As the most active venture firm in the United States, according to Pitchbook, Alumni Ventures has unparalleled insight into the startup world and the technologies driving change in the business community. The Manchester, New Hampshire-based VC firm offers alumni funds for graduates of leading universities, as well as focused funds that provide thematic investment strategies, including the very topical AI Fund. All told, Alumni Ventures boasts more than 1,100 portfolio companies, 9,000 investor partners, and 600,000-plus community members.
That makes Managing Partner Laura (Bordewieck) Rippy the perfect person to make sense of the investment and startup climate in what has turned out to be a challenging year for many. In this wide-ranging interview, Laura discusses her outlook for early and late-stage investments, her advice for investors and founders, and her perspective on the AI boom.
SB: It’s been a rapidly changing year in terms of the economy and investment landscape. How has Alumni Ventures adapted?
LR: Alumni Ventures is the third most active venture firm globally, and the most active nationally. As a result, you can think of us as that pulse point of what's going on, because we see so many deals. So, it's awesome that we are talking today.
The later stage certainly has seen the most impact in the last six or twelve months. So, I would call that B and later, and almost no deals are happening.
It's pretty skinny in seed and A, although we are starting to see the beginnings of a rebound there – a rebound recalibrated at lower valuations. And we love that because we're a co-investor.
Obviously, AI is carrying the load of the startup economy forward, and we are so thankful for that because the innovation that's happening in generative AI is just knocking the socks off us and everyone else. But we look at other sectors as well. So, things like defense, climate tech and women's health – there are other pockets that are innovating and get us excited about what's going forward.
SB: Any anticipation that the later stage will pick back up any time soon?
LR: At Alumni Ventures, about three-fourths of our entry points are seed and A, so we are less close to those later rounds. But I would say that it will take longer for B and later rounds to recover.
Part of what went on from a more macro perspective is that there were venture tourists, if you will, who had come down from the larger capital pools into Series B and later, and they got a little spooked. I don't think that capital will come back for a long time.
But the classic venture investors are still out there and they're looking at deals and they're really choosy. And they will pick the right ones with the right metrics. And that's what founders need to know: Metrics matter and performance matters.
SB: So how are your investors feeling right now – are they skittish, nervous? What are you telling them?
LR: Alumni Ventures is a one-of-a-kind, unique fund in that we source our capital from individual accredited investors. And one of the things that we do is an annual fund cycle; I’m on Fund 10. We talk to our investors about the kind of discipline of the regular, annual venture investment.
We produce diversified portfolios on stage, sector, and geography. What the investor can do is then choose to diversify by time and invest serially. A lot of our investors are coming back. That's what they do every year.
There aren't a whole lot of exits happening in 2023, I think that's pretty clear. The great, well-run companies just keep working hard, and they will get acquired or go public at that point when the markets are up again.
And that's why venture capital is largely uncorrelated to the public markets. The timeline that can be chosen by the board of the startup means that we are really traveling on an entirely different investment journey. And that's candidly one of many reasons why we've got over 9,000 investors at Alumni Ventures.
SB: And speaking of calming people's nerves, do you work closely with founders? And if you do, how have they been? Are they nervous about what’s happening out there?
LR:, We have about 1,100 portfolio companies, about 125 of those are within the Green D portfolio that I run. The common guidance for founders right now is certainly modesty and understanding that valuations are lower.
The second part comes from my perspective as a former CEO/operator: You must trim expenses and remain focused on the outcomes. Find additive partnerships, potentially co-opting competitors. Live to fight another day.
SB: Do you see it as part of your role to help make connections for founders?
LR: Alumni Ventures has this superpower network of about 600,000 people who are across all the 20 schools that we represent. And we make connections left, right and center. That’s in part how we get such great deals and get on the cap table of such amazing companies.
SB: And speaking of Green D Ventures, I read that you're one of the largest, if not the largest, funds in Alumni Ventures, even though Dartmouth enrollment is far from the highest. How do you have such an outsized role in Alumni Ventures?
LR: Green D is the archetype fund at Alumni Ventures, not just because we were the first fund at Alumni Ventures, but because the Dartmouth community is really top of the top of the heap in terms of willingness to network and be helpful.
SB: And switching gears to industries, we spoke a little bit about AI earlier, and I imagine you're bullish there. Are you at all concerned about the hype, and that too many firms are just tacking on an AI element and calling themselves an AI startup?
LR: AI has been around for decades. And when I look at our portfolio, we have some AI companies that really have been the highest performers. Like we have one that's called TRM Labs that uses AI to suss out crypto fraud. They sell to financial institutions and governments, and they are just crushing it. We first invested before the Seed in 2018.
Artificial intelligence’s impact is pervasive to almost every company that we look at, and they need to understand how it's going to impact them.
So really from all the startups we look at, you need to consider: Are you actively leveraging AI in what you're building or are you at least considering how AI is going to impact your business if there isn't a direct correlation?
I think the world is going to be a lot better and different. We need to have some bumpers to make sure that that journey is done with integrity and vision of how things could move forward. But it makes it super, super gigantically exciting as a VC given the innovations that are happening in AI.
SB: And when you speak about bumpers, that's a nice segue to my last question. Do you make a concerted effort to invest in companies that, beyond offering return potential, also offer technologies that could improve the world, or boost sustainability?
LR: It's not in our charter, but I will say I am a mom of three and I want every investment that I make to be one that I can look straight eyes of my kids and say that this was a good investment, not just from a financial perspective, but that it has a long term impact.
Randall Woods is a former editor at Bloomberg News and currently is a Senior Vice President at SBS Comms, a Comms agency for technology companies and startups.