Photo by Tom Jenz
Dana Guthrie of Gateway Capital Fund
Dana Guthrie of Gateway Capital Fund
What is a venture capitalist?
A venture capitalist is a private equity investor that provides capital to companies with high growth potential in exchange for an equity stake. I tracked down Dana Guthrie, one of Milwaukee’s youngest venture capitalists, to hear about her investment approach of funding pre-revenue startups with an emphasis soon low-to-moderate income communities. She told me, “Currently, our investment portfolio is made up of close to 80% minority-led startups, Black and brown entrepreneurs.”
Dana is small but has a big brain, apparent when she converses in articulate dialogue through measured observations. She has a disarming persona, friendly but earnest, and with steady eye contact.
Dana Guthrie grew up in St Louis, an inner city neighborhood of Black residents. She was raised by a single mother, and spent a lot of time at her grandmother’s house. “I had five uncles, and there was a lot of sports talk,” she said. “I played a lot of sports. When I was in about 3rd grade, I won a lottery to go to a magnet school, and I tested into the Gifted Child program, which got me outside of my neighborhood. Turned out I was very good at math and science. It helped me to find out I was good at things other than sports.”
She attended Hazelwood West High School, where she encountered a diverse student population. Starting as a freshman, she played varsity basketball and went on to be a star. Colleges recruited her for basketball, but she never grew any taller. All the while, she was pulling superior grades through her aptitude for math and science. Soon, her life experienced a significant change when she went into higher education.
Where did you go to college?
My mom encouraged me to pick an area I might major in at college. I did some studying and decided on the field of computer engineering. I wanted to attend a college in an urban area. I ended up at the Milwaukee School of Engineering, MSOE, where I majored in computer engineering and was also captain of the basketball team. MSOE has a very rigorous curriculum.
MSOE is located in the heart of the downtown area, and you lived in a downtown dorm, I assume. How did that experience compare to St. Louis?
It was a culture shock. MSOE was predominately made up of white students, and I didn’t notice many Black people downtown. This was in 2006.
Thirty-nine % of Milwaukee residents was made up of Black people, and most lived on the North Side.
I found that out later, but many didn’t come downtown back then. As a sophomore, I interned at Johnson Controls. After college, I got a fulltime job as a software engineer at Johnson Controls. Given where I came from, the job and the salary were life changing. My mom was proud of me.
What was it like working at Johnson Controls. Weren’t you there for 13 years?
Yes, and in those 13 years at Johnson Controls, I got a lot of opportunities. I was offered many different roles—from engineering to sales and operations to product management. Johnson Controls sent me all over the world. My first international trip was to Australia when I was in my early 20s. Eventually, I became a product manager for the product Metasys, building efficiency software. Our clients were large commercial organizations, like healthcare campuses, university campuses, or complex sports arenas.
The Metasys Building Automation System connects a building’s HVAC, lighting, security, and protection systems into a single platform to help improve building functionality.
That had to be a great job, international travel, working for a large reputable company.
I graduated from college in 2010. That’s when a lot of tech stories were becoming popular like Facebook. At Johnson Controls, I was working about 40 hours a week. In my free time, I helped friends develop MVP or early prototypes for their startups. I became super intrigued by the startup companies and also investment opportunities. If you have a good product idea, how do you find investors, especially if you are a minority startup? The answer is you try to find a venture capitalist. Before I left Johnson Controls, I founded and managed Alchemy Angel Investors, an angel investment network focused on early-stage startups. I brought wealthy individuals in the same room with diverse startup founders. I wanted the investors to hear local founders’ ideas.
So at some point, did you create the Gateway Capital Fund?
I left Johnson Controls in 2020 to begin fundraising for Gateway Capital. We closed our fundraise and began investing in startups in Milwaukee and in Wisconsin in 2021. Our focus on Milwaukee County was a result of research done on prior investments into the Wisconsin ecosystem. At the time, the data suggested that contrary to popular perception, Milwaukee and Madison did not get the majority of funding. Milwaukee was heavily underinvested on a per capita basis. I also compared Milwaukee to other large cities like Minneapolis, Indianapolis and even Chicago. I found that in many of those deals, investors wrote checks at the early stages of a business venture, in other words, the idea phase. There were a few Milwaukee investments published in the Wisconsin Tech Council’s annual in the 2018/2019 timeframe, and they were large dollar amounts, over a million dollars. I got to thinking that there were a lot of startups who could use lesser amounts of investment, $500,000 or below. That was my idea in starting Gateway Capital Fund.
Reading from your website: “At Gateway Capital, we aim to be the preferred investment partner to young startups by making venture capital as simple and transparent as possible.” How do you go about that?
We understand that there is a natural misalignment between investor and the startup company, the founder. The investor has the upper hand because the founder needs the funds. As investors at Gateway Capital, we are transparent. We try to explain to the founder our return objectives and typical expectations of the industry. Venture capital has historically been very “black box.” I aim to do things differently. I will share with our founders the spreadsheets we create so that they understand the numbers I’m running and any assumptions I’ve made. I tell them the stats that we have to be mindful of. Everybody we invest in we believe to be a winner, but the data shows that if a venture capitalist invests in 10 companies, approximately eight of them will fail. In theory, for Gateway Capital to make money, the two successful founders have to make up for other eight.
Supposing I am a venture capitalist investor, and I want to invest in a startup with the hopes of making a good return. Wouldn’t I want to know about the management of the company I am investing in?
Of course. We evaluate the management team and the leader of the startup.
What is the focus of the Gateway Capital Fund?
As a venture capitalist, we invest in primarily pre-revenue startups with an emphasis on low to moderate income communities. This includes people of color and women. Currently, close to 80% investment portfolio has at least one minority founding team member.
What is your investment process, how you decide what to invest in?
We source deals through many channels. After receiving a pitch, we may request more information from a startup founder during our due diligence process. We evaluate the team, run financial analyses, and sometimes bring in subject matter experts. They provide additional perspective and help evaluate the opportunity. Founders then present to our investment committee. We make an investment decision then.
Again, reading from your website about your Strategy: “Our investment approach is known as ‘Money For Minnows.’ This strategy promotes new company formation by spreading venture capital across diverse technologies and industries.” What do you mean by “diverse technologies and industries?”
It means we’re industry-agnostic and don’t solely invest in one category. Although many venture capitalists do specialize in a single category, like health-related businesses, for instance. At Gateway, we invest across industries. This allows us to cut the risk. As we mature, we may eventually find a specialty and narrow the focus of our investments.
From your published portfolio, you have provided investments for a number of startups over the past three years, I believe. Can you tell me how some of these founders are doing now?
Currently, we have a portfolio of nine startups that we’ve invested in. Again, the investments are across a range of industries including a digital health company called GenoMe that places power back into the hands of patients, giving them visibility into how their medical and genomic data is used and compensating them for its usage. We have some startups in artificial intelligence, including Ictect, an AI solution that automates compliance checks on highly regulated documentation.
Do you have other success stories?
The ultimate success is a successful exit, which generally takes about seven years. Gateway hasn’t been around that long. However, we do have companies getting products commercialized, growing rapidly, receiving follow-on funding, and heading in the right direction.
You mentioned a third company.
Another investment we made was in Golgix, a manufacturing AI company on a mission to make US manufacturers competitive. Golgix’s AI software is built to run on existing plant data. The software helps manufacturers increase production throughput and decrease downtime by predicting process and machine failures, and there is no need for additional hardware. Golgix is based in Milwaukee.
When Gateway Capital invests in a startup founder, are you issued shares of the company?
Yes, we make equity investments.
You, then, are expecting a return on the value of the stock shares? How do you measure that?
Most venture capitalists measure themselves to industry benchmarks for their investment segment. In our case, we are to be compared relative to the early-stage VC segment.
If I am developing an early-stage startup, how do I go about applying for your investment assistance?
That’s a great question. On our website, we have a form where founders can enter information about their startup or upload an executive summary We get a fair amount of proposals, but we only invest in Wisconsin-based startups at this time, out of the current fund.
What is Gateway Capital worth?
We have $13.5 million in assets under management.
For more information, visit gwaycapital.com.
