VCs Jonathan Triest and Brett deMarrais see their ability to read people and build long-term relationships with founders as the main reason their Detroit-based venture firm, Ludlow Venturesis celebrating its 15 years of operation.
It sounds silly, attributing their longevity to what is sometimes called “Midwestern Nice.” But is it crazy? Probably not. Before Ludlow, neither Triest nor deMarrais had much operating experience. They also had no investment experience. Triest was out of school when he spearheaded the company in 2009. When deMarrais joined him three years later, it was after completing his first job, which was running a wedding videography outfit.
Fast forward and Ludlow today have $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. financial services firm Northern Trust, Israel-based venture capital firm Vintage Investments; and fund of funds outfit StepStone, which anchored the new vehicle.
It’s certainly hard to know what else Ludlow offered at first other than a lot of heart and good instincts for 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. Young investors had a hard time getting excited about what the founders were building. But “George and Ryan were so good,” Triest tells me during a phone conversation while at a networking event in Detroit, an announcer’s voice echoing in the background.
Ludlow wrote the first check to Hudson and Rowan, who soon went 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 payment returned six times the $15 million Ludlow fund from which that investment was made.
“I look at my peers ‘curated,’ when in reality you can only look at people,” says Triest. “Our biggest miscalculations came when we invested in verticals or ideas we loved but the people weren’t great.”
It is not innovative, of course, to invest in people. Most VCs claim to do the same. There was also a bit of luck involved in starting Ludlow Ventures. Triest started the $15 million seed fund with a $1 million loan from friends and family. Not everyone can access that kind of money.
But even luck doesn’t sustain a business that long – and certainly not through a market that has become relatively tough as institutional investors run out of patience especially with newer outfits. While General Catalyst, Kleiner Perkins and other venture capital heavyweights are closing billions in capital commitments, a growing number of younger businesses are pulling the plug at this time due to lack of investment interest.
Indeed, when Triest talks about relationships, he convincingly argues that he means business. Ludlow maintained such a strong bond with Hudson that earlier this year, the venture capital firm wrote a $3 million check in a $5 million round for Hudson’s newest, still-stealth startup, even though Hudson “could have had someone to lead this round – it was so stacked” with top VCs, Triest says.
(Triest also notes that Hudson is married to another Ludlow-backed founder, Lumi founder Jesse Genet. He also admits that he can’t take credit for the match; they surprised him after they started dating .)
As for other differentiators, Triest eschews them. The company has no geographic focus. It is not sector focused. In terms of marketing, it relied heavily on a series of videos called “Carpool VC” that Triest and deMarrais once posted erratically on YouTube, where the two shared silly unscripted banter while blasting another, more well-known VC over the car speaker.
The shows, mostly recorded in 2015 and 2016, now give their kids the chills, says Triest, whose oldest child is 15. They also served a purpose, he adds, saying he’s still amazed by the “A lot of times people get on a call with us, and they feel like they know us a little bit.” In fact, he adds, “A lot of people have opted out, saying they don’t want to work with clowns like us. But many people choose.”
Clearly. Ludlow, which invests in about 25 companies with each fund, has funded hundreds of startups over time, some of which have broken even while others have seen significant growth since the firm funded them.
Flex, a flexible payments platform that currently promises to break monthly rent into smaller installments and has plans for other industries, just raised a growth round of funding led by Lightspeed, Triest says. (A competing startup, Circa, was recently acquired for 9.5 million dollars in cash and the stock of the credit company that bought it.)
Ludlow is also an investor in the valued workplace analytics company Density 1 billion dollars when he last scored a lap in 2021; Subtitles, a video editing app uploaded 25 million dollars in Series B funding last year. Notarize, an online network of notaries valued at $760 million by investors last year. Backbone, a startup that turns iPhones into gaming devices, has raised 40 million dollars in Series A funding in 2022; and a budgeting app called Copilot Money that raised $6 million in Series A funding in March led by Ludlow.
Asked about unifying the threads between the big companies, Triest again turns to squishy stuff. “The thread throughout our portfolio is that the people who founded them are people we want to spend time with, who make us want to leave Ludlow so we can go and work with them. We have to believe that what they’re working on is sustainable, but it doesn’t have to be.”
Don’t all VCs say some variation of the same? “I hate all this ‘founder-friendly’ talk” that other VCs espouse, Triest replies. “There is no sincerity behind it.” In Ludlow, he says, “if we are not standing [a founder’s] marriage, we failed.”
