Chris Sims, a partner at The Alchemy Fund, explains their investment approach as a small venture fund based in Western Massachusetts. The fund focuses on early-stage investments—often at the idea or partial founding team stage—in New England startups outside of major tech hubs like Boston and New York.
TRANSCRIPT:
Chris Sims: Hi! Chris Sims here, as Jeffrey mentioned. I’m a partner with The Alchemy Fund. We’re a small fund based out of Western Massachusetts. Our thesis is that we invest in promising companies in New England, outside of the tech hubs of Boston and New York.
We are a fly speck of a fund. We write a $100,000 check. The things that make us distinctive are that we’ll do that $100,000 check at the idea and partial founding team stages. So we are very dirt stage, and we’re incredibly hands on. So the normal operational model for a venture fund is to look at 1,000 deals and be really proud of yourself that you only funded two of them, so you’re very picky. We would rather get those same two deals by looking at 10 to 15.
The advantages are unique deal flow. So we we will talk to projects that no one else will. I like-in traditional venture to being a figure skating judge, where you’re kind of looking for someone to go and flip around in the air a couple times and then nail the jump perfectly. If your toe in the air is 20 degrees off of perfect, then you’re out, right? So if you want the gold medal, you have to be flawless. And with the number of deals, you know, going through Kendall Square, that’s a very good model for an investor, to sit there and the judge the triple axel. If you leave the tech hubs, you get something on the order of two magnitudes fewer, two order magnitudes fewer deal volume, right? So not only shouldn’t you do that in some ways, but you can, and so what you need to do is spend a lot more time with folks who maybe are imperfect in many ways. And the question is, why? What’s missing? And is it something that you can help them figure out?
We don’t take board seats if we can possibly avoid it, because I find that board meetings are a very arm’s length way to interact with the company, and it’s very formal. I want to be working with the CEO to prepare for a board meeting, because that’s when you find out it’s really happening, and you can help them, and you can use the board meeting as a commitment mechanism to help the company clarify and articulate and really think through what it is they’re doing.
We talk weekly in depth with the founders of the companies that we invest in, and we look at it as de-risking the investments that we’ve made after the deal. And so when you’re doing seed investing, you know there’s stuff you can de risk before you write a check. Most of it you can’t. You’re fooling yourself, and the folks who hold on to that fiction end up finding themselves investing in later stage deals, because that’s when you can. If it’s still a seed deal, there’s three or four things that are just unknown, and to us, we have the confidence to take those risks, if we have confidence in the team we’re working with because we get a front row seat to helping solve those problems.
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