Elevate Your Business: Mark Benning with Sprout VC

Good afternoon and welcome. Welcome to Elevate Your Business with Kent Boehm of Nine Business Group. Today we have the joy and pleasure of hosting with us Mark Benning. Mark with Sprout Venture Capital. Welcome and please introduce yourself and what a good referral or an ideal client is for you.

Thanks Kent and thanks for having me today. For me, a good referral is to a founder of a technology startup company. We typically invest in software companies, B2B software mostly. And so a company that’s in the enterprise software space, B2B, SaaS, anything like that. And we’re pretty much industry agnostic. So, you know, across a range of different industries is fine.

Okay. I thought everything had been solved in the software business space. Is there really people making new and better ERP? I mean, I had a client who’s in the ERP space. So are there people out there looking for new and better ways of creating ERP software? I thought SAP and Acumatica had the world’s problem solved.

No, it’s actually interesting because those companies are more legacy software providers. There’s been a big shift where software has moved into the cloud. And so there are a lot of new companies that are doing cloud-based software like Snowflake. Like, I don’t know, I could name a whole bunch of them, but basically the technology has shifted. And so SAP is actually seen as a legacy player rather than a modern cloud player.

So the cloud is the focus. Talk about the ideal founder. What makes for a founder or an entrepreneur that you go, you know what, I want to talk to that person. What are you looking for in that person?

Yeah, there’s three things we look for. One is deep domain expertise. So someone who’s lived in an industry and seen a problem that hasn’t been solved by software yet, and then decides that they’re going to build a piece of software to solve that problem.

The second thing is what we call founder-market fit. That means that the founder has the right skills and the right background to build the product and to sell it to the target market.

And then the third thing is just pure grit and determination. Starting a company is really hard. There’s lots of ups and downs. And so you need someone who’s going to stick with it through the tough times.

I love it. Domain expertise, founder-market fit, and grit. So once you’ve found that person and you’ve decided to invest, what’s the process? What does Sprout do to help that company grow and scale?

Yeah, so we’re an early-stage investor. We’re typically the first institutional money into a company. And so we’re very hands-on. We help with everything from recruiting to sales and marketing strategy to fundraising. We have a network of advisors and mentors that we can tap into to help the company as well. And then we’re also very focused on the next round of funding. We want to help the company get to the point where they can raise a Series A from a larger venture capital firm.

Fascinating. So you’re almost like an incubator or an accelerator, but with a lot more money and a lot more skin in the game.

Yeah, that’s a good way to put it. We’re not an incubator in the sense that we don’t provide office space and we don’t have a set program that everyone goes through. But we are very involved in the company and we’re working with the founders on a daily or weekly basis to help them grow.

So as you look ahead, what are some of the trends that you’re seeing in the software space that you’re excited about?

Well, obviously AI is a big one. We’re seeing a lot of interesting applications of AI in B2B software. Another one is vertical SaaS. So software that’s built for a specific industry, like construction or healthcare. And then the third one is the continued move to the cloud. There’s still a lot of legacy software out there that needs to be replaced by cloud-based software.

Okay, I got to know. If there was a pirate, a thief in your business, what would they be stealing from you?

That’s a great question. I think they’d be stealing our deal flow. We spend a lot of time and effort finding the best companies to invest in. And so if someone could come in and see all the companies that we’re talking to and all the due diligence that we’ve done, that would be very valuable to them.

I love it. Deal flow. That’s a great answer. When you look ahead five years from now, 10 years from now, what does success look like for you and for Sprout?

Success for us is having a portfolio of successful companies that have gone on to do great things. We want to be known as the best early-stage investor in Western Canada. And we want to have helped build some of the next great technology companies.

Fascinating. You’re looking for, you know, summary 10 to 20% of total companies you invest in to kind of be the juggernauts, to be the trendsetters, to really go out there and make the change. So in the next decade for you, if you had 30 companies that you helped do that, would that be a great number for you?

Oh, that’d be excellent. Yeah. Yep.

Fascinating. For those who’ve made it all the way to the end, please tell the listeners where to get more information and where to find you, if you’re going to be so gracious to take all the people out there wanting to send you a pitch deck. So where can we find you?

Sure. The easiest way is go to sprout.vc. And on our website, there’s sort of an explanation of what we look for in an investment. And then you can send an email to info at sprout.vc. And that’ll go through our process where we’ll respond to you and ask you any further questions, ask you to possibly send a pitch deck to us so that we can review it. And then if all works out, make an investment.

Cool. Thank you very much, Mark. You’ve been great with your time. The explanations were clear and concise. And I’m definitely looking forward to not just sharing the video in its entirety, but there’s definitely five or six segments I think that we can cut out, if you will, and share in pieces because they stand alone by themselves. So, again, thank you very much for your time. I greatly appreciate it.

Great. Well, thanks for having me, Kent. I enjoyed it. Take care.

All right.