The path of Ascend Venture Capital, from its modest beginnings to becoming a beacon of innovation in the Midwest venture capital landscape, exemplifies the power of strategic acumen and human-centered design. Here we’ll delve into the foundational decisions, pivotal moments, and continuous adaptation that forged our path to success in the highly competitive venture capital landscape.
A Pivotal Decision to break Into Venture Capital
Ascend’s journey began at a crossroads where I chose between pursuing a career in real estate property management or breaking into venture capital as founding general partner. A lot of shoe leather was worn out deciding which direction to take, but the allure of building something transformative in the venture space — a sector pulsating with dynamism and potential — was irresistible. This decision set the stage for what would become a leading name among Midwest venture capital firms.
What quickly surfaced as an immense challenge was investing wisely in the face of endless statistics evidencing the inability of emerging managers to advance beyond an attempt at a first fund. How do you enter an arena with intention, knowing 80% of new entrants will fail? At Ascend, our answer was: very carefully.
In the early stages of Ascend, our approach mirrored the rigorous stages of pharmaceutical clinical trials. We structured our initial flagship funds as a series of trials, each designed to test, prove, and refine beyond the next with an incrementally widened scope:
Fund I focused on validating our thesis and investment strategy.
Fund II served as a stress test for the internal systems underlining our practice, such as portfolio selection, construction, and engagement.
Fund III allowed us to build a team and share institutional knowledge in the firm.
The results of these funds, each marked by surpassing expectations at each phase, underscored the efficacy of our methodical approach in building a robust venture capital framework.
Overcoming Early Challenges in Starting a Venture Capital Fund
The early years of starting a venture capital fund were characterized by a relentless pursuit to establish credibility and trust within the investment community. Though Ascend’s first two funds were on their way to claiming the top rank for venture performance in their respective vintage years (2015 and 2018), it was difficult to win the trust of investors without established connections in the first stage of our development.
We learned that venture capital success required not just demonstrating potential through outcomes but actively engaging and growing our investor base with transparency and integrity. To build a strong reputation and network within the investment community, we had to be persistent, continually leveraging existing relationships and showcasing our mission, vision, and results.
Our success has been deeply rooted in the human element of VC, especially with our St. Louis origins. The results stand out against a backdrop of 14-year lows in cash returns and an 11-year decline in emerging managers raising subsequent funds. We aimed to prove that venture managers don’t need to be on the West Coast to excel — deep study, hard work, and discipline can prevail anywhere.
In overcoming these challenges, Ascend has learned valuable lessons about growth and innovation:
1. Lead with humanity.
Our Midwestern sensibility and discipline have guided our belief that treating people with humanity leads to better outcomes. Professionalism is vital; the founders of our portfolio companies are treated with respect and care, as if they were extensions of our team, from the initial contact through the entire relationship.
Understanding human motivations is also key, whether developing your investor network or contacting potential customers on behalf of your portfolio companies. By prioritizing genuine connections and tailoring your approach to individual needs, you can foster stronger, more productive relationships that drive collective success.
2. Document and share your investment rationale.
A key strategy that has reinforced trust and transparency with our investors is drafting detailed investment narratives for each portfolio company. We treat these documents as living records, which articulate why we chose to invest and outline the processes that led to our decisions.
Sharing these narratives with our LPs bolsters our credibility and facilitates deeper discussions during fundraising efforts. By maintaining these clear, accessible records, we validate our investment choices and empower our investors to understand and engage with our strategies fully. This practice is invaluable for any investor looking to enhance communication and build stronger stakeholder relationships.
3. Leverage SPVs for strategic doubling down.
At Ascend, we’ve strategically used special purpose vehicles (SPVs) to amplify our investments in promising portfolio companies during critical Series A and B growth stages. This approach has allowed us to deploy additional capital and increase our stake in our leading portfolio companies — essentially acting as we would if our funds were twice their size.
Doubling down on our commitment to burgeoning companies maximizes potential returns and signals strong confidence in their trajectories to other investors and stakeholders. For investors seeking to optimize impact and returns in high-potential ventures, strategically leveraging SPVs can enhance investment positions without compromising the flagship funds’ fundamentals.
Embracing Core Values for Sustained Venture Capital Success
In times characterized by economic turbulence and a competitive funding environment, the principles of thorough research, relentless hard work, and disciplined execution remain paramount. Venture capital success stories are often about more than financial acumen — they’re about building relationships and maintaining a humane approach to dealings.
The journey of Ascend Venture Capital is a testament to the power of strategic foresight, resilience, and the human touch in fostering venture capital success. For those looking to emulate our path or carve their own routes, remember that integrity, innovation, and inclusivity aren’t just ideals; they’re essential practices that can drive results in this dynamic industry.
Contact us if you’d like to invest in our newest fund in our highly ranked flagship fund family, Fund 4.0. Secure your spot alongside one of the leading early-stage Midwest venture capital firms today.
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