Celebrating a Decade of FirstMile Ventures

Accomplishments, reflections and lessons learned of the first 10 years of growing FirstMile Ventures
​By, Aaron Stachel

This month marks the 10th anniversary of FirstMile Ventures making investments in seed-stage companies.  We raised our first fund in 2014 and started deploying it at the beginning of 2015.  We had identified a big opportunity:  Colorado was an up-and-coming technology market, seed was now a dedicated stop on the way to Series A, but there was a lack of seed capital available for Colorado founders.  Over the past decade, we’ve invested in 66 companies, raised two more funds, and maintained our mission to be the first partner to founders building generational companies in the large, fast-growing markets outside the coasts.
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For me, this milestone is particularly personal. Before entering the world of venture capital, I spent a decade in the Army as a helicopter pilot and have now spent 10 years in each career.  When I left the military, I felt very confident in my ability to execute.  Although each mission was a little different, my units had lots of experience and we felt prepared for anything.  Around the time I started in VC, I read a quote from Fred Wilson (one of the most successful VCs in history) saying it takes ten years to really know if you’re any good at this.  I’ve grown a lot as an investor over the past 10 years, but confidence is different in venture, a field where even the best investors’ tend to miss on a majority of their investments.  

While there is always something new to learn in this business, there are some general principles we've become quite sure of:

1. Patience is a Virtue: It takes years to see whether an individual investment will succeed, and there are a lot of ups and downs along the way.  Even our best investments had periods where prospects looked pretty grim.  It takes even longer to know if your overall strategy is working. From the start, our goal has been to build a durable firm, and we’re grateful that our LPs and partners have supported us through our own ups and downs along the way.
2. The Power Law is Real: A small handful of investments drive the majority of returns in a venture capital fund. In our first portfolio of 31 companies, four of them will be responsible for over 90% of the distributions we send back to LPs.  That holds true even at the top of the distribution.  We’re fortunate to have invested in two multi-billion companies, and even though they are both amazing companies, our best deal has produced over 10x the return of our second best.  This also doesn’t mean that those other 27 companies didn’t have great teams who worked tirelessly to get to a good outcome; it just means our thesis didn’t play out as well as we hoped, which is going to happen more often than not.  It’s also why lower-risk companies don’t fit in a venture portfolio. They are taking a slot away from one of the big wins that will drive fund performance.  Those big outcomes are rare, and you need to give yourself enough shots on goal to have a chance at deals that can return your entire fund (or a multiple of it in the best deals).
3. Focus on Your Process, not Outcomes:  As a pre-seed investor, each investment is a high-risk, high-reward bet.  We’re seeking well-positioned founders, tackling important problems for big markets.  We invest early, when there’s little evidence yet in the form of quantifiable metrics that they will be successful.  Almost by definition, they are working on an important problem that nobody else has been able to solve.  Because our founders are taking big swings, many of them will strike out, but that doesn’t mean they were “bad" investments.  Sure, we’ve made some investments that look naive with the benefit of hindsight, but for many of them, we followed the process and would do every time given the available information.  It’s safe to say you need a little luck to be successful in venture, but having a sound strategy and sticking to it over time creates the conditions to get lucky.
4. There’s More Than One Path to Succeed.  Venture has become a much more competitive industry over the past decade, but it’s reassuring to know that you can chart your own path to success.  When we started, creating a fund focused on Colorado was a quaint idea when there was skepticism that you could attract the talent and capital to build a big company in Colorado.  Fortunately, our ecosystems have grown tremendously, and we’ve been able to ride that wave and prove the skeptics wrong.  There are also profoundly different ways to underwrite deals.  Our best investment was expensive and raised lots of capital.  Our second-best investment produced great returns because we got in early at an attractive valuation, and the company was able to grow without much capital/dilution for us.  You have to be contrarian and right in VC to make real returns, which means you have to be willing to do deals that are likely to make your partners and LPs slightly uncomfortable, at least at first.  
5. Community Matters: Being rooted in Colorado (and now Texas) has been one of our greatest strengths. Our partners have each been investing in our markets for 10-20 years.  The relationships we’ve built with founders, investors, and partners have been instrumental to our success. The later stage you go in investing, the more it becomes about spreadsheets and metrics.  Where we invest, it’s about people and ideas.  Getting to work with ambitious founders and seeing them turn their vision into a reality -  a large company employing hundreds or thousands of people - makes this one of the best jobs in the world!

As we look ahead, we’re more committed than ever to supporting ambitious founders at the earliest stages of their journeys.  We’re already building on the foundation we’ve created over the past decade and added a new partner (Zaz Floreani) to help us expand our reach into Texas - another market with loads of entrepreneurial talent, but very little in the way of VCs willing to write that first check.  We believe the next decade holds even greater promise, both for FirstMile Ventures and the broader Colorado and Texas startup ecosystems.

To everyone who has been part of this journey—our founders, limited partners, team members, and friends of the fund - thank you! Your belief in us has made this milestone possible, and we’re excited to continue building the future together.

Here’s to the next 10 years of learning, growing, and creating generational companies!
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