At RPM Ventures, MVCA Venture Fellow Brad Lichota has a front-row seat to the innovation happening across various sectors, including B2B enterprise solutions, marketplaces, and mobility. As his fellowship comes to an end, we asked him to share with us what he’s learned about venture capital, companies he’s taking note of, and what’s next for him, down the road.
Tell us about your Fellow position – where are you, what have you been doing?
For the past two years as a MVCA Fellow, I have served as the senior analyst at RPM Ventures, a venture capital firm that invests in early-stage, high-growth technology companies. The firm focuses on investing in B2B enterprise solutions (e.g., cloud, SaaS, etc.), marketplaces (e.g., insurance, fintech, etc.) and the mobility sector (e.g., autonomous vehicles, transportation, etc.).
RPM Ventures has a very entrepreneurial culture, fostered from the three partners’ previous success as entrepreneurs, which has helped shape the foundation of my role here at the firm. As such, my primary responsibilities have ranged from evaluating new investment opportunities, building investment theses, supporting portfolio companies, assisting in capital raising efforts, and supporting the day-to-day operations of the firm, amongst a host of other things. As a firm, our main priority is our existing portfolio companies, which has enabled me to work with a tremendous set of entrepreneurs and founding teams on scaling their businesses.
What favorite new technology or solution did you encounter during your time as a Fellow?
There are too many new innovations and technologies to count! One company that has been exciting to watch is RPM’s portfolio company, DailyPay. Based in New York, DailyPay is a financial technology company that reduces employee turnover and increases retention through instant access to earned wages.
DailyPay is an excellent example of a company that has been purposely built to solve a large, growing problem while also on a social mission to improve financial wellness amongst individuals. By advancing earned wages, the company offers employees a tool to meet their financial needs, promote financial wellness, and ultimately avoid costly late fees often associated with things such as late rent payments and credit cards bills. By helping employees reach financial security faster, DailyPay’s platform ultimately reduces turnover and improves the bottom line for employers. The win-win business model, coupled with a hyper-focused team, has made this company fun to watch.
Is there something you’ve learned during your Fellowship that you didn’t know before you started in the industry?
I’ve learned a tremendous amount during my time as a MVCA Fellow and as a member of the RPM Ventures team. Functionally speaking, I learned (and keep learning) the mechanics of investing in the venture world. I have come to appreciate that venture investing is a skill set that grows with time and requires mentorship – something I’ve found here both at RPM Ventures, as well as within the MVCA community.
Additionally, and this may seem overly obvious, I also learned not to over assume the real-time challenges entrepreneurs face every day as a result of starting a business. In a sector where large technology companies can appear to grow into global conglomerates (e.g., Facebook, Uber, etc.) overnight, it is easy to overlook the humble sacrifices the founding teams make every single day to grow their companies. More than anything, I’ve learned to be thankful for the folks on the front lines scaling their businesses.
Have you learned anything surprising about yourself/your perspective on venture capital as a profession you didn’t know before you started?
Relationships matter. A lot. We are in a time, as an industry, where large company fundraising rounds are becoming par-for-the-course and that access to venture capital is becoming easier with new investment managers (and funds) joining the sector. For better or worse, this has created an environment where transaction pace and deal size generate buzz and news-worthy headlines, often highlighting the financings as the success, and skirting the fact that relationships with people first need to be forged.
As venture investors, we invest over the long haul. And while new rounds of financing can help enable growth, it is not what actually makes the company successful. People make companies successful. Navigating an early-stage technology company through the rollercoaster that is entrepreneurship requires the constant flux between emotional highs and lows. Good relationships, which are built on trust over time, help to be sure that the highs are never too high, and the lows are never to low – and that someone is there not just during the good times, but also there with unwavering support during the challenging times.
Building a real relationship, over time, with an entrepreneur or another investor is the first step to evaluating an investment opportunity. The deal or the transaction is simply just a net result of a longstanding relationship. This has been the biggest change in my perspective, and I’m thankful that our firm places a great deal of emphasis on this.
What are your plans post-Fellowship? Do they include growing your career in Michigan?
Post-fellowship, I look forward to continuing my role with RPM Ventures by helping the firm continue to build strong relationships with entrepreneurs and support our existing portfolio companies.
One of the best parts about working at our firm is that we are thesis-driven, not geography driven. We have an advantage of investing and partnering with great teams solving real problems and are agnostic to the actual location for where they choose to build their company. While we have several great portfolio companies in Michigan (e.g., ArborMetrix, Give and Take), we invested because they are great companies with great teams, not just because they are outside the back door of our Ann Arbor office.
With that said, the cost of living is on the rise in many other more established technology-hubs. Competition for talent remains high in these areas, creating inflated company valuations, amongst other things. Founding teams are beginning to realize these costs and conclude that other places in the country, including Michigan, are filled with folks with great talent, energy, and enthusiasm to build companies and solve real problems. It is because of these tailwinds, and many other reasons, that I have seen Michigan’s startup ecosystem grow significantly over the past two years. We are already beginning to see a pendulum shift, and I’m glad to have a front-row seat here in Michigan.