New Venture Fund Capitalizes on Minnesota’s ‘Bread and Butter’
There’s no time like a pandemic to launch a new venture fund.
Two experienced Minnesota-based investors, Brett Brohl and Mary Grove, are teaming up to launch Bread & Butter Ventures, a seed stage fund that intends to invest globally by leveraging Minnesota’s industry expertise in food, agtech, healthcare and enterprise software. The name, they said, is a nod to Minnesota’s nickname as the “bread and butter state,” key sectors, and its mission to raise up the next generation of “problem-solving companies.”
For Brohl, a veteran investor and entrepreneur, Bread & Butter is the evolution of The Syndicate Fund, which he launched four years ago, with more than 40 investments to date. “Syndicate is preforming really well,” Brohl said. The $8 million fund has deployed about half of its capital in seven companies, and as Bread & Butter, the partners expect to invest in around 20 companies total out of the current fund. Brohl said 25 percent of his portfolio is Minnesota-based companies. “This was an opportunity to do more and go bigger.”
Grove, a former Google executive who founded the tech company’s Google for Startups program, recently left her position as an investment partner at Revolution’s Rise of the Rest Seed Fund where she focused on identifying Midwest startups. Grove moved from Silicon Valley to Minnesota in 2018 with her husband Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development. Together, the Groves run the nonprofit Silicon North Stars to inspire teens in underserved communities to pursue careers in technology. Brohl volunteered with the program, which is how he met Grove.
The two said they were already planning to team up before Covid-19, but the coronavirus pandemic, combined with the crisis over racial inequality, accelerated their efforts—even though they’ve met in person just once in recent months. They also brought on board Stephanie Rich as head of platform to support portfolio companies with mentorship and connections to the local business community. “This community matters deeply to us,” the duo said.
With their announcement on Thursday, Grove and Brohl talked to TCB about their vision for Bread & Butter.
Q. Times of crisis and a bad economy often tend to inspire entrepreneurial ventures. Is that the thinking behind launching Bread & Butter now?
Brett Brohl: I believe you can start and create a great company at any point—it doesn’t matter if you’re in a down cycle or up cycle. But with everything happening, there are going to be some really unique opportunities. You’re going to see a shortening of the adoption curve at the enterprise level. Big food, and health companies are realizing a lot of things are broken—their systems don’t work as well from home. It’s making enterprises realize they need to be more efficient and selective. It creates tremendous opportunity to get traction. On the flip side, there’s the potential that it could be more difficult to raise capital.
Mary Grove: At Google, we had this saying, ‘constraint breeds opportunity.’ I saw that with our work in emerging markets—health care, in particular. For those who can pivot, these are exciting times. Is it daunting? Yes. Hard? Yes. The right time to barrel forward? Absolutely.
Q. Mary, your husband Steve Grove has become a household name and familiar face at the governor’s regular Covid-19 press briefings, not to mention a key player in bringing financial aid to struggling businesses and unemployed Minnesotans. As a relatively new Minnesotan, and career investor, how has that influenced your thinking about being part of the startup community here?
Grove: I definitely feel like I’m getting a backseat education on Minnesota’s economy, and even more conviction to want to jump in. I’ve fallen in love with our community—I’m all in for the long term and I want to be investing here. We have so many great assets here and the potential to transform the future. These are heartbreaking times, but I’m really proud of the job Minnesota is doing.
Q. In the wake of George Floyd’s death, there’s been more talk in the investment community about the lack of funding for BIPOC founders. How will Bread & Butter approach diversity and inclusion?
Grove: We are deeply committed to building a diverse and inclusive team, portfolio, and community. We’ll both be first to say, we do it because it’s good for business—not social pressure. We want to invest in the best companies in the world and we know diverse teams lead to better outcomes.
Brohl: We commit to publicly reporting our fund’s diversity metrics on an annual basis. We are building our portfolio support platform to include resources around anti-bias, diversity, equity and inclusion resources. And we are carving out a portion of our fees to financially support organizations that support black founders and align with our values and culture.
Q. Is Silicon Valley North Stars a factor in your thinking about diversity?
Grove: Many of our participants are students of color in many of the hardest hit neighborhoods in Minneapolis and St. Paul. We hope we’re helping future founders that could come to Bread & Butter years down the road. We just rolled out our new scholarship program. Philanthropic fund raising has been extraordinarily hard first quarter of this year. But as far as programming, we’ve increased our cadence of how often we get together online.
Q. Brett, you also serve as managing director of Techstars Farm to Fork Accelerator—how has that program been affected by Covid-19?
Brohl: Usually, we’d be starting the program in about a week. We’ve pushed that to September and we’re going to be doing a lot of it virtually. It’s always been in person [with participating companies from around the world relocating to Minnesota for the duration of the program; three from last year decided to stay permanently]. Some founders may still decide to come and set up shop here—it depends what happens in the next two months. We facilitate over 1,000 mentor meetings—that’s all going to be virtual. The [company] selections have been made, but are not yet announced. I can tell you there are four international and the rest are domestic. It’s been fascinating to talk during these times to companies in Hong Kong and India and Italy, and beyond. Cargill and Ecolab are tremendous partners in this program and they’ve been super flexible.
Q. Back to Bread & Butter, how soon will you announce new investments?
Grove: We’ve got one we may be finalizing today.
Q. Some VCs limit their involvement to the dollars. How closely do you expect to work with your portfolio companies?
Brohl: As an investor, I’ve always tried to be as helpful as possible. I think I’m currently on 11 boards. In some cases, we’ll be extremely active; some founders don’t need us as much. We’re both pretty active advisors and we always want to be here for our portfolio companies.
Grove: We’re very excited to have Stephanie Rich as head of platform and build a wholistic, scaleable approach to help founders with anything and everything. We’re a venture firm that will lean into our Minnesota backyard for engagement and support. Community first.