Boris Wertz & Version One Ventures: The NW’s Newest Early Stage VC
Boris Wertz’s career as an entrepreneur blossomed at an unbelievably exciting time for technology startups: 1999, the height of the first tech bubble, when it felt like the world-connecting power of the Internet was about to revolutionize every business on the planet.
The company itself, he says, was a little more pedestrian. “It was a pretty boring idea—to start an online marketplace for used and out-of-print books,” Wertz says with a laugh.
Maybe that’s understating things just a bit. JustBooks, which Wertz co-founded, was purchased a few years later by AbeBooks, another rare-book startup. In 2008, Amazon decided the business was interesting enough that it bought AbeBooks.
With that deal, Wertz turned to the world of investing. And after about four years of putting his own money into startups as a prominent angel in Vancouver, BC, Wertz announced this summer that he had raised $15 million to begin a new early stage venture fund.
Although the geographic focus will be across North America, Wertz says the two most important markets for the new Version One Ventures are Vancouver and Seattle. That’s probably welcome news to Seattle-area entrepreneurs, who often say there’s a need for more money to back startups in the region.
It also helps that Wertz isn’t a new name to entrepreneurs in the Seattle area, having backed companies including Dan Shapiro’s startup Sparkbuy (which was sold to Google), TechStars graduate Smore, and travel data company Yapta.
So why take the leap into early stage venture now? Wertz says it’s partially because he thought he’d honed his approach enough with his angel investments and wouldn’t be doing anything too reckless by taking on other people’s money.
“I invested in about 30 startups over about four years. Especially in the last two years, I really hit my stride in terms of really figuring out how to invest,” he says. “By then, I really had a good investment thesis and I knew what worked what scaled, and how to look at businesses and cut through the noise.”
And the opportunities, he says, are what entrepreneurs thought they’d see in those early days when JustBooks was getting started. In a note on his blog introducing Version One, Wertz wrote that the explosion of mobile devices and cheap computing power meant that “today’s entrepreneurs will be in the position to build the companies we all dreamt of in 1999.”
“Suddenly, we’re going to have a much higher percentage of the population that has access to mini-computers, and even higher usage than we see today,” he adds. “Because software has become so cheap, and everybody has access to it, it gets into verticals that have never had access to it.”
That’s no casual mention of business verticals—if you’re an entrepreneur who wants to talk to Wertz, it’s not a bad place to be. Here are a few exmples of Wertz investments that tackle specific slices of a market, and what they say about his invesment philosophy.
— Julep: This company started out as a small chain of high-end nail salons in the Seattle area. But founder Jane Park saw an opportunity to build a broader business, aided by the power of digital networks to find new customers. Today, Julep sells its nail polish colors online, along with other beauty products, and offers a monthly service that sends a package of special items to members. Wertz says that service now has tens of thousands of members.
The something-in-a-box a mechanism is one that several startups have rolled out in the past few years, to the point of some complaints about oversaturation. But Wertz says that Julep, like other boutique online retail companies, has a chance to grow partly because mega-retailers like Amazon have left a vacuum for higher-end, more personal brands.
“There’s almost no chance, as a startup, to compete with [Amazon],” Wertz says. “But one of the things that has been very successful in the last little while is companies that focus on one vertical and create a whole company that is vertically integrated. Julep, I think, has the opportunity in the beauty space.”
—Indochino: This Vancouver-based startup makes custom suits, shirts, jackets, and pants for men who send in their measurements and select a fabric and style from the large online selection.
The suits, made at the company’s facility in China, are affordable and come in a wide range of styles. Indochino also puts a focus on quality and customer service by offering alteration credits and the option to remake a suit if it can’t be tailored to fix any problems.
Wertz isn’t the only local investor backing this company: Seattle’s Madrona Venture Group led a $4 million investment in the startup last year.
—Jobber: This is another Canadian startup, based in Edmonton, Alberta. It offers software designed specifically for small service businesses, like house painters, landscapers, and contractors, giving them tools like calendars, invoices, customer tracking, and more.
It’s the kind of specific market that might be seen by traditional institutional investors as a small opportunity—not that huge enterprise software business that could make a monster payoff to buoy an entire VC portfolio.
But Wertz says the trends are moving in favor of these businesses, because they’re unlocking demand in sectors of the economy that never got good software solutions during any previous cycles of computing innovation. And with more investors moving “downstream” to earlier stages,a payoff doesn’t have to be a billion-dollar homerun to be a success.
“There’s nothing bad about it,” Wertz says. “If you pick the right niche that monetizes really well and you’ve built your business, then that’s fine.”