The Essentials

• The Alchemy Fund has invested in more than a dozen early-stage companies in the Pioneer Valley.
• If a founding team demonstrates the ability to face reality and make progress, they’re a strong candidate for Alchemy’s funding.
• In Western MA, “The founders are scrappier. They’re tough and resilient because they’ve had to be.”

When the Alchemy Fund began raising capital, “we heard, ‘we don’t believe you’re going to find any startups in the Pioneer Valley,’” said Chris Sims, one of Alchemy’s founders. “But this area is full of smart people who could be anywhere in the world, but choose to be here.”

In the five years since Alchemy was founded, it has invested in 13 early-stage companies in Western Massachusetts. Eleven of those companies have grown — a much higher success rate than typical VC investments that concentrate in urban areas. Those companies have gone on to raise over 10 times as much additional capital from third-party sources, some of which look nationally or internationally for deals.

“We kept running into all these brilliant people with cool ideas, and we figured out what they lacked was some sophistication about things like capital and channel strategy, as well as access to the networks that control VC, which are deeply concentrated in New York, Boston, and San Francisco,” said Sims.

Alchemy’s approach revolves around founders. They look for unique technology with transformative potential in large markets, like all venture investors, but are unusual in focusing their diligence process mostly on the founders’ behavior. If the founding team demonstrates the ability to face reality and make progress, working collaboratively with Alchemy, they’re a strong candidate for funding.

“The companies we work with aren’t connected to enormous pools of capital, and they’re used to the idea that there’s not just another big check sitting out there. They think through the economics earlier because they have to,” Sims said. “The founders here are scrappier. They’re tough and resilient because they’ve had to be.”

Alchemy’s founders bring a wide range of experience to the table for their entrepreneurs. Before founding Alchemy, Sims was an entrepreneur in Silicon Valley, an executive at Yankee Candle, and a team leader at Bain & Company. Partner Kevin Sanborn, another Bain veteran, has a similarly long career in business development and P&L management. Partner Chris Bignell was an investment banker in Boston and L.A., a co-owner of his family’s industrial distribution business before selling to a national roll-up, and then the interim CEO of Valley Venture Mentors. Partner Brett Gearing has worked in institutional investments and VC for years, and has done a considerable amount of angel investment work, including on the investment committee for the Springfield Venture Fund.

“The world we grew up in was hands-on in evaluation and due diligence before you even get involved in making an investment decision,” said Sanborn. “Taking that approach into the VC world by getting actively involved with coaching, business strategy, and playing a hands-on consulting role—we’ve seen that be extremely effective with Alchemy. If there’s a good idea, intellectual property, unique tech, that’s all wonderful, but having the right founder or co-founders who understand, who have the right kind of drive, is crucial.”

“We are not just financial investors—we don’t throw a check at someone and go away quietly,” said Bignell. “We’re a pain in the butt. We want to be right on the front line, developing the strategy with the founders.”

That experience also leads to broader networking connections for entrepreneurs. Lever has invested in five of the companies in Alchemy’s portfolio, and Lever’s team often consults with Alchemy’s team on deal flow and strategy. Lever’s Angel Network also began as a partnership with Alchemy, syndicating deals they had already sourced and screened. “We have a similar instinct toward things that will go on to grow,” said Sims. “We trust their process and diligence, and their network. It opens the door for us to give something a more thorough examination.”

Alchemy is on to raising capital for Fund 3, and the partners don’t foresee any difficulty finding investable companies. “There’s not a shortage of projects, that’s for sure,” said Sanborn. “There are plenty of good places to put capital in our market.”

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