establish themselves in a career. And so we started sharing deals with, I would say region agnostic funds all over the country, including Canada, as well that were looking for b2b software companies and markets. And they really didn’t care where these companies were located. And I would say that message really resonated with us. But it did take us about a year and a half to get to that point. And we deployed a lot of capital, you know, with good intentions, but without the deal flow network required for a venture capital fund to succeed. And we try to articulate this to founders as well. But usually like our pipeline, we want to fill it with, yes, on the quantity side, a couple 1000 minimum, but you know, four to five really good opportunities where you invest in one of them. And getting to that point takes a lot of time, and a lot of providing value to other co-investors in order for them to share deals with with us, which is really my day to day. And I think to even elaborate on that, you know, our check size is 100 to 200,000. And we're investing into usually a one to $2 million round. So we need to  syndicate 100% of that of the time. And I would say the bulk of those if not 99% of them are not in Colorado. I'm not, Colorado's wonderful market. I love the funds here. Yeah, but that is our experience.


Les 12:04

Well, this isn't found in Colorado. This is Found in the Rockies. So I think you're we're good. You're on the right show. So anyway, what about what about the name? What about Stout Street? Is that actually a real place?


Clay 12:19

Yeah, so we formed the company at the Ghost Building, which is on 18th and Stout, which used to be the Colorado Diner. I believe it was way back in the day. And, you know, to be honest, we were in that building, which is a very cool, eclectic building, which is our logo, which is the Ghost Building, and it was off 18th and Stout and looked outside and it was either 18th or Stout and yeah, and that's literally how the name came from. So


Les 14:46

Yeah, 18th capital. It's almost like I would think of it as like a golf course or so. Yeah, or Yeah, Country Club. I like I think you made the right choice. Cool. I never realized that was the significance of the logo.


Clay 12:59

Yeah, you’ll have to drive by the building at some point. It's pretty cool. Well, hindsight is 2020 You know, “Stout Street Ventures” sounds pretty good, but we ended on Stout Street Capital.


Les 13:07

I think you made a good choice. I mean, you know what I'm gonna do I'm gonna drive by with a picture of the logo. And I'm gonna hold it up like a Goonies like the decoder ring from Goonies and see how well that see how well it matches. Yeah, awesome. So So you guys have been active since 2017. How many? You know, you said you said it best. You know, the way the real way to show people you're serious is do deals. What have you guys done since 2017? What kind? How many investments, what does the portfolio look like? That kind of stuff.


Clay 13:36

Yeah, so we've made 65 investments in 25 states and two countries Canada, US. We are a generalist tech fund that has gravitated, I would say historically away from energy. But we've done a good amount of HR tech, we've done a good amount of advertising or marketing tech more broadly, we've done or at least personally, because my partner and I differ on the types of companies that get us excited, I would say I have gravitated away from enterprise SaasS and more to SMB, SMB, companies, just with a little too long sales cycle. We feel like the companies that look very good on paper has not historically done well, for us, they've either needed a lot more capital than originally anticipated with, which again, for a small fund is a problem. And so we've looked at companies that were have required less capital, and we felt like the SMB companies in our portfolio have done that. There is a good amount of enterprise SaaS in there as well. Yeah, I would say we've historically been known for investing in less flashy, non transformational type companies. But there is in efficiently, there is an efficiency improvement. The value proposition is very clear to someone who isn't as smart as the founders that we invest in. But it's very clear and to a certain extent, boring. That is more of what we have known to do. So sure, let's not take anything away from our companies. But it's just again, 


Les 15:12

No, no, no


Clay 15:12

We stay away from the hype, and we try to invest in stuff that I feel comfortable. Yeah, knowing what the company actually does.


Les 15:20

For sure. Right. Well, and then it's also probably, you know, it's I would imagine that it's, it's probably a an easier pricing environment, it's probably it's also probably easier to kind of meet founders where they're at and maybe underwrite to an exit that isn't, you know, a unicorn or the new, you know, a Deca-corn, whatever, like, you can, you can look to pay capital into these companies, when it makes sense, you see a clear path to growth, and you see a clear path to an exit that's meaningful and changes people's lives change. And, and, you know, makes for a well, you know, well, well managed portfolio, so I get it. It’s a cool strategy.


Clay 15:57

I think that's exactly right. I think that's exactly right.


Les 16:01

25 states, that's, I don't even think I've been to 25 states, I'm embarrassed to say that, but I mean, how do you cover that kind of territory? That's amazing. 


Clay 16:11

Yeah. So, you know, we've only met with a founder, before investing and about 20% of our deals, and chances are, they're in Arizona or the Rocky Mount region, we are investing the bulk of our investments in people that we have not met with in-person. This is all pre-COVID and everything, but we feel like in today's society, it's pretty easy to get a reference check. I would say most of the times there is a local fund leading the deal that can really vouch for it. And given we have done investments in a lot of these different small markets, you know, I would say reputation is, it matters, and it's pretty easy to find out about either founders or other VCs because I think VCs should ultimately get pushed back on as as well, but it's a little bit easier than it sounds. But you know, St. Louis, Kansas City has been a great market for us. We got to deal in Charleston, Melbourne, Florida. Toronto has been phenomenal. Pittsburgh has been awesome. I would say Arizona has been one of the best. Colorado has been fantastic. It's definitely maturing quick. I think more quality top talent is moving here. We'd love do more in Idaho and Montana. So keep us in mind for Next Frontier…


Les 17:25

Yeah, for sure. So very cool. I was really shocked when you said Melbourne, Florida. I've been there saltiest ocean I think coastline in the US. Fun Fun Fact.


Clay 17:40

Yeah, it's it's random. 


Les 17:42

How did you find like how do you how would you find a deal like that? That's fascinating to me, Melbourne. 


Clay 17:45 

Yeah, it was just referred from someone at a consulting agency that I was a family friend with so it was more of a cold outreach than anything, but we do we do check that like anyone that submits via our website like we actually check that. But anyways, the founder, Brad Truesdale, with Tomahawk and they basically provide software to hardware devices to the Department of Defense, but it's probably one of our best Fund I companies and they've grown from like seven employees to close to 100. And yeah, so they're doing incredibly well and they came out to our Denver UNMET conference as well. So again, it's it's a pretty small community at the end of the day, and they just happen to be in middle of nowhere Florida, or I've never been in Melbourne so I don't know, but a smaller market in Florida than, you know Tampa or Miami.


Les 18:39 

Lots of jellyfish there and be careful if you go wear water shoes. Well, you know, it's fascinating to me because like I, you know, I spent I spent some time in Melbourne before for work related stuff. And there's a lot of tech there. I mean, when it comes to satellite communications, and RF like Harris has an office there. So I would imagine just from a sample size of one example here, it's probably a lot of places like that all over the country, and where there's these “UMET” founders, so to speak. Now, you know, we'll get to that in a second. But, like, I can see how there could be some really unique opportunities to source source deals. What? Oh, go ahead. I'm sorry. 


Clay 19:18

Yeah, I mean, I, if you look at you know, you're based in Bozeman, I believe, I think it's very comparable to Bozeman or Denver. You know, if I wanted to hear about a Montana startup, chances are that you've had a relationship with it. And I feel like you would give an honest representation of the company knowing that, you know, you would request and ask the same for me, and I would give you a straight answer for any of our deals in Colorado or Arizona. And yeah, I think people are pretty willing to be honest. And you know, we champion the Midwest values pretty, pretty hard. And we feel like a lot of times, founders, at least where we invest are a little bit more transparent and respectful than let's just say, some of the founders I've communicated with on the coast. That's not everyone, but it's just a different culture or personality type of where we invest. And I do think that that does matter.


Les 20:08

Sure. You know, speaking of where you invest, you mentioned, you mentioned Arizona, and I'm really, I'm really anxious to hear kind of your perspective on that ecosystem. So tell us tell us about Arizona.


Clay 20:19

Yeah, I would say Arizona. So out of all the marks that we invest, I would put Arizona and maybe a number one, I mean, they are just freaking fantastic. Again, the lens of me being the investor where price does come into fact, into play. So I feel like the players matter. And so this was talked about some other venture books as well. But do you need to have a lot of population to make a successful venture community or whatever? Or do you need to have like the very right collaborative people to really foster that relationship. And I feel like Arizona has it. And so we have met, mostly Andy Lombard, who you'll have a chance to meet with that Venture Madness down there hosted by Invest Southwest, he's actually running it this year. And Stout Street is sponsoring, which is exciting. But I feel like he is one of the reasons that Arizona has become so successful is he is really dedicated to the long-term approach of building the foundation of investment for companies looking to start in Arizona. Talent’s been great for the most part, obviously, they have some really large universities, but making it more of a tech state would be great. Obviously, semi-conducting is a priority for the state as well. But I feel like it's just great talent I no investors are really looked at and when they dive in, you're gonna see some really good companies at more reasonable valuation than other markets. Because I feel like at some other markets, valuations aren't as down to earth, which is subjective, of course, we just feel like with the talent and what you're investing in at that at Arizona prices, for the most part, it's a market that you really can't beat. So, glad that you're going down there. And I think you're going to be blown away, personally.


Les 22:04

Well, I'll tell you, I just met Andy, last week, and I was already blown away. I mean, he, he told me, we got to get him on the podcast. Andy, if you're listening, I'm coming after you next. But he told me that last year, I think he meant I think it's 2021 the total amount of VC dollars that you know, were invested in the state was around $2 billion. And if you put that in perspective to like typically what you Utah's usually annually, around $4 billion, I think Colorado is around $3 billion. Arizona is definitely a challenger in this region, in terms of, you know, rising, rising the top and based on what you just said, it sounds like there's great founders there, there's great, you know, pricing that great, great value there still.


Clay 22:54

Yeah, and pricing doesn't I'm not trying to say that in any kind of way to take away from like the quality talent and pricing is definitely a larger conversation. You know, when it comes to like total funding for each state, it is tough because it's so weighted towards like three companies receiving a $500 million round. But as far as like the sheer quantity raising a successful Seed Round, I would say it was drastically increased in Arizona. And I feel like that that's great and more people leaving the coasts. Yeah, yep. Well, I'm excited you’re going down there.


Les 23:26 

Yeah, and you we could probably have a whole episode on pricing, but I mean, you know, kind my intent when I, when I typically think of a good pricing environment is really more about the prudence of the founders and doing, doing the responsible thing at the earlier stages. I mean, ultimately, we've seen in our portfolio, it's better for founders, it's better for investors, you know, it's responsible, it's the responsible thing to do.


Clay 23:49

Yeah, I would say it's, it's all a tradeoff. Like we've we've told founders, you know, if you want to get a high price, that's fine. But chances are, it's gonna take a lot longer to get there. If if you do. And if you do come down a little bit on price, then it makes it a little bit more attractive, which expedites the fundraising process. So like, it's all it's all tradeoffs. At the end of the day, it is a two-sided relationship. And we have seen companies come too far down on pricing to your point as well. And it is a balance, and where founder equity is important and part of the series a discussion. So for sure,


Les 24:23

Cool. And Arizona also just wasn't there just like $100 million fund that got raised there. Was it Innovation AZ or something like that?


Clay 24:31 

Yeah, I think it's a state back fund. I can't remember if it was $60 or $100 million, but they're gonna do Arizona deals, which is exciting. I think Andy's gonna run point on that as well. So you have to ping him.


Les 24:40 

All right, you heard it here first on Found in the Rockies with Clay. Arizona, spend some time there. Tell me about we've we've kind of bounced around the edges on it? A little bit. But tell me about the UNMET Conference, because like, this was by the way, this was my first touch point with Stout Street. And you know, I was immediately a fan, because it was an amazing event. Tell us about it. Tell us about UNMET.


Clay 25:05 

Yeah, all um, I'll give you the full story. Going back to maybe some good and bad of Stout Street’s experience as well. But to a certain extent, like we have been denied access to other venture capital conferences, which have access to great companies, which is unfortunate, like to be honest, that's like the bitter truth of our experience, which isn't, isn't bad. It just is what it is. And so like, where where do us as a fund go from there, you know, if we want to create value, which this give first mentality in Colorado was a big part of it, you know, not being able to be in the room, like, where do you go, and so we went to Arizona, and then it's kind of like, hey, you know, what is missing? And we felt like what was already established. And an opportunity is, you know, we felt like there was a gap for companies raising institutional seed and institutional Series A in the middle of the country, or the Rocky Mountain region specifically. And so that's where the name came from, it was filling an UNMET need of raising capital in the middle of the country. So our first one, which was in Denver, which was purely for Series A companies, which we felt like was a value add not only for our portfolio company, but other common co-investors, their seed stage companies, as they raise downstream capital, can we expedite their fundraise in a way to be valuable in addition to capital, which we get pinged quite a bit from founders, you know, what's your value in addition to capital as well. And so that's how it started was Series A focused it was in Colorado, we had 50 companies. You know, I would say every venture conference is different. And we did not want to have a Stout Street centered approach, we wanted to have a community centered approach. And that's why it's not a “Stout Street Conference”. We set it up in a way that we can partner with other NGOs, or funds or anyone for that matter to to enable companies to raise capital easier in a more efficient way. And so for the Denver one we had, I think it was 50 companies at the series A level, it was not Colorado region, even though the bulk of the companies did come from Colorado, but we felt like with our broader co-investor network, we felt like we could bring everyone together in a certain room to really facilitate connections that I would say other funds or other companies wouldn't have access with historically. And we tried it. And to a large extent, I would say it was a big success. And part of that is someone from it was Andy Lombard at ACA ended up coming up and said, Hey, love the concept. We'd love to bring this in Arizona. We said, Heck, yeah, let's do it. And they said they would cover costs. And we said, we will recruit all the investors. We just need help sourcing companies. And that's how it started.


Les 27:55 

Get the tour bus get the tour bus out roadshow time.


Clay 27:59

Yeah. And so it was just interesting, because that was at about the same time as COVID as well. So we pivoted to virtual, which there's pros and cons with. But ultimately from hosting our first one in Denver. We have hosted I believe it's seven conferences so far, including Colorado, Arizona, twice. We did a diversity conference virtual last year. Our next one is for diversity female founders May 18 and 19th 2022. We've co-hosted with Kickstart in Utah. We've co-hosts with Jobs Ohio in Ohio. We're in talks with a couple other states as well. So I think it's been fantastic. Again, this is under the efficiency play of expediting fundraising and being helpful. And in a, I would say, community building way, is really where the premise is,


Les 28:50

I'll tell you, I, it's a, it's a great, it's a great explanation of the strategy. And in what you're doing, I'll tell you, though, kind of on a more qualitative note, I could not believe just the level of the quality of the relationships that came out of that format. And in I don't know if it's the same as, as the the event that I went to in Colorado, that was pre-COVID. But it was basically there was like a speed-dating, speed-dating is the wrong word. But it was like, meet with founders in these like short blocks of time. But then there were like breakouts like events. And like, there was it was, like, more time to socialize. I remember one founder, I went on a walk with, and it was like, I there's still people from that conference that I've kept in touch with I just looked at a Series B from one of the founders that I met there, I mean, very intimate setting and authentic, I guess that's maybe intimate is probably the wrong word it’s more authentic, very authentic relationship building. So I, I encourage anyone, maybe we can put the link to, for people to learn more about it in the notes, but it's definitely worthwhile. From my perspective.


Clay 29:55 

Yeah, I appreciate it. We'd love to do an UNMET Montana. So keep keep this in mind with you guys.


Les 30:01

Let's do it. You said it, now we have to do it, it's on the podcast. Alright, let's do it.


Clay 30:07

It's been, it's been great, you know, collaborate with. Ultimately, we feel like if companies succeed at the conference, that is what's going to enable a successful conference to go on. And we did want to foster enough investor touch points at each conference. And so usually, kind of like your point, I think it was pretty pretty right with speed dating, but we do on average, every company meets with at least six institutional firms at the conference, some companies get a lot of interest, some not as much interest, but on average, each one has been able to facilitate at least six, or on average, six investor connections. And then we do back test to see like, who actually raises from the conference and everything. And obviously, a lot of state entities want to see you know how much new investment came? Historically, we've been able to average for each investor connection, so six per company, on average, we've been able to, on average, raise $100,000 per investor connection. So each conference is raising around, I think it's like $75 million, or something like that, again, Series A, if you raise five to seven, it kind of gets weighted, but we do want to have bulk 50%, minimum at seed, and so even smaller rounds are getting funded. And it's just the activity. You know, I feel like with founder, founders raising money, it's all about momentum. And I feel like this can be a really big catalyst to drive momentum towards raising a successful round.


Les 31:36 

Amazing statistics. That's, that's fantastic. And, and I know I, you know, one of our portfolio companies went to an event, I think it was, was the Utah event, their most recent one.


Clay 31:46

It was Arizona in person in October, I think, 


Les 31:51

Well, maybe that was the one they went to, but, you know, they weren't raising at the time, but they're they are raising now. And it's it's led to it basically gave them, you know, a template of amazing people that were already engaged already knew about the company already excited about, you know, the prospects. So I think it pays so many dividends, no matter what the timeline is for the companies or the investors. I mean, it's just great momentum creates for all


Clay 32:13

Yeah, we want to continue to kind of adapt the conference and find out ways to be more effective, which has been good. I think partners have been great on that as well. But yeah, appreciate the shoutout, the shoutout on the conference, it's, you know, put a lot of time into it, to be honest with you. And I feel like any kind of emerging fund needs to create just a ton of value prior to actually, you know, being established in the market. And I feel like this is kind of our way to create value. Yeah


Les 32:44

Great. Well, we'll post the the link to that in the in the show notes for sure. What about you know, so we've talked about Arizona, we've talked about Colorado, we've mentioned Utah, we've mentioned Montana. What maybe a little Idaho too, but what give us a what do you think about the Rockies? Like what are where's, where's the dark horse? Where's the where should we be looking next? What's your like long long on the on the Rockies?


Clay 33:07

Um, yeah, I think there's a lot to unpack with that. I would say the Rockies ultimately is going to succeed for a lot of different reasons. One, like there's just so many tailwinds to I feel like the culture historically, being an extremely collaborative community. I feel like does matter. I feel like let's say Stout Street and Next Frontier, like we want other funds to succeed. And if those funds have So in companies that succeed, you know, we will see more opportunities that we can invest in as well. So I feel like there is a really big community championing each other approach, which I feel like is great, there's less competition, or, you know, less competition, that's, that's getting a little bit more, I would say the Rocky Mountain region is changing between established funds and emerging funds. I think more first time funds are popping up more now than ever. And I think founders having exits and seeing, raising their own fund or starting their own family office, or angel investing as an avenue as the next step. And I feel like one that's phenomenal for the foundation for companies to raise capital from. So I think we're gonna see more. I know that the billion dollar exits really drive headlines, and then ultimately, more investments for the states. But I feel like new funds should be open to smaller exits, and not billion dollar exits, because there's tons of companies out there. And I think a lot of those will be started in the Rocky Mountain region. Yeah, so very excited. As far as dark horse, you know, I'm curious if it's going to be software, or if it's going to be, you know, something else, like batteries, or semiconductor, or whatever. So, you know, I don't know, if I'm sold, that software is going to be, you know, what the Rocky Mountains are gonna be known for. But, you know, we see a ton of, you know, consumer product companies that probably received less funding that are just fantastic companies, you know, so we'll see more of that as well. So


Les 35:11

Cool, more Allbirds and Justin's Nut Butter. Awesome. What about? Uh, what about a, something gets you excited about Stout Street or UNMET? Any reveals any big news? Anything exciting coming up to kind of kind of wrap up today's episode?


Clay 35:30 

Yeah, um, you know, we're, we're finishing up our second fund where 65 companies we’re on the market to raise our third fund. I would say that's really excited. Definitely some some stress coming into fundraising as well. I think it is important with I feel like founders are always kind of pressed on for fundraising. And I feel like it's, it's good for funds, or at least good for ourselves to be, you know, humbled or kind of pushed back on as well, just to relate a little bit more to founders throughout the process as well. I don't know if I have any really big news, the portfolio is doing really well. There's no kind of big exit or anything like that. I'll put one plug as almost a brag not even a humble brag, but we invested in Blockthrough, which is based in in Toronto, but it was the 11th fastest company or growing company in Canada, and actually the number one fastest adtech company in Canada. So that's the bright side and the humble brag. It's just the full brag. 


Les 36:31

So hey, throw it out there. I love it. That's great. How did you where did that one come from? How did you source that. 


Clay 36:35

It was that co-investor in St. Louis. Yeah. And that was referred by another fund in DC that we also know so they ultimately get that the credit. So, yeah.


Les 36:45

The network of Clay Gordon is immense. And that's why you know what, when he told me you were worried about fundraising, I was like, come on, come on, Clay.


Clay 36:53

Well, we're grateful to have Next Frontier in our network and grateful to be chosen to participate in the podcast, and we appreciate the relationship.


Les 37:02

Well, thank you so much for being on today. And I look forward to continuing that relationship and growing that network as we work together to help founders in the Rockies succeed every day. So why don't you tell our listeners a little bit about where they can find you and find Stout Street and find UNMET online?


Clay 37:23

Yeah, Stout Street capital.com is probably the easiest. My email is clay at stout street capital dot com again, we do check all that. You can email on LinkedIn as well. I’m not as responsive via LinkedIn, I feel like emails best. We’re on Twitter, and then UNMET conference dot com. But I feel like our website would probably just be the best at stout street capital.com. So yeah, keep us in mind. You know, we'd want to be a resource for the community. I feel like how you treat companies that you don't invest in probably matters more than the companies that you do end up investing in as well. And so we care about that and our reputation. So, again, if it's not a fit, we want to keep the door open and be helpful, where we can sell one day at a time.


Les 38:09

Thank you Clay, really great to have you and look forward to seeing you in the Rockies. 


Clay 38:14

Thank you


Les 38:22

Thank you for listening to this week's episode of Found in the Rockies. You can find links in the show notes or go to our podcast page at next frontier capital comm to get links and contact information for today's guests. If you liked what you heard and want more, please rate review and subscribe to get notified as our new episodes drop. We'll see you next time.