Do you have a promising early-stage business, but can't seem to get the attention of a venture capital firm?

You're not alone...

The continuing challenge for entrepreneurs in the Midwest

In Indiana, Ohio, and the surrounding region, there continues to be a significant gap between the number of early-stage technology companies seeking venture capital and both the amount of venture capital AND the number of firms targeting such investments. Angel investor activity (high net worth individuals and organized groups) and state-based support for start-up companies have been increasing — driving the creation of more high-potential businesses that will need early-stage venture capital to grow and succeed. At the same time, many of the early-stage venture firms that historically served this region are no longer making new investments. Others have shifted to later-stage (i.e. already profitable) companies. And many firms based on the coasts are still a bit hesitant to lead investments in "flyover land” despite the success of several companies in the region, and often like to have a local lead when they do.

Enter Allos

We formed Allos in early 2010 to help fill this gap. We only invest in early-stage companies, augmenting the capital provided by angel investors who have helped the companies reach a stage at which they are ready for their first institutional VC financing round. In addition to providing much needed capital, we leverage the investment experience and business-building skills and resources developed over the past 15+ years by our principals — Don Aquilano and John McIlwraith.

We believe in a “hands-on” approach to venture capital investing, which benefits both our partner companies and our investors. This vision drives everything we do — from the number of investments we make (no more than about 6 boards per partner), to the geography we cover (places we can drive to in about 4 hours — more or less obeying the posted speed limits), to the industries we'll invest in (only things we know well: B2B software and tech-enabled business services).

Current status

Allos II recently completed its five-year new company investment period and is now closed to new investments. In the near term, we are solely focused on helping our partner companies accelerate growth and build value. But the early-stage capital gap continues, and after we help guide a few more of our companies to successful exits we plan to be back in the market raising funds for Allos III. In the meantime, while we aren’t a potential source of capital for promising Midwestern companies, we would be pleased to grab coffee and offer our thoughts on fundraising strategies, business building challenges, and any other areas where our experience (aka lessons learned) and connections might be helpful. We really like coffee.

Things we strive to do

  • Lead your syndicate — too many venture firms like to wait for the round to come together, rather than commit to help you make it come together; we'll develop a mutually-agreeable term sheet with you and work to build the best investor syndicate for your company
  • Stick to our knitting — just like we stress to our entrepreneur partners, we focus on what we know best: early-stage companies in industries where our investment professionals have operating and/or investing experience
  • Be responsive — including getting back to you within two days of an initial meeting with our decision and next steps
  • Add value as a hands-on partner in growing your business — we're experienced early-stage investors who can contribute meaningfully to the success of your business in areas such as board and management recruiting, fundraising, and strategic and exit planning
  • Stay out of your way while you run your company — while we have operating backgrounds and will seek to add value where we can, we only back entrepreneurial teams we believe can build their businesses, and don't invest with the intention of replacing the team

Things we won't do

  • Phone in to your board meetings (and listen only part of the time), or show up late, leave early, and play with our iPhones in between — we actually enjoy spending time helping our partner companies, and we'll do it in person (even between board meetings, if you invite us)
  • Sit on dozens of company boards, and ask you to remind us at every board meeting what your company does — we are going to invest in a select group of companies, so we will have time to properly engage and learn about your business
  • Make you run a gauntlet through an inexperienced associate — a partner will be engaged with you from early in the process, and all three of us are engaged to some extent with each company through the due diligence process; this means fewer repetitive presentations and faster decision making (plus, we don't even have an associate)
  • Treat a term sheet as a starting point for further negotiation — we don't deliver term sheets until the majority of our due diligence is complete, so while a subsequent find could stop us from ultimately investing, we don't use the due diligence process as leverage for better terms after locking you in early in the process