Next Coast Ventures Latest Addition to Austin’s Investment Ecosystem

Austin—Mike Smerklo, co-founder of Next Coast Ventures in Austin, says his venture firm brings a key ingredient to investing: entrepreneurial experience.

“We just believe that relevant experience is more important than anecdotal evidence,” he says of himself and co-founder Tom Ball, who have led companies such as ServiceSource, Nucleus Growth, Openfield, and eCoupons, which was later acquired by Lifeminders (NASDAQ: LFMN). Ball was also part of Austin Ventures for a decade before the firm shuttered in 2015.

Smerklo says the firm will largely focus on Austin startups, making Series A and B investments in tech companies innovating in retail, edtech, SAAS, and related industries. “The big thing is where tech is driving significant disruption,” he says.

Next Coast is in the process of raising a $50 million fund, something Smerklo says he hopes they will complete in the first quarter this year. In the meantime, the firm has made investments in four Austin startups and one based in San Francisco. These include Dropoff, a same-day delivery service company; Phlur, an e-retailer that sells personalized fragrances; and enterprise software startup UMuse.

The firm is also targeting overlooked markets like Boulder, CO; Salt Lake City, UT; and Ann Arbor, MI; Smerklo says. “These are not on the radar of Silicon Valley firms,” he adds.

That focus on the Midwest and smaller startup hubs is similar to the strategy employed by other firms such as Mercury Fund and Sante Ventures, both of Houston, which regard those markets as prime hunting grounds.

“Many of our current investment themes focus on innovative SaaS, cloud, and big data platforms that make the industrial ecosystems of Middle America more competitive and efficient,” Mercury managing director Blair Garrou wrote in an Xconomists Forum article last month. “We believe, now more than ever, the Midcontinent represents a great venture capital opportunity.”

Still, Smerklo says he does believe that his and Ball’s 18 years total spent in the Bay Area does have its advantages. “The connective tissue back to Silicon Valley is absolutely crucial to recruiting talent,” he says.

Angela Shah is the editor of Xconomy Texas. She can be reached at ashah@xconomy.com or (214) 793-5763. Follow @angelashah

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