When Bothell, Wash.-based EagleView Technology Corp. was acquired in 2015, EagleView CEO Chris Barrow wasn’t sure what he would do next. He planned to move on from EagleView — a powerhouse in aerial imagery and analytics — but he didn’t know where to invest his time.
Ultimately, investment opportunities ended up being what he stuck with. Last month, Barrow and EagleView’s former CFO John Polchin launched the $150 million venture capital fund Imagen Capital Partners with a $5 million investment in Vioguard, the Bothell company that makes a self-sanitizing keyboard. Imagen will focus on emerging software and hardware companies in the Seattle area and other U.S. technology hubs.
GeekWire spoke with Barrow about how he and Polchin went from running a company to investing in others, and where we can expect to see Imagen invest next. Continue reading for edited excerpts.
GeekWire: Why did you decide to start a venture capital firm?
Chris Barrow: I was fortunate because I had been successful in the exit of EagleView and was now in a financial position where I could kind of pick and choose what I wanted to do next. I kept getting a bunch of calls from people saying, “What are you doing next, Chris? Are you going to go run another company? Are you going to be a CEO again? What are you thinking about?”
I looked at that pretty seriously. I had a number of opportunities — companies that had reached out to me — folks that I had talked to about maybe going and running another business. But I also was in a position where I could start investing in some companies and I did so.
I started investing in some businesses – little angel investments here and there. I was sitting on a couple of private company boards and I found that I really enjoyed that. I really enjoyed working with some of these small companies. I enjoyed the startup phase. What was interesting to me was, it was very diverse. I was talking to a lot of different companies and evaluating a lot of companies, and I really enjoyed doing that.
At the same time, I was getting a lot of calls from people who were former EagleView investors who had said, “Hey Chris, what are you doing now?” I said, “Well, I’m just investing in this company here and investing in that company.” These folks would say, “Can we invest with you?” My response was, “Well sure, let me send you the company’s information and let me tell you about it.” I had several of them say “Well Chris, we don’t really want to see the information we just want to know if you’re investing in it we’d like to invest alongside you.”
That was an interesting light-bulb moment because I thought, if I’m going to invest my own capital that’s one thing. If now I’m going to be investing other people’s capital that’s a whole ‘nother ball game. So, if I were to do that, what would be the best way to do that and how would I do that?
I went and talked to some folks I know very well and asked them that same question — If I was going to be investing other people’s money in addition to my own what would the best structure be? — and the answer was, well, it kind of depends on what you do. It depends on how much you’re investing and how much capital you have.
So, I called some of those folks back and said, “If we were to do this for real, if we were to start investing, would you be willing to commit a certain amount of capital?” I was able to, within a few phone calls, get $150 million committed in capital to be able to go invest. At that point, I knew that I had the desire, I knew that I had the capital, and then I went to look at what the best structure was.
It turns out the venture structure is a pretty well-established formula for how to make investments. So that’s what we did. We formed an investment firm, a venture capital firm, called Imagen Capital Partners and we were kind of off to the races. That was sort of the genesis of how the company started.
The rest of the story was, I recognized that I’m not the smartest guy out there. I certainly have areas that I think are personal strengths and I certainly have areas that are not strengths of mine. I’m painfully aware of what most of those are and I recognized that I really needed a partner with me that had strengths that I didn’t have. So, I reached out to my former CFO at EagleView, John Polchin, and asked if he would be interested in joining me as a partner in the firm and he was. I was really excited to be able to bring John in as a partner at Imagen to help grow this and help make this a successful entity.
GeekWire: So how is Imagen different than other funds?
We don’t have very many LPs [limited partners]. We have a very, very small group, less than a handful. Because of that, we don’t have some of the same constraints about the timing of deals. It allows us to be more selective in terms of the companies that we do. We don’t feel like there’s a certain number of deals that we have to invest in. As I look at a lot of other venture capital companies out there, a lot of them like to really tout that they’re doing X number of deals and so forth, and that’s not us. We’re really about being very selective about picking the right companies.
We also feel like we’re not typical venture guys, we don’t come from that space. We’ve run companies and we’ve run companies very recently. Just a few months ago we were CEO and CFO of a successful technology company in the Seattle area, so we feel like we’ve got some good, solid recent experience about what operational issues some of these small companies are going to face.
We’re small and we’re very well funded. So we’ve got a sizable fund for the size of firm that we are and we’re strict business operators. We look at things from an operational standpoint. A lot of other companies out there probably say the same things and do similar things. I just know that I met with a lot of them when I was at EagleView – we met with a lot of different investment companies and venture companies. I feel like we’re different from most of the ones we met with, just because we have such a strong operational background.
GeekWire: Can you talk a bit more about what sectors you’re interested in investing in?
Barrow: We definitely came up with an investment thesis when we put this together, and the investment thesis is really all about technology companies – mostly software companies. We love the SaaS space, so highly recurring revenue, low capex kind of business. But we’re also really intrigued by some of the other sort of technology related areas. Our first investment was actually at a hardware company and you guys covered it – a company in Bothell called Vioguard.
And we’ve also been looking at companies that are sort of in the technology-enabled services space. I think, maybe one thing that makes us a little different, is we don’t really have such a strict thesis as far as the exact kind of companies we’re investing in. We’re trying to be very opportunistic and find great companies and great teams, but also companies that we think we can help. There’s some companies that quite frankly we come away and say they’re probably better served by a more traditional venture firm. I don’t know that there’s necessarily a lot of value we can bring to the company.
So we know what are strengths are from an operational standpoint and, to the extent that we can find companies that we can provide more than just money, those are the companies that we’re most interested in talking to.
GeekWire: How do you choose how much to invest?
Barrow: We’re opportunistic, I think we sort of see, based on the size of our fund and our ability to manage the number of deals in our portfolio we probably see sizes somewhere between that $2 and $12 million is kind of a sweet spot for us. But we wouldn’t be strict about that. If we found the right company we would certainly vary from that, but at least that’s our initial target right now.
GeekWire: What about the Seattle startup market seemed like a good opportunity?
Barrow: We love the marketplace. We’re from Seattle, we built a successful business in Seattle. So, we think that Seattle is probably an undercapitalized market in terms of some of the great technologies and ideas that come out of Seattle. We think that this is definitely an area we will be focusing on. There are also some other areas in the country that we tend to like. I really like the Utah Valley area – I think that there’s a lot of really exciting technology companies coming out of that marketplace and not as many firms focusing on those. There’s some other cities we love too. We love Los Angeles and Austin as technology hubs that we think probably don’t get as much attention from capital markets. So we’re definitely looking at those marketplaces, with Seattle, of course, being right now on top of our list.