Chicago VC Fund Deepening Its Roots in Dallas, Planning First Texas Investment

Founder Equity is expanding its fee-free venture capital model to Dallas with plans to close its first area investment in the next month.

VC fund

Chicago-based Founder Equity, known for its fee-free model for early-stage investing, has officially expanded its venture capital fund to Dallas.

The move has been years in the making, said Founder Equity partner Joe Dwyer.

“We’ve purposely structured our fund so that we don’t benefit by the size of the fund, we benefit purely by the performance.”

Joe Dwyer

About two years ago, Founder Equity’s sister company, Digital Intent, which Dwyer also is a partner in, established a presence in Dallas under the helm of Managing Director Matt McCabe.

The consulting business works mostly with Fortune 500 companies to identify areas ripe for innovation and execute plans to help those disruptive ideas come to fruition. It’s done work for the Chicago Bulls, KPMG, Kindred Healthcare, and many others who prefer to remain confidential.

CREATING A DIFFERENT APPROACH TO VC FUNDING

With Founder Equity, Dwyer and the other partners wanted to create a different breed of VC firm.

Unlike other firms, Founder Equity doesn’t charge management fees and generally invests earlier in the risk curve.

“We’ve purposely structured our fund so that we don’t benefit by the size of the fund, we benefit purely by the performance,” said Dwyer, who teaches innovation and entrepreneurship classes at Northwestern University’s Kellogg School of Management.

“I think it’s a perfect fit for what we have going on in Dallas and all across Texas.”
Trey Bowles

Founder Equity also can give up-and-coming startups much needed business assistance by calling upon its blended team of roughly 60 full-time employees specializing in areas such as engineering, marketing, product development, and UX/UI design.

“If you’re an earlier-stage business that’s trying to figure things out and grow really quickly, it’s not good enough to give you money. You need help [with] engineering, data science, strategy; you need all sorts of things,” Dwyer said.

Trey Bowles, co-founder and CEO of The Dallas Entrepreneur Center, said Founder Equity has an interesting model that’s different from others he’s seen.

“I think it’s a perfect fit for what we have going on in Dallas and all across Texas,” Bowles said. 

FOUNDER EQUITY’S FIRST TEXAS INVESTMENT EXPECTED IN NEXT MONTH

The firm is working to close out its first $30 million fund. It has signed investments with seven startups. Numbers eight and nine are in the works, and the firm is still looking for the 10th startup, Dwyer said.

Among those pending is a Dallas-based startup the firm hasn’t announced publicly yet. That deal, which would be Founder Equity’s first Texas investment, will likely close in the next month.

“We’re excited about it because it’s a deeply fragmented market that no one is paying attention to,” Dwyer said about the startup’s industry during the VC firm’s private Dallas launch event Tuesday.

Dwyer expects it will be the first of many local investments for the VC firm.

FIRM SEES POTENTIAL IN ‘GROWTH OF DALLAS’

With North Texas’ broad economic base, area universities for talent recruitment, and business-friendly climate, Founder Equity sees a metro area with many similarities to Chicago.

“What we are doing effectively is making an investment in the growth of Dallas as a market. We’re trying to get in early and start making some investments, building relationships, and growing the capital pool,” he said.

“We’re excited about the Dallas market — the people, the culture, and lots of opportunities.”
Joe Dwyer

Dwyer told a group gathered for Tuesday’s event at The Network Bar that the potential in Dallas “far eclipses the opportunity in Austin.” Dallas still has room for improvement, though, he said.

“We’re excited about the Dallas market — the people, the culture, and lots of opportunities,” Dwyer said. “We’re looking forward to getting to know as many people as possible and really integrating ourselves into the market.”

PHOTO GALLERY

Photos by Merissa DeFalcis.

 

 

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