Boris Wertz and Angela Tran, partners at Version One Ventures. (Version One Ventures Photo)

Investing in a startup without meeting the founders in person — it’s the new normal amid a global pandemic.

Version One Ventures just led a $2 million seed round in DemandStar, a Seattle startup that helps businesses connect with government purchasing officers.

The deal came together without a single in-person meeting given the ongoing COVID-19 crisis. It’s quite a departure from the traditional get-to-know-you investment process that is similar to dating, especially with nascent startups that require investors to bet solely on the entrepreneur’s potential.

Version One has a distributed team and was already comfortable with virtual meetings, said Boris Wertz, who leads the firm from Vancouver B.C. with co-partner Angela Tran, who is in Silicon Valley. But this was the first time Version One has led a round virtually via video calls, Dropbox folders, DocuSign forms, and other remote tools.

“The hard thing is to really get to know an entrepreneur through Zoom,” Wertz said. “It’s much harder to pick up on social cues than when you meet somebody in person, and vice versa for the entrepreneur.”

Wertz said his firm ends up spending more time with entrepreneurs for virtual deals. “It simply takes longer to get comfort around investing in a founding team/startup opportunity when you are missing out on IRL interaction,” he said.

But Version One has adjusted quickly to the new virtual dealmaking practice. In fact, April was the firm’s busiest month ever. Of the four deals Version made, three were with company leaders Wertz and Tran met virtually for the first time.

Wertz advised entrepreneurs to give the virtual pitch process more time than usual given the lack of in-person meetings — “and FOMO might generally be way lower,” he added.

Wertz also said to make sure a VC is truly open for business — “many say so but few have actually done deals since March,” he said — and to prioritize pre-existing investor relationships.

DemandStar CEO Ben Vaught. (DemandStar Photo)

Ben Vaught, CEO of DemandStar, said pitching virtually felt more intense than in-person, but it allowed for more robust conversations and data sharing over a shorter period of time.

“Building trust and conviction virtually simply takes more steps, so we emphasized our ability to execute and make our vision real given the limited resources we had,” Vaught said. “Advice to entrepreneurs: tell the big story, and also demonstrate through results that you’re the ones who can get there.”

DemandStar will use the fresh cash to grow its online marketplace network that has more than 600 government entities and 100,000 businesses.

The 7-person company was previously owned by Seattle-based Onvia, which sold to Deltek, a division of Roper Technologies, in 2017. Vaught took out a loan on his house to buy an existing base of customers and legacy software from Deltek in late 2018, and raised a small angel round prior to today’s investment.

DemandStar makes money by selling annual subscriptions to businesses for notifications of government contracting opportunities.

Vaught said government purchasing makes up 7% of the U.S. GDP, and pointed to “the rise of B2B marketplaces.”

“We’re raising now so we can open up the DemandStar Network to more governments and businesses in more territories across the nation,” he said.

Vaught previously worked at Microsoft for six years and spent three years in Olympia, Wash., as a communications leader for the Office of the CIO.

DemandStar recently hired Seattle startup veteran Zachary Cohn as head of product.

Advance Venture Partners and Forefront Venture Partners also participated in the round.

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