VCs Jonathon Triest and Brett deMarrais see their ability to read people and create longstanding relationships with founders as the primary reason their Detroit-based venture firm, Ludlow Ventures, is celebrating its 15th year in business.
It sounds silly, attributing their longevity to what’s sometimes called “Midwestern nice.” But is it crazy? Maybe not. Before Ludlow, neither Triest nor deMarrais had much operating experience. They also had no investing experience. Triest was fresh out of school when he first stood up the firm in 2009. When deMarrais joined him three years later, it was after winding down his first job, which was running a wedding videography outfit.
Fast-forward and Ludlow today has $250 million in assets under management, including a new $50 million fifth fund that the duo just closed in recent weeks with commitments from billionaire Dan Gilbert; the financial services company Northern Trust, the Israel-based venture firm Vintage Investments; and the fund of funds outfit StepStone, which anchored the new vehicle.
It’s certainly hard to know what else Ludlow offered at the start other than a lot of heart and good instincts about people. In 2012, for example, while on a trip to Los Angeles, Triest and deMarrais met with entrepreneurs Ryan Hudson and George Ruan about a Chrome extension that helped customers score deals. The young investors had trouble getting excited about what the founders were building. But “George and Ryan were so good,” Triest tells me during a phone conversation while he’s at a networking event in Detroit, an announcer’s voice booming in the background.
Ludlow wrote the very first check to Hudson and Ruan, who soon went more public with their shopping and rewards platform, called Honey. In 2020, when Honey sold to PayPal for $4 billion in a mostly cash deal, that payout returned six times the $15 million Ludlow fund from which that investment was made.
“I see my peers ‘out diligence’ themselves, when in reality you can only look at the people,” says Triest. “Our biggest miscalculations have come when we invested in verticals or ideas that we loved but the people were not exceptional.”
It’s not novel, of course, to invest in people. Most VCs claim to do the same. There was also a bit of luck at the start of Ludlow Ventures. Triest kicked off its $15 million inaugural fund with a $1 million loan from friends and family. Not everyone can access that kind of getting-going money.
But even luck doesn’t sustain a business this long — and certainly not through a market that’s become comparatively harsh as institutional investors run out of patience with newer outfits in particular. While General Catalyst, Kleiner Perkins and other heavyweight venture firms are locking down billions in capital commitments, newer firms are increasingly pulling the plug right now owing to a lack of investor interest.
Indeed, when Triest talks about relationships, he convincingly argues that he means business. Ludlow has maintained such a strong bond with Hudson that earlier this year, the venture firm wrote a $3 million check into a $5 million round for Hudson’s newest, still-stealth startup, even though Hudson “could have had anyone lead that round — it was so stacked” with top VCs, says Triest.
(Triest also notes that Hudson is married to another founder who Ludlow has backed, Lumi founder Jesse Genet. He admits, too, that he can’t take credit for the match; they surprised him after they began dating.)
As for other differentiators, Triest eschews them. The firm doesn’t have a geographic focus. It doesn’t have a sector focus. As for its marketing, it largely relied on a video series called “Carpool VC” that Triest and deMarrais once posted irregularly on YouTube, wherein the two shared silly unscripted banter while beaming in another, better-known VC via the car’s speakerphone.
The shows, mostly recorded in 2015 and 2016, now make their kids cringe, says Triest, whose oldest child is 15. They also served their purpose, he adds, saying he’s still surprised by the “number of times that people get on a call with us, and they feel like they know us a little bit,” In fact, he adds, “Plenty of people have opted out, saying they don’t want to work with clowns like us. But plenty of people opt in.”
Clearly. Ludlow, which invests in around 25 companies with each fund, has funded hundreds of startups over time, some of which have gone to zero, while others have been marked up considerably since the firm funded them.
Flex, a flexible payments platform that currently promises to break one’s monthly rent into smaller installments and has plans for other verticals, raised $20 million in funding last fall, along with $100 million in debt funding. (A rival startup, Circa, was recently acquired for $9.5 million in cash and the stock of the loyalty company that bought it.)
Ludlow is also an investor in the workplace analytics company Density, which was valued at $1 billion when it last raised a round in 2021; Captions, a video editing app that raised $25 million in Series B funding last year; Notarize, an online notary network valued at $760 million by investors last year; and Backbone, a startup that turns iPhones into gaming devices and which raised $40 million in Series A funding in 2022.
Asked about unifying threads amid the wide-ranging companies, Triest again turns to squishy stuff. “The thread throughout our portfolio is that the people who founded them are people who we want to spend time with, who make us want to quit Ludlow so we can go to work with them. We have to believe that what they are working on is viable, but it doesn’t have to be the thing.”
Don’t all VCs say some variation of the same? “I hate all this ‘founder-friendly’ chat” that other VCs espouse, answers Triest. “There is no genuineness behind it.”
At Ludlow, he says, “if we are not standing up in [a founder’s] wedding, we’ve failed.”
