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    HomeStartupsEntrepreneurshipS7E1 - Max Brickman, Heartland Ventures

    S7E1 – Max Brickman, Heartland Ventures


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                    [00:45]         614Startups Nation, welcome to another episode of the 614Startups podcast. I’m so excited. It’s season seven and I think I hit a home run with the first guest, my man Max Brickman of Heartland Ventures. Max, welcome to the show.

    Max:       [00:59]        Thanks for having me.

    Elio:        [01:00]         Well, you’re kicking off The Money Issue, right. 10 VCs shaping the future of venture capital in the state of Ohio. Before we get into the nitty-gritty of that discussion about Heartland Ventures and all the stuff that you guys are doing in the state, outside the state to make Ohio the best place to live, work and build a startup, we got to get to know you, man. What’s your backstory?

    Max:       [01:28]        Sure. So I’m from Wisconsin, so still from the Midwest. I got into entrepreneurship pretty early on. So I started my first company when I was 14, a landscaping company in Milwaukee, and was able to save up enough money to buy a rundown duplex in northern Wisconsin. And was able to fix that up and rent it out and use that to buy a second and a third. And throughout high school was able to get up to about 450 units throughout Milwaukee, and had a general contracting company associated with it that was able to package together and sell during college. So I just loved the entrepreneurial space. I just loved the ability to create something and build something and I think that’s stayed with me. I went to school down at IU in Indiana. I’m a little out of my element in Columbus but went to school in Bloomington and had an education startup that prevented cheating on exams, actually. So I don’t know Scantron or Blue Books, the fill in the bubble multiple-choice tests, so it’s really easy to cheat off those. You can just look at the person next to you and see all their answers. So I was able to chemical engineer this paper that lets you write normally, but if you look at it from an angle, it’s completely black, so you can’t cheat. So licensed that to accompany internationally and then moved to South Bend Indiana. That’s where my girlfriend now wife was going to grad school and where I knew one person, Haley, that was pretty much it. And ended up there and that’s where I started Heartland. So there’s sort of an unconventional place and time to start a venture fund but it worked out.

    Elio:        [03:04]         It worked out well, man. So I’m hearing a lot of wins there, man. So you scale up, 400 plus units. What is that learning process like? Because when I hear real estate, I hear tenants, when I hear tenants, I don’t always hear everything was smooth, you know, rents got paid on time, etc. So what were some of the lessons, man, in that world, and what got you interested in that? And what are some things that you found “Hey, this is great” or maybe, “400 units is enough for me. I need to exit and do something else”? What was it about that business that got you excited? And what were some lessons learned there?

    Max:       [03:38]        Yeah, no. And when I say things worked out, not necessarily in that way, but just in being able to find something that I enjoyed. No, it was not easy all the way through. I mean, I was managing the properties, you know, many of the properties I was still in school in Bloomington. So every weekend, I was driving back five, six hours each way, driving right after class on Friday, coming back Sunday night, three in the morning, driving back to be able to manage all the properties. And for anyone who’s ever done property management or rented an apartment, there’s a lot of things that can come up. Everything from tenants not paying to houses catching on fire or everything you can imagine, happened.

    Elio:        [04:17]         Listen, I know real estate is an interesting world. I’d like to learn more in the future. So I definitely have somebody who could teach me the ropes, somebody who has that experience, so it’s great. So you go to IU, and I know Heartland Ventures started in Indiana, and so why did you want to get into the venture space? Why did you want to start a venture firm? Like you said, you had a startup and you scaled that up and that went well. Why did you want to get into the venture world? What attracted you to it?

    Max:       [04:45]        Yeah, and I always liked the investing side. I think from the real estate company, I enjoyed being able to evaluate different deals and be able to look at a lot of different opportunities. So I always knew I really wanted to go into venture. It’s just my other interest. I love technology, I love early stage companies, and any part I can be involved in building a company, I love that. So I knew I wanted to be in that space and honestly didn’t think I’d be able to go in being in South Bend. Yeah, I thought it was going to be a situation of, “Okay, we’re going to wait for my wife to graduate and go to San Francisco because you have to be in San Francisco to be in venture”, and that’s kind of the impression that I had. And it worked out in that South Bend was as a city very much like Columbus, very much on the upswing, a lot is happening, a lot of excitement around the city. But what you have in a market like that, and same thing here, in Columbus, you have a lot more startups that are being actually developed here, in South Bend, you don’t have as many. But what you do have a lot of are these family businesses that are doing a couple hundred million to a billion in revenue that are manufacturing RVs or pontoon boats or in manufacturing logistics sector that they have a ton of expertise within their industry, but don’t have a lot of connectivity to the tech world.

                   [05:52]          So what South Bend really had when I ended up there was all this expertise of these billion-dollar companies and the owners of those companies living in the community, knowing everything there is to know about manufacturing RVs and the logistics that go into it, and procurement and sales of it that had all of that, but that was sort of ignored from a lot of the technology companies that are developed in the coasts. There’s this gap in between, you know, you have these hubs of industry that’s in the Midwest, and then you have a lot of tech that’s on the coast, and they’re not really communicating. And that’s really what I found when I went to South Bend, and really tried to make the most of the opportunity, ended up absolutely loving the city, and loving my time there. But what South Bend had was something that I think was underappreciated, and I think that’s something that a lot of Midwestern cities have, which is industry expertise. And I think that’s something that when paired with venture and with tech is a perfect combination, because, at the end of the day, those companies are the users of the technology, those are the customers. So to integrate them into the decision-making process and involve them earlier on and not just look at them as flyover country, or just kind of the industry that you’re going to sell to down the line, actually integrate them into the process, it can help all parties involved. So I really got into it because it was sort of just seeing just the amount of value that exists in some of these secondary, tertiary markets that is just exciting and where I felt like there’s opportunity to connect them at the coast.

    Elio:        [07:11]         So to put it a different way, Asana helps companies manage projects. The companies that need Asana’s project management tool are your Wendy’s of the world, your Nationwide Children’s Hospital of the world, your Nationwide Insurance. They’re here in the Midwest, they are the users of these products, so why not begin here and get a clear understanding of who those customers are, and then see how they can be integrated in the process, which I love. I mean, I went to the website, and I said, “Okay, well, this is a different way of looking at venture.”

                     [07:43]        Thank you for listening, we’re going to take a quick break and be right back after this message from our sponsor.

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                    [08:21]         What was your path to raising your first fund, and then opening subsequent offices that would bring you eventually to Columbus?

                    [08:30]         Yeah, I like your analogy. It was a process. I mean, I wasn’t from South Bend, not from South Bend and I really didn’t know anyone there again, when I moved there. So it was very much a process of meeting people there. And it was really fortunate that a lot of people kind of took a chance on me and the fund early on, and really wouldn’t have been able to without that.

    Elio:        [08:49]         Why do you think they took a chance on you?

    Max:       [08:53]        I think they saw I loved what I was doing and that I wasn’t going to stop until I returned the fund and was a good fiduciary with their money and giving them return, that I wouldn’t stop. On the investing side, it’s the same thing as being an entrepreneur or starting a company. You’re developing a product, you’re pitching investors, you’re doing all the same things, you’re reporting, you’re communicating back to the investors. So it’s very similar, and anything that I would recommend to any founder is just immerse yourself in it and show your investors that you’re immersed in it, and that you love it and that that’s everything that you think about. And I think that if that comes off to the investor, they’ll see that you’re someone that they can trust with their money because you’re going to do whatever it takes. So I think that was one.

                    [09:36]         And then the other side was, I think finding where there are opportunities for sort of ancillary value for investors at an early stage can be very helpful. And what I mean by that is the most simple pitch would be someone invests in our fund, and they’re going to get a return. At an early stage fund one, there’s no track record. You can pick that apart and that’s a very difficult thing to stand on its own and same thing with any startup. But if there’s ancillary value for the investor, strategic value for the investor, they can overcome a lot of those, and maybe the barrier for the investment is just easier. And what we did by doing that is we said, “Hey, look, we’re connecting with a lot of technologies from around the country that could be strategic for your business.”

                    [10:13]         So let’s say we’re talking to someone that is manufacturing RVs,  recreational vehicles, and we’re coming across a lot of technologies that can be strategic for your business and can help save you money in the long term and reduce your hiring costs or increase your efficiency, whatever it might be. They start looking at that and seeing, “Okay, so I’m investing in them, and yes, I expect to get a return, but I’m also getting this other value that’s going to help my core operating business in the form of increased efficiency, new insight into technology that can help my business.” And I start listing these in their mind thinking like, “Okay, there’s a whole menu of value that you’re getting, and it’s less dependent on one thing.” And my outlook is if you go in and raise at a point where you don’t have track record, and everyone starts out at a point where they don’t have a track record, if you’re just selling it based on their financial return, it’s a very difficult argument.

    Elio:        [11:03]         And your investors are the companies themselves, the founders of these companies? Who are the investors in Heartland Ventures that are interested in that ancillary return? Are these individuals? Are these companies? Who are your investors?

    Max:       [11:20]        Yeah, and that’s what makes us different is that we don’t raise from institutions or endowments or we don’t raise from OSU or Nationwide or anything like that, we raised from owners and operators of businesses. People that are typically entrepreneurs themselves, and not of $50 million companies, but of $1 million companies, or $200 million a year companies. So your middle market may be a couple hundred to a few thousand employees. And the reason we do that is because again, those are entrepreneurs themselves, and they see the value in investing in other entrepreneurs, but they’re also the decision-maker of the company. The owner of the company is also the decision-maker, is also the investor. So now when we come across, you know, your Asana example, when we bring them Asana, let’s say we fortunate to identify Asana in their early, early days, and we bring it to them, because all the investors are the owners and operators of these companies, we can just go straight to the owner, and say, “Hey, we really like this company, Asana, we think they’re going to do great things and grow. And we see a lot of value and we like founders, and this and that, but what do you think? You’re the user at the end of the day. Would you get an ROI from using this product and becoming a customer?” And if they say, “Yes, this is amazing. I want to use it. I’m going to bring five of my friends who own other companies to use it”, that’s a good indication. But if they say, “This is really cool. I’ve never seen anything like it but honestly, there’s really no real ROI that feels like something different.

    Elio:        [12:44]         Yeah, so I’m thinking kind of Midwest values, kind of out there in South Bend, Indiana, you’re talking to the guy who owns the RV, and you’re talking to them about technology. And they hear the stories of this company scaling in IPO for a billion dollars, or this other company raises 100 million dollars on their way to a billion dollars, right? They hear all these stories. Was there any that Midwest skepticism, that “I don’t know about this technology thing. I mean, I get it, I’ll buy the product if it makes my company better”? Or did you kind of have like, “Oh, my goodness, you’re a godsend. We’ve always wanted to put our money into the tech world. We understand the risks; we just needed somebody to help bring us along, what was their feeling about that?

    Max:      [13:37]          It was definitely not oh, we’re a godsend bringing it to them in a lot of cases, especially at the beginning. It was really because it’s difficult to say that you’re able to identify things they don’t know exists yet. So what we found is we had to kind of put the cart before the horse a little bit and find the technologies before we actually had the investors in the early days of fund one, and actually bring them technologies before their investors and say, “Hey, this is the kind of thing we would look at.” And then they meet the founder and get really excited because it’s a passionate startup founder who loves their product and is selling something that’s relevant for their industry, and then the owner of the RV company is now looking at it saying, “Okay, this is really cool. I get it now.” It was difficult for us to sort of paint that picture at the beginning, so we had to get a little creative. And it’s not something for every business owner in the Midwest, but there are a lot of them who are, again, very entrepreneurial, and they know they need to adopt technology, and they need to have a pipeline of tech that they can use. And that isn’t always in the budget for a lot of these companies.

    Elio:        [14:33]         I love it, man. So it’s the farmer, two, three generation farm but large operation, and there’s a drone company out there that’s going to help them get more bushels per acre. Not only will they eventually use this drone technology, but they can own a piece of it? I get it. Okay, so now I understand the Heartland value proposition on the investor side.

                    [14:55]         Thank you for listening. We’re going to take a quick break and be right back after this message from our sponsor.

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                    [15:28]         Let’s go to the founder. So you have this fund, I think what’s interesting now that I understand the investor side is that you’re not only bringing capital, you’re bringing first customers, which is critical. Is that essentially the value proposition on the founder side when you guys are going in sourcing deals for why you’re a good fit as an investor? Is that one of the value propositions for Heartland Ventures?

    Max:      [15:52]          Exactly. If we did one thing, its revenue. And there’s a lot that we’re not going to be the best at. We’re not going to be as good at helping someone raise their Series D financing like a lot of larger funds can, including happier funds in the coast, including Drive here in Columbus, we’re not going to be able to do that. But that’s why we want to partner with people with funds like that because we know they can. The one thing that we know how to do, and we can do really well is help identify revenue here in the Midwest. So we’ve invested all of our resources internally as far as our platform, and just what we spend so much time thinking about is how do we connect more of our founders, the companies that we’re investing in to strategic customers here in the Midwest?

    Elio:        [16:34]         So let’s talk stage, industry. Are you guys industry agnostic? Are you up to a certain stage? Where are you looking for opportunities to invest?

    Max:       [16:43]        Yes, we wouldn’t look at anything on the consumer side since it’d be hard for us to rally 1000 people to validate the need for consumer technology. We’d rather do it with two or three large enterprise customers. So that’s why on that front, we don’t look at anything that’s in a highly regulated industry, so health care, education, gov tech, because it takes a long time to see, “Okay, we would you– You can’t just go to the president of a hospital and say, “Would you use this technology?” As much as they would like to, there are certain processes that they have to go through. So we’re really in manufacturing, technology, logistics, HR, agriculture, and the things that would apply to what a lot of people would consider to be Midwestern industries. Bit of a broad brush, but it’s some truth to it.

    Elio:        [17:27]         Yeah, so I got a bone to pick with you, man because I saw this, “We’re going to connect the Midwest with the coast.” All right, now, when you put the coast in there, I’m like, “Hold on, hold on, 614Startups is betting on Ohio, man.” So was it at the outset kind of low hanging fruit in terms of you could go out to the coast, and you could probably find volume in terms of deals to source that might be a good fit for your investors, again, looking for technologies that they could apply this solves a problem? And please tell me, that’s not the only place that you look.

    Max:      [18:04]          We look everywhere, honestly. From a positioning and branding, it’s easy to say, from the coast here. At the end of the day, we’re investors, our mission is to deliver the highest returns we can for the investors that are investing in us, and that we’re fiduciaries. So we’ll look at opportunities anywhere but in terms of scale, there’s so much happening in Ohio, so much happening in Columbus, I love it. And I’m very passionate about it and want to do anything that we can as a fund and me personally, to build up this ecosystem. And there are funds here that are investing in that and obviously doing very, very well doing that. We’re just positioning ourselves as– The majority of the deals still are coming from the coast. There’s more and more happening here but there’s still a hundred times, thousand times more deals coming out of a couple square blocks in Silicon Valley in San Francisco. So that’s why we chose to focus on that.

                     [18:53]        But what would be difficult for a normal investor when we first started investing is we saw there are a lot of deals in Silicon Valley, but it’s also very competitive to get into those deals, especially some of the top tier deals. So why would someone in San Francisco bring a relatively small, very small fund and– We’re a $15 million fund one, raised a bit more for fund two, but why would they bring someone in from South Bend, Indiana under the cap table when they could bring somebody else in. And so we really had to try to punch above our weight class a little bit and show that we’ll do whatever it takes to support the portfolio company so that people will let us in on the deal.

                    [19:25]         So that’s really why we focused on “Okay, how do we find large quantities of deals on the coast? And then what do we have to do to be able to get our way into those deals?” But now that what we’ve seen on the economic development side, and where I think Ohio comes into play here is now what we’re seeing is, the companies we’re investing in, we’re connecting them to customers here in Central Ohio. Now they’re saying, “Okay, we have 30 or 40% of our revenue coming from Central Ohio. We weren’t planning on setting up operations here, but it starts to make a lot of business sense for us to have a presence here, just to support our customers and build it out.” Now, this could be their Midwestern launch point. So we very much want to not just connecting the Midwest to the coast, but creating a pipeline of companies from the coast that are expanding into the Midwest, and using Columbus as the hub for them to be able to do that because this is where their customers are; it makes strategic sense for them to be here. The number of Fortune 500, and just large brands that are based here that can be strategic customers, it makes sense for a startup to be based here or at least set up secondary operations.

    Elio:         [20:24]        Yeah, so how much dry powder are you looking to deploy right now? And we know like you said, you got to go where the deals are, but how do scrappy entrepreneurs building great companies, great products, solving problems, actually pitch you because we want to compete for access to that dry powder? So how much dry powder? How do we engage with you? How do entrepreneurs listening get in contact with you to pitch your company?

    Max:       [20:49]        So we still have one more investment to make out of fund one, out of a $15 million dollar fund. We’re getting ready to close on fund two; that’ll be quite a bit larger here in the next couple of months. So we only have a lag in the capital were able to deploy. But for companies that are B2B SaaS companies here in Central Ohio that are targeting the industries we were talking about – logistics, manufacturing, HR, agriculture – definitely reach out. We have our information email listed on the site. We are not precluded from investing in anything that isn’t central Ohio. And if it’s not a fit for us, we want to be a connector to other investors. I mean, we spend a lot of our time talking to other VCs, sharing deals, and as much as we can play a role in bringing more money to this region, we want to do that. So whether it’s us investing or if we can help be a connector to other investors on the coast, or also in the region, definitely reach out.

    Elio:         [21:39]        Yeah. Max, thank you so much for joining us on this episode. I learned a lot. And that’s what these conversations are about just kind of understanding at a deeper level, but also at a very simple level, what companies like yours, investors like you are looking to do. And again, we want to increase startup activity here in Central Ohio and Ohio in general. We want to increase venture activity in the state, so I’m so thankful that you joined me. I want to leave you with my one takeaway. And you used this word a couple of times over the last couple of minutes as we’re closing but it’s the word connection or connector. One of the things that I’ve found, and I didn’t do this early on when I started the podcast was really build relationships and be the connector. There’s a lot of value in being the connector. At Heartland Ventures, Max is connecting Midwestern companies with companies on the coast, soon to be fully convinced to be only companies in the Midwest because I’m partial, Ohio especially. But Max, thank you so much. Guys, be the connector in your community. There’s real value in that. Thank you for joining us on another episode. Peace.

                    [22:57]         That’s a wrap. You can find this and all our episodes on our website,, Apple Podcasts, Spotify, Anchor, and all your favorite podcasting platforms. Don’t forget to subscribe and write a review. If you would like updates sent to your inbox, you can sign up for our weekly newsletter on the website. To engage in the 614Startups community, follow us on LinkedIn, Twitter, Facebook, and Instagram at 614Startups to join the conversation. For sponsorship opportunities and collaborations, email us at

                    [23:34]         It takes a village to do a podcast and I would like to say a special thank you to my friends at Waveform Music Group. Andy and Carlin have been working with us to enhance the production of 614Startups and we’re so happy with the results. Outside of podcast production, Andy and Carlin are experts in sonic branding, songwriting, and music production for companies and creatives. To learn more about them, go to their website, that is