Venture capitalists Jonathon Triest and Brett deMarrais imagine their ability to read people and build long-term relationships with founders is a key reason why their Detroit-based enterprise capital firm, Ludlow Venturescelebrates its fifteenth anniversary.
It sounds silly to attribute their longevity to what’s sometimes called “Midwestern nice.” But is that crazy? Maybe not. Before Ludlow, neither Trieste nor deMarrais had much operating experience. They had no investing experience, either. Trieste was fresh out of school when he first began the company in 2009. When deMarrais joined him three years later, it was after he’d left his first job, running a wedding videography business.
Fast forward to today, and Ludlow now has $250 million in assets under management, including a latest $50 million fifth fund that the duo closed in recent weeks with commitments from billionaire Dan Gilbert, financial services firm Northern Trust, Israeli enterprise capital firm Vintage Investments and fund of funds StepStone, which was a pillar of the latest entity.
It’s definitely hard to tell what else Ludlow offered early on, beyond a big heart and good instincts about people. For example, in 2012, on a trip to Los Angeles, Triest and deMarrais met with entrepreneurs Ryan Hudson and George Ruan about a Chrome extension that helped customers get deals. The young investors had trouble getting excited about what the founders were building. But “George and Ryan were so good,” Triest tells me over the phone from a networking event in Detroit, with a speaker’s voice in the background.
Ludlow wrote the first check to Hudson and Ruan, who soon took their shopping and rewards platform Honey public. In 2020, when Honey sold to PayPal for $4 billion in a mostly money deal, the payout was six times larger than Ludlow’s $15 million fund that made the investment.
“I see my peers ‘show urgency’ when in reality you can only look at the people,” Triest says. “Our biggest mistakes came when we invested in verticals or ideas that we liked, but the people weren’t exceptional.”
Investing in people isn’t latest, after all. Most VCs claim to do the same. Ludlow Ventures had some luck in the early days, too. Trieste raised its inaugural $15 million fund with a $1 million loan from friends and family. Not everyone has access to that type of money to start with.
But even luck doesn’t sustain a business that long – especially not in a market that has turn into relatively difficult as institutional investors have run out of patience, especially with newer firms. While General Catalyst, Kleiner Perkins and other major enterprise capital firms are shutting down billions Newer firms are increasingly participating in capital commitments pulling the plug at the moment due to lack of investor interest.
Indeed, when Trieste talks about relationships, he makes a convincing case for seriousness. Ludlow maintains such a strong bond with Hudson that earlier this yr, the enterprise capital firm wrote a check for $3 million in a $5 million funding round for Hudson’s latest, still-hidden startup, although Hudson “could have had anyone lead that round—it was so packed” with top VCs, Trieste says.
(Trieste also notes that Hudson is married to another founder whom Ludlow endorsed, Lumi founder Jesse Genet. He also admits that he cannot take credit for this connection; they surprised him when they began dating.)
As for other distinguishing features, Trieste avoids them. The company has no geographical scope. It has no sectoral orientation. As for marketing, it has relied largely on a series of movies entitled “Carpool VC” that Trieste and deMarrais once posted irregularly to YouTube, where the two bantered silly, unscripted while broadcasting on another, better-known VC via a automobile speakerphone.
The shows, mostly filmed in 2015 and 2016, now make kids cringe, says Triest, whose oldest child is 15. They’ve also served their purpose, he adds, saying he’s still surprised by “the number of times people call ‘us’ and feel like they know us a little bit,” he adds. “A lot of people have dropped out, saying they don’t want to work with clowns like us. But a lot of people do.”
Bright. Ludlow, which invests in about 25 firms from each fund, has funded a whole bunch of startups over time, some of which have gone to zero while others have gone up significantly since the firm funded them.
Flex, a flexible payment platform that currently guarantees to break up monthly rent into smaller installments and has plans for other verticals, has raised 20 million dollars in financing last fall, along with $100 million in debt financing. (A competing startup, Circa, was recently acquired $9.5 million in money and shares of the loyalty company that bought it.)
Ludlow is also an investor in value-added workplace analytics company Density $1 billion when it last raised a round of funding in 2021; Captions, a video editing app that has acquired 25 million dollars in Series B funding last yr; Notarize, an online notary network that was valued at $760 million by investors last yr; and Backbone, a startup that turns iPhones into gaming devices and has raised 40 million dollars in Series A financing in 2022.
When asked about unifying threads across firms, Triest turns again to the squishy stuff. “The thread of our portfolio is that the people who started it are people we want to spend time with and who make us want to leave Ludlow so we can work with them. We have to believe that what they’re working on is doable, but it doesn’t have to be.”
Don’t all VCs say the same thing? “I hate all this ‘founder-friendly’ chit-chat” that other VCs espouse, says Trieste. “There’s no authenticity behind it.”
In Ludlow, he says, “if we do not rise up to [a founder’s] wedding, we failed.”