Digital transformation is a hot topic among large enterprises, government agencies, and practically every other organization on Earth right now. These organizations are looking to harness the efficiencies and new capabilities that today’s advanced technologies – from cloud services, to artificial intelligence (AI), Internet of Things (IoT), and machine learning technologies – can deliver to their organizations.
Many of the organizations that are making digital transformation possible for these organizations have prospered in the last few years – even in spite of the COVID pandemic. This includes the hyperscale and cloud providers delivering essential cloud and SaaS services, the data center providers helping those companies grow and scale, and even the technology integrators that are bringing new solutions to bear for their customers.
However, there are other companies that are also growing despite the recent economic and societal turbulence – companies across a wide range of industries and markets that have made emerging technologies a key part of their operations, and that have disrupted their industries as a result.
This year’s Venture Capital (VC) Deal Team of the Year at the ACG National Capital Corporate Growth Awards – Motley Fool Ventures – has built a solid and growing portfolio of companies just like these – tech-enabled organizations that are leveraging next-gen solutions as key differentiators and veritable rocket fuel for growth.
To learn more about Motley Fool Ventures, what makes them stand apart in the VC industry, and what they look for in portfolio companies, we recently sat down with Ollen Douglass, the firm’s managing director and the former CFO of The Motley Fool Holdings, Inc.
Here is what Ollen had to say:
Corporate Growth, Capital Style (CGCS): Can you tell our readers that may not be familiar with Motley Fool Ventures a little bit about the company? What does the company do? How did it get its start?
Ollen Douglass: Motley Fool Ventures is an Alexandria, VA-based venture capital fund and is a subsidiary of The Motley Fool. We launched in 2018 after I transitioned from the corporate CFO role to build the fund.
It’s the parent company’s first offering in the private company investing space. We focus on investing in early-stage tech-focused companies nationally and across a range of industries.
CGCS: What differentiates Motley Fool Ventures from other VC funds? What kinds of companies does Motley Fool Ventures look to invest in? How is this different than other VC firms?
Ollen Douglass: We have a couple of differentiators. First, we’re a hybrid fund. Technically, our structure puts us in the “Corporate VC” category. Many Corporate VCs act as a strategic extension of the parent company, and economically and operationally, are fully dependent on the sponsor. Motley Fool Ventures receives some operational support but is funded primarily by external investors.
Like traditional VCs, we have a profit maximization goal and an independent investment strategy. We believe our hybrid structure brings together the best of both worlds.
We also leverage the power of community in our fund. While the typical fund has maybe 20-40 investors, we have around 800. It’s an incredible group of people that help us find opportunities and serve as ad hoc subject matter experts.
CGCS: Motley Fool Ventures was named Venture Deal Team of the Year at the 2020 Corporate Growth Awards. Were there any specific investments or transactions the company executed in 2019 that you think propelled it to this award? Any transactions that you’re particularly proud of from the previous year?
Ollen Douglass: We were fortunate to have the chance to support several outstanding local companies. We participated in funding rounds for Hungry Marketplace, UrbanStems, MotoRefi, Upskill, Homecare, Territory Foods, and Eyrus.
“The connecting thread [among our portfolio companies] is our focus on tech-enabled startups. We describe those as companies deploying technology in new ways to drive scale, improve efficiency, or open access in large markets.”Ollen Douglass
The fact that we could find the number of high-quality startups that we did speaks to the region’s development as a place where innovative companies can thrive. Seeing and participating in that growth is a source of pride.
CGCS: Picking a favorite portfolio company is probably like picking a favorite child, but is there a portfolio company that you’re particularly excited about? One that you see a lot of potential for in the future?
Ollen Douglass: You’re right about the difficulty in choosing, so I’m not going to do that.
Growing a business literally from scratch sounds exciting but is extremely challenging. Seeing the time, energy, and effort expended every day to beat the odds makes me admire the companies for their courage, dedication, and spirit.
Win or lose, they embody a spirit of innovation and excellence that deserves celebration. They are all exceptional.
CGCS: Looking over the list of the fund’s portfolio companies, there are companies representing a number of different industries and market sectors that the company has chosen to invest in – from healthcare, to outdoor recreation, to health food. Why has the company chosen to invest in these industries? Are the investment choices based on the growth potential of the industry, or the technology and growth potential of the individual company?
Ollen Douglass: The connecting thread is our focus on tech-enabled startups. We describe those as companies deploying technology in new ways to drive scale, improve efficiency, or open access in large markets. It’s sometimes referred to as digital transformation in fortune 500 companies.
In reality, almost every company is embracing and leveraging technology to grow. We’re looking for startups that are either enabling that transformation or using it to create significant competitive advantages.
CGCS: Last year was what many consider a very difficult and challenging year filled with unique societal and economic challenges. What are your business and economic predictions for the coming year? Is the ongoing pandemic creating growth opportunities for any particular industries or types of companies?
Ollen Douglass: There are signs of progress on the societal and economic progress, but it remains to be seen if the actions are sufficient to produce sustainable change. I believe 2021 will mostly be a vaccine-dependent transitional year, but we’re never entirely going back to the way it was.
Zoom calls and a distributed workforce are here to stay. Flying half-way across the country for a four-hour conference seems like it will be a lot less appealing.
CGCS: Will we see an increase or decrease in investment as a result of the economic uncertainty we’re currently experiencing? Will there be any particular challenges for VC and PE funds as a result of the pandemic and other destabilizing societal issues?
Ollen Douglass: The retail, restaurant, travel, and hospitality industries were hit really hard. On the other hand, the pandemic is creating a lot of pent-up demand to get out and about. It will be interesting to see how that imbalance is addressed, and I can imagine VC capital moving to help people creatively address the demand.
On the PE side, I expect a rise in M&A activity as weakened companies become attractive opportunities for strategic buyers and PE firms.
For a full list of 2020 Corporate Growth Award winners, click HERE. To learn more about Motley Fool Ventures click HERE.