Greg Maday has made his mark as a serial entrepreneur and an investor. The head of SpecChem LLC, a part owner of Sporting Kansas City and co-founder of Rock Island Capital reflects on the private-equity and venture-capital climate.
Q: In terms of VC, angel funding and other forms of investor engagement, what characteristics do you believe define the Kansas City marketplace?
A: It feels to me like the local investors provide more than just capital … they provide mentoring and networking as well.
Q: For investors, what differentiates the start-up ecosystem from other markets, in terms of the types of investments that might offer the greatest prospects for success?
A: The investment Eco system has improved greatly in Kansas City; 25 years ago, there was one private-equity firm, maybe two, in town.
Q: What’s your sense of how much capital is being applied in this region from local sources, as opposed to outside, particularly deeper pockets on the coasts?
A: My sense is that a majority of funds invested in the region are from local resources … my guess would be 75 percent.
Q: Should it matter where, geographically, the capital comes from?
A: Not from an investor’s perspective. However, the more success that comes to Kansas City-area firms, the more funds they will have to reinvest.
Q: How has the VC game changed over the past 5-10 years, as information has become more available to both investors and those seeking investment capital?
A: The venture-capital industry has become much more sophisticated in KC… which is a good thing.
Q: Is the long-standing VC success model still valid, the one that suggests for each 10 investments, you might have 1-2 home runs, 1-2 singles and 6-8 strikeouts? If that’s changed, what’s changed it?
A: It just depends on where you are in investing time line. I like to invest in companies that have a business and are generating revenue and profitable or very close to profitability. I think wise investing is as much about protecting your original investment as it is about generating an above market return.
Q: What would you hope for from the public sector to help open the spigots on accrual and flow of capital?
A: Keep the public sector out of this … let the markets and capitalism work.
Q: What are key pieces of any successful funding pitch from a start-up/expansion executive?
A: I like investing in someone that is committed and has significant “skin” in the game. If we fail, we both lose.