IVCA Feature: New Member Profile of M25

March 31, 2021

The new member participants in the Illinois Venture Capital Association (IVCA) keeps expanding, giving the current membership new opportunities in networking and offering support/partnerships, as well as exchanging guidance and new ideas for Venture Capital, Private Equity and support industries. The latest new member is MC5, an early-stage venture firm based in Chicago, investing solely in tech startups headquartered in the Midwest.
The following is a Q&A profile with M25 which explores the firm’s background and their expectations for interacting with the IVCA.
New Member: M25
Representative: Leandro Bedolla, Analyst
IVCA: What is a brief history and background on M25?
M25: Victor Gutwein founded M25 in mid-2015 as a $1M fund from friends and family on the thesis that there was a huge gap in Midwest VC funding opportunities for truly early stage tech startups in the region. In 2016, he closed an $11M Fund Two, brought on Mike Asem as a Partner, and have since grown into a full-time team of five with Abhinaya Konduru coming onboard in 2017, Leandro Bedolla in 2019, and Katie Birge in 2020.
We are currently investing out of our third fund, lead and participate in Pre-Seed and Seed rounds with $250K-$500K checks in $500K-$3M rounds, and have invested in 106 tech startups to-date, of which 42 are based in Illinois, including Regroup, Kin, Convr, TripScout, 86 Repairs, Rheaply, and CashDrop.
M25’s name comes from Jesus’ Parable of the Talents in Matthew 25:14-30. For us, this parable is a Biblical example of wise entrepreneurship as well as a charge to properly steward all that God has given. At M25, this notion is core in our investment philosophy – both as we invest our own capital into the entrepreneurs that inspire us daily and as we responsibly manage capital entrusted to us.
IVCA: Why did the firm decide to join the Illinois Venture Capital Association?
M25: We are huge supporters of and investors in the Illinois startup ecosystem and as a VC headquartered here, we get a lot of value out of the various efforts put forward by the IVCA. We are literally the most active VC investor in the State of Illinois and plan on investing here for decades to come.
IVCA: On your website, you talk about having two of the youngest fund managers in the industry ... how does a "youthful approach" distinguish your philosophy regarding investment?
M25: As younger fund managers, we would say that we’re more collaborative than the typical VC firm, as demonstrated by our monthly dealflow email to over 1,000 national coinvestors and our twice-a-year Club M25 Summit. We also encourage fair, modern deal terms as a best practice for both sides of the table. Additionally, we have been well ahead of the diversity, equity, and inclusion hire-and-wire movement as demonstrated by our team, portfolio founders, and M25’s Commitment to Anti-racism, Diversity and Allyship.
IVCA: One of the more interesting elements on your approach to investment is "encouraging fair terms as a best practice." How is the best way, in your experience, to allow an entrepreneur to be comfortable with the terms of a deal?
M25: In our experience, the best way to be founder friendly – while doing right by our firm and LPs – is to listen to founders’ expectations and what they care most about, having an open conversation with them about what are commonly accepted best practice terms, and how certain terms impact either side … from making sure the founder isn’t being diluted more than 20% in a Pre-Seed or Seed round to why we want pro-rata rights. Overall, we want to align our interests with the founders as best as we can, be fair, and start our founder-investor relationship on a strong foundation.
IVCA: Your portfolio is over 100 companies strong. What is an example of one or more companies that the firm is particularly proud of, both in discovery and the way you have nurtured them?
M25: We pride ourselves on seeing most if not all the deals in the Midwest, and have invested in 106 companies to date, ranging from backing first time founders to reaching out via a cold email, all the way to serial founders with exits from warm intros.
One of the many portfolio companies we are proud of is Kin, which we invested in their Seed round in 2017. We introduced them to their Series A lead, August Capital, and have helped them navigate their other raises through pitch deck feedback and potential investor introductions. We’re proud of Kin’s evolution, the numerous jobs they’re creating, and the unicorn path they are on.
More recently, we invested in Rheaply’s Seed round in 2020 and since then they have helped many more organizations eliminate unnecessary waste and spend through their SaaS, and worked with the City of Chicago to create the Chicago PPE Marketplace. We helped Garry Cooper, the Co-Founder/CEO, as much as possible throughout the fundraising process. Rheaply recently announced an oversubscribed $8M Series A, with Garry Cooper becoming one of just a few Chicago Black founders to raise $10M+.
IVCA: What does M25 hope to achieve in their interaction with the VC/PE community within the IVCA?
M25: We are always seeking to build stronger relationships with downstream investors for our portfolio companies. Additionally we hope to continue to push the boundaries on deal syndication/collaboration, investing/supporting diverse founders and tech talent, and fostering Illinois as the hub of a rapidly booming Midwest tech ecosystem.
For the website of M25, click here.