M25 Announces $31.8M Fund III to Expand Funding of Midwest-Based Startups
Chicago, IL (May 7, 2021) — Chicago-based venture capital firm M25 has announced the close of its third fund, a $31.8M vehicle raised to continue to build upon M25’s commitment to backing early-stage tech startups headquartered in the Midwest.
M25’s newest fund comes in at nearly triple the size of its last, signaling that the firm’s strategy and execution are hitting the mark. The firm was founded in 2015 with the thesis that startups headquartered in the Midwest can generate better returns than their coastal peers.
In addition, Fund III’s size allows M25 to lead pre-seed and seed round deals, and so far, about half of the fund’s investments have been led by M25. Early Fund III co-investors include Forerunner, Founder Collective, Long Journey, Anthemis and Seven Seven Six, to name a few.
“Since launching our firm, we’ve backed over 100 companies in 24 cities across 11 Midwest states,” says Founder and Managing Partner Victor Gutwein. “We are the first to see, evaluate, lead or syndicate pre-seed and seed rounds with the best founders in the region. While it’s not in our Midwestern ethos to boast about our accomplishments, we’re proud that when someone from St. Louis, Cincinnati, Ann Arbor, or Chicago wants to raise their first round of capital, their mentors, lawyers, and community leaders all say the same thing — M25.”
M25’s Fund III announcement comes at a time when Midwest venture investment continues to lag behind investment on the coasts. 10% of all US venture deals are in the region, but only 5% of US venture dollars are deployed here — despite the Midwest generating the highest average return on capital. M25 is currently the most active early stage investor in the Midwest.
“We are a Midwest fund working with (relatively) capital efficient companies selling to the broad backbone of the American economy — finance & insurance, healthcare, supply chain, government and consumer,” says Partner Mike Asem. “But we bring a healthy amount of coastal inspiration: Yes, you can be a multi-billion dollar company in Omaha or Pittsburgh or Madison. Yes, you can make global headlines, not only the local business journal.”
While M25’s fund is not specifically focused on diversity, the firm’s diverse team demographics and commitment to antiracism and allyship has continued to move the needle towards a more diverse portfolio. So far in Fund III, 47% of companies are led by women and/or Black and LatinX founders.
M25’s portfolio includes Kin Insurance, Branch Pay, Astronomer, Summersalt, ScriptDrop, SteadyMD, Loop Returns, Chowly, Upsie, Idelic, Opendorse, Metafy, and Rheaply, among others. Prior exits include Glidera (acquired by Kraken in 2016), Pactsafe (acquired by Ironclad in 2021), Avail (acquired by Realtor.com in 2021), Regroup Therapy (merged with Insight Telepsychiatry to become Array Behavioral Care in 2019), Mimir (acquired by Hackerrank in 2019) and Costello (acquired by SalesLoft in 2019).