The Utah startup scene gets another boost with Album VC’s new $75 million fund
Album VC, a Lehi, Utah-based early-stage venture firm that's been known until now as Peak Ventures, just gathered up $75 million in capital commitments for its third early-stage fund.
The development shows investor confidence in Album's young team, which came together in 2014 after the founder of Zinch - a site connecting colleges and students that sold to the ed-tech company Chegg in 2011 - decided to try his hand at investing in other startups.
As that founder, Sid Krommenhoek - who stayed on with Chegg for several years, running its international efforts - explains it, "I thought I'd do another startup. But I also knew from our own experience in struggling to raise money the need for more capital in Utah, and I thought having that operator-entrepreneur perspective could be useful."
A first fund, like many in the industry, was more of an experiment, though it was a decent $23 million, thanks largely to the support of Chegg CEO Dan Rosensweig, who was early to commit capital to the fund. A second ($56 million) fund followed when Krommenhoek and John Mayfield - a friend who joined him from a marketing role at Qualtrics - began investing more seriously in their backyard and beyond.
They were soon joined by a third investor, Diogo Myrrha, who began as a principal with the firm and is now a general partner. Explains Krommenhoek of one of the many things that binds the three Brigham Young University grads, "We all came into Utah's orbit when it wasn't necessarily a place where you could live out your career, but that's changed."
Indeed, Album's momentum - Krommenhoek claims they raised their new fund in one month's time - also underscores the continuing growth of the startup scene in Utah, where a growing number of home-grown companies have paid off in a big way for their backers, creating new wealth that's now being reinvested.
Album isn't an investor in two of Utah's biggest success stories, Qualtrics and PluralSight, but it jumped early into two others that must have gotten its limited partners excited. One of these is Podium, a fast-growing, five-year-old, Utah-based company that helps businesses manage reviews and communicate with customers online and that has so far raised roughly $93 million, including from IVP, GV and Accel. The other is Divvy, a three-year-old, Utah-based company that helps businesses manage payments and subscriptions, build strategic budgets and eliminate expense reports. Divvy has raised more than $250 million from investors, including New Enterprise Associates, Insight Partners and Pelion Venture Partners.
As for how it will invest its newest capital pool, Krommenhoek says the idea is to invest in roughly 24 companies, roughly half of them in Utah, roughly half out of state. He also says the firm tends to fund more mature seed-stage deals, meaning companies that have moved past the paper-napkin phase and can prove that their product or service is gaining some early traction. That won't change with this new fund, though the size of the average check will be slightly higher than in the past, ranging from $1 million to $1.5 million in exchange for at least 10% of a company. "We like to own double digits," says Krommenhoek. "What we do at this stage doesn't scale because human relationships don't scale. You can only have a finite number of deep relationships."
In terms of the firm's areas of interest, Krommenhoek suggests these are broad, but that Album - a name meant to hint at the firm's collaborative nature - is most comfortable with software-as-a-service startups, marketplaces and companies focused in some way on the future of work.
Above, from left to right John Mayfield (general partner), Lisa Thomas (engagement), Sid Krommenhoek (general partner), Diogo Myrrha (general partner) and Steve Hale (operations).