William Leonard
Hey everyone, we’ve got a phenomenal episode planned for today on the Atlanta Startup Podcast. I’m sitting down with Allyson Plosko, who is a Principal at SpringTime Ventures. Throughout this conversation, we’ll talk about how SpringTime has refined this thesis to focus on three particular verticals in the Southeast. We’ll also discuss the macroeconomic state of the world and how it’s impacting early-stage venture markets. And as an investor, Allyson hears hundreds of pitches each year, and she’ll share two to three characteristics of a good pitch and some characteristics of a pitch that could use some refining and tweaking when talking to an investor. I also want to give a huge shout-out to Allyson and say thank you for joining the 14th edition of Startup Runway as a showcase judge. Allyson, welcome to the podcast.
Allyson Plosko
Thank you, William. I’m really excited to be here. Thank you for having me.
William Leonard
Likewise, excited to have you on. I think there’s gonna be a lot of great conversations and a lot of great topics that we discussed today. I’m excited to kick it off here. We’d love for you to introduce our audience to SpringTime a bit. Tell us more about the fund and then we’ll dive into more of Alison’s story.
Allyson Plosko
SpringTime is a seed-stage venture capital fund, currently investing out of our second fund. The first fund was a small generalist fund initially focused on companies building in the Rocky Mountain region but over the course of deploying that capital, the geographic scope expanded as those things often do. With the second fund, we’re being much more explicit about the fact that we’ll invest anywhere in the US but are still excited about the Rocky Mountain region and what’s happening here in the southeast, which is why I am in Atlanta. We’re honing in on a couple of key industries for us based on our experiences and networks where we saw success in fund one. With fund two, we’ve moved away from generalist and are focused on three key industries; healthcare, FinTech, and logistics supply chain. We also have a fourth category that’s less of an industry more of a model about marketplaces. We usually look at marketplaces within those three core industries that we focus on but every now and again, we step out if we find a founder market that’s particularly compelling.
William Leonard
Awesome. That is a great thesis to have, especially in a region like the Southeast that is growing. Quickly, when you think about healthcare, you think about Nashville, you think about FinTech, you think about a lot of companies here in Atlanta, and you think about a lot of the enterprises here in Atlanta as well. Equally, supply chain logistics in Chattanooga almost come to the top of mind as well. This is really fascinating. The firm started out generalist and then you kind of shifted to focusing more on the southeast, what were some of the things that the team saw that led to them wanting to be boots on the ground here in this region?
Allyson Plosko
The firm is based in the Denver Boulder area and when they started SpringTime, it was pretty much in the same place that Atlanta is today. They’ve been watching from afar the growth that this region has seen, new companies, and funding, and they really wanted to have a presence in the community and they didn’t want to just sit in Denver and Boulder. They realized that you’re not going to get the best deal flow, you’re not going to build, it’s going to be just harder to build a relationship, and they really wanted with the second fund to have someone on the ground in Atlanta to build those relationships, connect with founders, and really serve as the gateway to the southeast.
William Leonard
That makes perfect sense. I think they’re right. The South East is the fastest-growing region in the country when it comes to population and it’s also one of, if not the most diverse region, in the country, as well. When you have these factors serving as tailwinds for a specific geography, I think that’s going to create a lot of opportunities for innovation. With innovation comes investment so I love the thesis there. I want to dive into more of your background. I know you went to Tulane University. I’m from New Orleans originally. I can resonate with you go into the green wave there, but what’s your journey as an individual and then now to VC? How did you end up in Atlanta?
Allyson Plosko
I’ll start with the first one because it’s the less interesting part of the story, but my husband flies for a major airline. He was flying the line and then decided that in addition to that, he wanted to do some training. He now teaches about 75% of the time and then flies but because of that, it’s more of an office job. We moved from Houston to here about four and a half years ago for him to do that. As far as my personal journey, coming out of undergrad, I originally thought I wanted to do industrial-organizational psychology. But personally, my mom was ill for probably the time I was around early adolescence, so 11/12 until unfortunately, she passed away in my early 20s. She spent the last week of her life in ICU and I realized I’d spent the last decade trying to get her the health care that she needed. She didn’t have health insurance, it was a mess. In that last week of her life, I just saw how inefficient and at times, unfriendly and inaccessible this system can be for patients. I decided at that point that where I really wanted to spend my professional energy was in creating a more accessible and equitable health care system. I initially thought I’d started a patient advocacy service, but I don’t even think the ink was dry on the ACA, and quickly realized that that was not going to be a viable business. My hypothesis was okay, well, maybe there’s healthcare so expensive that people can’t get the care they need because there’s not enough innovation. And so I thought, well, maybe I can do something on the R&D side. I was able to take what I had done as an undergrad, spin it into a Chief Of Staff role for a Department Chair at a university, and got to do a lot of different projects in and around Biomedical Engineering. Through all of that, I got to know some really awesome researchers, PIs that were running fantastic labs, and writing papers, a few received some NSF SBIR phase one funding and had really awesome, potentially game-changing technology but it never really moved beyond the lab. I became really interested in this kind of valley of death, the bench to bedside commercialization route for the emerging healthcare technology, and became really interested in venture capital as a way to solve the problem that I kept seeing PIs run into, which was a lack of access to capital and a lack of access to managerial talent. I saw VCs as a way to, especially for first-time founders, help provide some of that guidance in that early stage where there are some common pitfalls. VCs with a pattern recognition they develop across a breadth of companies can step in and support founders in that journey and help them avoid some of those common mistakes. It was not the path that I originally intended to go on but solid as a really critical way to address some of the gaps that I saw. After that role, I went on to Village Capital, which is a seed-stage accelerator and had an affiliated investment fund, and I spent about four and a half years there. Then left for Vinaj Ventures which is an innovation consulting and investment services company. I sat on the investment services side of the house and launched and then worked and operated Telolsity, which was a proof of concept fund to invest in early-stage companies addressing adolescent and young adult mental health. The target was to do 7 to 10 investments, we did 8. Through one of those investments, I got to know Matt and Rich, who were the two Managing Partners at SpringTime. They were raising their second fund. I wasn’t looking at the time but the more I got to know the team, the more I got to see the vision, and the more excited I became because it is philosophy, things were so hyper thematic, I really didn’t get to do a lot in Atlanta, and I was getting a little bit of FOMO. Through the conversations I had with Matt and Rich, I realized that I really wanted to be a part of the ecosystem and be a part of what’s next for Atlanta. I joined the SpringTime team at the beginning of this year.
William Leonard
Awesome. That’s such a fascinating trajectory that you’ve had into VC culminated by a lot of personal experience as well, that I think kind of shaped your journey, too. As you mentioned, you were at Village capital, I believe the sector lead for health over there. As you have navigated throughout VC and have seen trends and cycles run their course, what are some of the verticals and industries that you personally like more and have an affinity towards currently?
Allyson Plosko
I think health care remains my personal passion, this is part of the why part of the reason why I’m so excited to join SpringTime. I’m really interested in healthcare and its intersections with things like Fintech. I think over the last several years with the rise of high deductible plans, consumers now really have a lot of skin in the game. We threw them into the game but didn’t give them the rules of the game. I still think there’s a huge opportunity for companies that can close some of the knowledge gaps and I’m hopeful that with some of the price transparency regulations that have come online recently that maybe there will be some more activity in this space. Also, I think the supply chain is another area that I am really interested in particular, how can we lower greenhouse gas emissions within the supply chain? I think there are a lot of inefficiencies that if you can correct for those can start to drive down those emissions. We know that pollution has had an impact on people’s health care, especially for vulnerable populations. Those are a couple of areas that are really, really critical for me and things that I’m always looking for new companies in.
William Leonard
That’s so true. I think the intersection of healthcare and FinTech payments is going to be something that is well funded. Over the next few years, even probably throughout this decade, as you know, the healthcare model kind of shifts a bit, and things become more democratized, as well. That’s fascinating, as you all are evaluating investments, and I know, this isn’t like a one size fits all, but what are some of the things that get the SpringTime team most excited about a potential investment? Is it the team? Is it the market size? As I said, it’s not a one size fits all approach but there are some things that you all probably paid attention to a bit more than others.
Allyson Plosko
I think every seed-stage investor and team is super important. I’m sure you’ve experienced this, you get on a call, and you can just get so excited and bought into the vision that the founder is setting about where the world’s going to be in five years, and the energy and excitement that they bring just translates so well. Far above and beyond its team, the ability to tell a story, and show a vision of where things are now, how they’ve built, what they’ve built to date, where this is going, and what the world looks like is, I think, first and foremost, something that we very heavily weigh. I think the other thing that gets us really excited are things that are somewhat non-obvious. Markets that are hidden, we’ve done. We’ve looked at companies in the barter, serving barter networks, for example. It was an area that we knew very little about and was not something that I think is on a lot of people’s radar. But it’s a nonobvious market with big potential. I think those are a couple of things that we look for and I guess related to that is just differentiation. I’m sure you’ve seen this, too with the state of the market, there are a lot of similar companies out there. And so, whenever we see things that are really differentiated, we get very excited.
William Leonard
Definitely. That’s interesting. You’re looking for companies that are building in untapped markets almost, flying under the radar, in a sense, and I think those are all at the seed stage where there’s just so much competition and so many deals to see. You have to find that diamond in the rough. That’s fascinating. I want to shift the conversation here a bit, Allyson, as you think about what’s happening today from a macro-economic standpoint. How do you see some of the things today like the rise in interest rates and the supply chains that are kind of impacting the flow of goods here domestically in the US and throughout the world? And then you’re thinking about the war in Ukraine, how do you see this impacting the early-stage venture market?
Allyson Plosko
We invest only in software-based solutions so, for us, we actually think that the supply chain challenges are a big boom for companies that are creating more efficiency within the supply chain or transparency or whatever the model is. So for us, we think that some of that is actually very good for companies building in this space. Interest rates are something that is on my mind. I’m less concerned about it in the very near term because I think there’s still a fair amount of dry powder out there. What I think is top of mind for me right now is what’s happening on the public markets and how that’s going to start to trickle down to a growth which I’ve started to hear has already taken some hits, and then that trickles down to Series A, which never really trickles out to seed. I think what happens in the public markets over the next couple of months is something that, for me, is a little bit concerning, especially since we have portfolio companies that go to a Series A or growth. I would say that, arguably, I’m already seeing a little bit more sensitivity around valuation at the seed stage than maybe even I’m seeing in January, but would be curious if you’re seeing some of the same things.
William Leonard
I can agree with that. Definitely the later stage, both markets have been impacted. That’s a direct parallel to what we’re seeing in the public markets right now, companies are taking valuation haircuts that are almost halving their valuations. That’s something that I think a lot of investors are = keeping top of mind here and trying to think about capital efficiency at these stages, and not burning through money and having to raise so quickly, is another thing, right? I think Series A valuations have been a bit lower. That’s just from sounding out the market, but I think people still have strong valuation expectations around the seed stage. There are a lot of trends that are taking shape. I also think it’s regional as well, The Bay, LA, those valuations are still relatively elevated. I still think here in the Southeast and Midwest region, valuations are coming down just a bit, just more in line with where things are on an even playing field, I’d say. This entire macroeconomic situation is going to play out. Not in the next few months, it’s going to be years, I think as the Fed figures out what they’re going to do relative to interest rates as well. Really fascinating insight there, Allyson. As you all think about 2022 in SpringTime, what are some of the things that you’re most excited about looking ahead?
Allyson Plosko
I think supply chain logistics is still and will be for the foreseeable future, an area that we’re really excited about. I think some of the areas that we talked a little bit about earlier, my hope is that we start to see some more innovation at this intersection of healthcare and fintech. I think the other thing that I’ve been excited about for the past five years but has never come to fruition is the role of self-insured employers in health care and their ability to potentially drive down some costs. I don’t know if it’s a TPA alternative but I would love to see some innovation to support self-insured employers in maybe price negotiation, maybe it’s direct provider contracting, which I think you’re already starting to see in some ways, or maybe it’s self-insured employers innovating themselves, but I would love to see something there because I think that they carry a lot of weight in the health care sphere but I don’t think are necessarily building it in a way that is really driving down cost and benefiting their employees.
William Leonard
That’s interesting. Relative to the supply chain, are there particular areas that you all are looking at within the stack? There’s that like a cold chain? Is it trucking, long-haul trucking, short-haul trucking? Are there any trends there that get you all excited about the industry as a whole? Or is it more so focused on a particular aspect of the supply chain?
Allyson Plosko
We’re pretty broad in our supply chain focus on fund one. In the fund one portfolio, we have Veho, which is a last-mile logistics company. They recently raised a pretty large Series B. I would say what we’ve been spending a lot of time looking at lately, some of this is opportunistic, some of this is just been driven by what we’ve been hearing from folks that we know in corporate supply chain logistics positions is around packaging. One of our latest investments is Paccurate. We’re in the process of closing another company that’s basically building a marketplace around connecting packaging suppliers with brands, and we’ll announce that hopefully in the next month or so. For a couple of different reasons, we’ve been looking at a lot of the packaging space and ways to make it more efficient than what it currently is.
William Leonard
Packaging is definitely an area that I definitely wouldn’t have thought of that needs some innovation. Like much of the supply chain does, we see all the stories about ships just being stuck out on the water, the port’s not being able to handle the capacity, and so there’s a lot of opportunity for innovation there. As we kind of wrap up the conversation here, Allyson, I would love to get your thoughts on something that a lot of founders have questions about and want insights from a VC about and this is the characteristics of a strong pitch that maybe need some tweaking here and there. I’m sure you’ve had a plethora of conversations with founders, maybe can you share with our audience two to three takeaways from some of the strong pitches that you heard and some of the pitches that maybe need a bit of refining as a pitch to you?
Allyson Plosko
I think the first generally common theme that I see with strong pitches is that they know their numbers. They know how much revenue they did last month, they know how many visitors they had to their website, what that conversion looks like if it’s a download, or whatever that depends on the model, what that conversion is. I think this is a really important piece, they know how much they need to raise. I will sometimes talk to founders, and they’ll say, “Oh, well, we’re going to raise like between 2 and 6 million.” I immediately lose confidence, because it tells me that you don’t really know your business and that you don’t really know what you need in order to hit your next milestone. Especially right now with this market where there’s some uncertainty, yes, definitely be opportunistic, if you can take more than what you need to a reasonable extent. But I think that you should come in knowing a really solid number of what you need to hit your next milestone in the next 12 to 18 months. I would say generally, that’s consistent across all of the strong pitches that I’ve seen.
William Leonard
Knowing your numbers is pivotal. As you said, I think the keyword that you said throughout that was confidence, right? As an investor, if you’re going to allocate millions of dollars to a potential startup and a team, you have to have confidence in this person’s ability to run the business day to day and not knowing the figures of last month’s revenue churn conversion rates, and some of the key KPIs that most investors are going to want to know on an intro call, it is a bit of a red flag. I would definitely encourage founders to really know the numbers. These numbers are dynamic, they change day to day, week to week, and stay on top of it. That kind of shows you where the business is trending for a particular product, strategy, and things like that. Definitely can resonate with your insight there on knowing your numbers.
Allyson Plosko
I think the other two things that I see in weaker pitches is one, not really doing a deep dive into the competition. I think most investors know who your competition is, or have some thoughts, and for me, again, it comes back to this point of competence if you don’t also know who those folks are, that to me is a bit of a red flag. Competition is healthy, it’s not something to be shy about. I think being very transparent and upfront about your competition builds my confidence in you as a founder and that you really know this market. The second one, we have every company that we potentially invest in, we have this mentality that they must return the fund. We have to see a return to find potential. One of the questions that one of my partners always ask is, where do you see this in three to five years? If an exit gets brought up, like an acquisition, it’s not a complete deal-breaker but it gives us some pause because we want folks who want to build the next great company, we don’t want folks who are going to grow this and then exit in a couple of years. That’s great for founders and that’s awesome but as a venture capitalist, we’re betting and investing in you to create the next great company. That’s the other piece of advice, be thoughtful about how you include or even if you need to include an exit strategies slide. Think big when you’re pitching.
William Leonard
I really liked that perspective there. That’s fascinating and definitely gives founders a new avenue to think about how they’re talking about the medium-term vision of the business. I really can appreciate that insight there, Allyson. This was a very fascinating conversation for our listeners to understand if SpringTime may be a fit for them. They know the industries that you and the team are most excited about, where you have some expertise set, and some of the industries that you’re bullish about over the next decade or so. If a founder is listening right now, what is the best way for them to share their company and get in front of you or someone on your team?
Allyson Plosko
My email is I’ll send it allyson@springtimeventures.com. It’s pretty easy. But we also have an intake form on our website, we look at every single company that submits a form to us through that portal. You will get a response even if it’s not quite a fit. We firmly believe in transparency and where folks are at in our process. We look at everything that comes through that portal.
William Leonard
Awesome. I love it. Well, Allyson, this was certainly an insightful and informative conversation for our audience. I look forward to networking more with you and the ecosystem and hopefully collaborating on a deal together with SpringTime.
Allyson Plosko
That would be great. We love our co-investor relationships, so I’m really looking forward to that.
William Leonard
Awesome, Allyson, thanks for joining me today. Cheers. Take care.
Allyson Plosko
Thank you, you too.
Lisa
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