This week M25, a venture capital concern focused on investing in the U.S. Midwest, announced a new fund of $31.8 million.
The company said in a statement that its new fund was about three times the size of its previous investment vehicle. I caught up with M25 partner Mike Assam to chat about the round. Asem joined M25 in 2016 after partner Victor Gutwein led the effort with a small $1 million fund. Asem and Gutwein have technically led the company from the first element on a second fund basis.
Asem said his team had targeted $25 million to $30 million in funding, meaning they came in a little higher than expected in terms of fundraising. Given the pace at which both VC funds and start-up capital are invested, it is not surprising that today’s venture capital markets. Investors told The Exchange that M25 started an investment with CASHDROP for some time outside of its third fund which I heard some good about its growth rate start (MA25’s capital is in the CASHDROP round here.)
All is well, but what makes the M25 an attractive bet is that the firm only invests in Midwest-headquartered startups. Often when I chat with a fund that has a unique geographic focus, it’s just a focus. Contrary to the more strict and fast rules of the M25. Now with more capital and plans to participate in 12-15 contracts per year, the team cans double the thesis. According to Asem, the M25 has about one-third of its contracts in Chicago, where it is based, but has so far started capitalizing in 24 cities. TechCrunch covered metaphysics of Met companies earlier this week when companies closed in the new capital for more than $5 million.
Why does M25 think the Midwest is a place to deploy capital and generate outbound revenue? Assam lists multiple perspectives based on his team’s thesis: the economic power of the Midwest, the network it built in the region before its partner and its partner M25 were discovered, and the fact that assessments may be more interesting in the region his firm investment.
These are quite different, he said, as his firm could generate component returns if it exits beyond the $100 million marks, which can be less marginal than most VCs in larger capital vehicles. M25’s bet is not alone in alternative regions. On Friday, the exchange spoke with Somak Chattopadhyay of Armory Square Ventures, an organization that invests in New York’s coast-based and B-2B software companies that we can call post-manufacturing cities. One of its investments has been publicly published and the group’s latest fund is more than its first size. The Army now has about $60 million in AMM.
