Investors Jonathan Trist and Brett DeMaris see their ability to read people and create long-term relationships with founders as the main reason behind the success of their Detroit-based investment firm. Ludlow EnterprisesThe company celebrates its fifteenth year in business.
As silly as it may seem, its longevity is attributed to what is sometimes called the “Beautiful Midwest.” But is this crazy? Maybe not. Before Ludlow, neither Trieste nor Demarais had much operational experience. They also had no investment experience. Trist was fresh out of school when he first founded the company in 2009. When Demarais joined him three years later, it was after finishing his first job, running a wedding videography company.
Fast forward to today, and Ludlow 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; financial services firm Northern Trust; Israel-based venture capital firm Vintage Investments; and StepStone, the money fund that anchored the new vehicle.
It’s certainly difficult to know what Ludlow initially brought to the table other than a lot of heart and good instincts toward people. In 2012, for example, during a trip to Los Angeles, Trieste and De Maris met with entrepreneurs Ryan Hudson and George Rowan about a Chrome extension that helped clients close deals. Young investors had a hard time getting excited about what the founders were building. But “George and Ryan were very good,” Trist told me during a phone conversation while at a networking event in Detroit, the announcer’s voice booming in the background.
Ludlow wrote the first check to Hudson and Rowan, who quickly went public with their own shopping and rewards platform, called Honey. In 2020, when Honey was sold to PayPal for $4 billion in a mostly cash deal, it returned six times Ludlow’s $15 million fund from which the investment was made.
“I see my colleagues doing their best, when in reality you can only look at the people,” says Trieste. “Our biggest mistakes were when we invested in sectors or ideas we loved but the people weren’t exceptional.”
Of course, investing in people is nothing new. Most venture capital firms claim to do the same thing. There was also a bit of luck at the start of Ludlow Ventures. Triest launched its inaugural $15 million fund with a $1 million loan from friends and family. Not everyone has access to this type of money.
But even luck doesn’t sustain businesses for long—and certainly not through a market that has become relatively tough as institutional investors grow impatient with newer outfits in particular. As General Catalyst, Kleiner Perkins and other venture capital heavyweights close, Billions In capital commitments, new companies are becoming more involved. pull the plug Now due to lack of investor interest.
Indeed, when Trieste talks about relationships, he argues convincingly that he means business. Ludlow has maintained such a strong relationship with Hudson that earlier this year, the venture firm wrote a $3 million check in a $5 million round to Hudson’s newest, still-stealthy startup, even though Hudson “could have hired whoever to lead that round—it was very stacked” with top venture capital firms, Trieste says.
(Trist also points out that Hudson is married to another Ludlow-backed founder, Lumi founder Jesse Gennette. He also admits that he can’t take credit for the match; they surprised him after they started dating.)
As for other trade-offs, Trieste avoids them. The company has no geographic focus. It does not have a sector focus. Its marketing relied largely on a video series called “carpool“Which Triest and deMarrais once posted on YouTube infrequently, the two shared some silly, unscripted banter while broadcasting another popular VC over a car speaker.
Trist, whose eldest son is 15, says the shows, most of which were recorded in 2015 and 2016, now make their kids tremble. They’ve served their purpose, too, he says, adding that he’s still amazed at “how many times people call us, feeling like they know us a little bit.” “A lot of people chose not to participate, saying they didn’t want to work with clowns like us,” he says. “But a lot of people chose to participate.”
clearly. Ludlow, which invests in about 25 companies in each fund, has funded hundreds of startups over time, some of which have gone to zero, while others have marked up significantly since the company funded them.
Flex, a flexible payment platform that currently promises to split monthly rent into smaller installments, has been brought up and has plans for other sectors. 20 million dollars Last fall, along with $100 million in debt financing. (A competing startup, Circa, was recently acquired for $100 million.) $9.5 million In cash and shares of the loyalty company it purchased.)
Ludlow is also an investor in workplace analytics company Density, which was valued at $ 1 billion dollars When it launched another round in 2021; Captions, the video editing app that sparked $25 million In last year’s Series B funding; Notarize, an online notary network valued at $760 million by investors last year; and Backbone, a startup that turns iPhones into gaming devices that has raised 40 million dollars Series A funding in 2022.
Asked about unifying the threads of scale among large companies, Trieste again resorted to the squishy stuff. “The theme across our portfolio is that the people who founded it are the people we want to spend time with, who make us want to leave Ludlow so we can go work with them. We have to believe that what they’re doing is viable, but it doesn’t have to be the same thing.
Don’t all VCs say some variation of the same thing? “I hate all this ‘founder-friendly’ chit-chat that other VCs have,” Trist responds. “There’s no honesty behind it.”
He says: In Ludlow, “If we do not stand [a founder’s] “The wedding, we failed.”