Pando

75% of Vegas Tech Fund's investments are now outside of Vegas (and they've dropped Vegas from their name)

Will the last company to leave the Downtown Project please turn out the neon?

By Paul Bradley Carr , written on July 18, 2016

From The Delivering Happiness Desk

When I launched NSFWCORP in Vegas, our very first investor was Tony Hsieh and his Vegas Tech Fund. Not long afterwards, Vegas Tech Fund became an investor in Pando. 

When last I spoke to VTF partner Zach Ware he had just returned to the fund having shuttered his own startup, SHIFT. He told me that his vision for VTF was to expand the fund's remit outside of Vegas, focussing instead on companies that "share a DNA" with Zappos:

"We have a broad portfolio but are focused mainly on a few companies we see an opportunity to help scale where we believe that the growth capital will enable them to do big things. It's not that we aren't supportive of the overall portfolio but rather we've realized that the companies that aren't a part of our double down strategy have other sources of capital." 

At the time, I argued that the re-focussing was a smart strategy as I'd witnessed first hand the problems of VTF partners stretching themselves too thin and leaving portfolio companies hanging. According to sources, that hands-off approach was a contributing factor to the sudden demise of VTF-funded Zirtual. 

So how is the new strategy going?

For one thing, the firm is no longer called Vegas Tech Fund, having rebranded itself earlier this year as VTF capital. And if they're still pursuing their "dna of Zappos" strategy then they've decided to keep it low key: I couldn't find a single mention of the Z-word on their website. 

Interestingly, according to the firm's own figures, some 75% of their portfolio companies are now based outside of Vegas, including Bow and Drape in New York, Fanduel (also New York), True & Co (SF and New York), Asana (SF) and Pandoland winner Umano (Athens, GA).

 Even more interestingly given how free the fund used to be with its investments, according to Crunchbase (see update below), VTF Capital has only made one investment this year, in Oakland-based Ink. Its last Vegas investment was Bungalow Clothing, a year ago. 

(If there was any doubt that VTF is all about the TF, and not so much the V, their current about page says VTF Capital doesn't invest in "companies directly or indirectly focused on gambling, gaming or nightlife entertainment.")

All of which is probably a smart strategy. But what does it say about the state of Hsieh's Downtown Project when even the tech investment fund he created to bring startups to Vegas doesn't believe there's much opportunity in Vegas any more?

I emailed Ware late last night to confirm the shift away from Vegas but I hadn't heard back by publication time. I'll update this story if I hear more.  

Update: Ware responded to say that Crunchbase has their 2016 investments wrong ("which is generally the case with Crunchbase").

As our website notes we are making less quantity and instead deeper investments of time and capital.

2016 investments in new companies: InkThrive MarketThe Renewal WorkshopIceAsanaExactMedia
2016 past portfolio company follow-on that were publicly announced: RingMinistry of SupplyAdespresso

I asked him how many of those additional investments were based in Vegas and he responded:

I'm sure Crunchbase can help with that ;-)

 And it did! According to Crunchbase, the answer is zero.