Q&A with Carter Steffes
Q: How did you get to this point?
A: I was born and raised in Fargo, went to high school at Fargo South, and attended college across the river at Concordia. My plan during undergrad was to become a dentist, but after doing an extensive externship that gave me true insight into what the day-to-day life of a dentist was like, I realized it wasn’t for me. I graduated at the height of COVID, briefly worked at Sherwin Williams, and ran circles in my head trying to figure out what I wanted to do next. Eventually, I decided to apply for grad school and landed at the University of Maryland where I studied finance and explored my interests.
While completing my coursework at Maryland, I thought I might pursue investment banking or equity research after graduation, that is until I tried a few internships and discovered that I wanted to work closer with entrepreneurs instead. During this time, I took my first foray into the startup world, which was when I joined GoAhead Ventures as a student investment scout. At GoAhead,
I spent a ton of time meeting early-stage startup founders, an experience that was highly enriching given the raw talent, incredible work ethic, and mission-oriented mentality of so many founders. Soon after, I was able to build further on my experience at GoAhead when I joined a student-founded startup called Atmos AI. Atmos was a software company that delivered a sustainability reporting platform for private markets, where we were initially selling into venture capital and private equity firms. I was then able to parlay that experience at Atmos into my first full-time role at Catalio Capital Management, a NYC-based private equity firm that was one of our first customers at Atmos.
While at Catalio Capital, I continued to scout early-stage companies on my nights and weekends as a hobby. As I was sourcing deals to other investors, I grew frustrated that I didn’t have much skin in the game until that frustration led to my friend (and business partner) Murtaza and I raising capital to invest in our first deal together on our own. After investing in a few more deals together, our nights and weekends project had turned into what is now New Era Ventures, and I decided to leave my job at Catalio in May of 2023 to pursue New Era full-time. Fast-forward to today and we’ve invested in 14 amazing early-stage teams and are actively scaling our investments and operations.
Q: Am I hearing you correctly that you’re helping founders connect with angel Investors?
A: That’s kind of how it started. In 2022 and early 2023, my business partner Murtaza and I spent a ton of time connecting founders to angel investors, venture firms, and family offices—purely as a hobby and a way of meeting talented people. Eventually, we both felt compelled to invest in these founders ourselves so that we could capture more value for ourselves, rather than just playing connector just for goodwill.
Today, we operate more like a traditional venture firm, investing in and supporting startups full-time, but our model is different from the typical venture fund setup. Rather than investing via a large pool of blind investor capital, we operate on a deal-by-deal basis. This is called a “venture syndicate.” Essentially, we are identifying promising investment opportunities on a company-by company basis, and writing up deal memos that we then share with our network of angel investors. Our investors then can opt in or opt out of investing in any individual deal with us. This model is great because it gives each investor vetted deal flow on a silver platter with full autonomy to choose which ones they want to be involved with, whereas, with a traditional venture fund, investors are committing their capital to a diversified vehicle of startup investments where they have no voice in the investment selection process. This high-touch process serves as an excellent way for us to maintain high-quality dialogue with many investors at a time which has been instrumental in building trusting relationships with them that we are hoping to maintain deep into the future.
Q: Is there a specific industry you are focusing on with New Era Ventures?
A: We’re not focused on any particular industry; we’re truly sector-agnostic. Our focus, however, is on a specific founder demographic: Gen Z Technically, that’s founders who are currently 27 years old and younger, but we’re not overly proscriptive. The point is that we aim to back America’s most talented young people. The only other filter we have is our focus on early-stage teams, which means that we typically focus on pre-seed and seed-stage startups.
Q: How much information do you need to get someone on a deal like that?
A: Before we commit to investing in a company, we typically will take at least two calls with the founding team in addition to collecting a fundraising pitch deck, any relevant financial information, customer contracts, and anything else that might be useful for learning more about the business-specific risks and opportunities. After taking in all the information that the founders provide us with, we also try to leverage expert opinions from our network.
Before sending out an investment opportunity to our network of angel investors, we’ll put together an informative investment memo that lays out all the decision-relevant information. These memos are usually 10-15 pages and include details on the problem the business is solving, the solution itself, product details, team, business model, market opportunity, key risks, financing details, and more.
After disseminating our investment memo to our network, we usually will spend a few days answering specific questions before accepting capital commitments and closing the deal.
Q: Can you tell me about one of the companies you have already invested in?
A: Each investment is unique and exciting to us, but one of our recent ones is a consumer FinTech company called Fizz. It’s essentially a debit card designed to help Gen Z build credit without the same risks as a traditional credit card. Furthermore, they offer awesome rewards that are hyper-relevant to where young people actually spend their money, and their app offers a gamified experience with financial literacy courses, spending monitoring, and more.
Using Fizz is easy—a user can sign up in minutes and connect their bank account via Plaid. Once approved, Fizz will mail a physical debit card and issue the user a daily spending limit that’s calculated by referencing the account balance. When a user spends money on the Fizz card, their account balance is automatically paid off at the end of the day via Fizz’s Daily Autopay. At the end of the month, Fizz reports each user’s payment activity to all three major credit bureaus so that Fizz users can build their credit scores.
The founders of Fizz, Carlo Kobe and Scott Smith, dropped out of school and started the company when they realized that even their smartest Ivy League classmates didn’t understand personal finance. This lived experience coupled with their young mission-aligned team has given them a unique advantage in building financial products for tailored for young adults.
Part of the reason we invested in Fizz was because I was actually a Fizz user myself and I found it to be incredibly easy to use and the spend rewards were optimal for my budget. And as someone who was always advocating for credit cards and building credit amongst my friends in college, Fizz’s mission truly resonated with me.
Q: If someone is looking to raise early-stage venture capital, what tips would you give them?
A: Founders should be ready to talk about themselves as much as they are ready to talk about their business and their market. Why should an investor back YOU? Why are you an outlier as a founder? How did you meet your co-founder and why is your dynamic special and complimentary? Why will the most talented people in your field want to join you? What have you accomplished in your career so far? What kind of challenges have you overcome in life and in your career? Why are you the best person to run a company like yours in the market you chose? Your idea is incredibly important, but the best early-stage investors back the best people above all else.
When pitching your idea, you need to convey that you have a unique insight or advantage based on your personal background, previous work experience, market timing, or some other notable circumstance. You should know the problem you’re solving inside and out, and you should have strong opinions and insights as a result of that knowledge. If you’re able to, build as much of the product as you possibly can and take on as many customers as you can without selling equity. The further along you can get without a venture capital infusion, the stronger a position you’ll be in to actually raise capital. You want to be in the driver’s seat with the ability to choose your partners. Capital is commoditized and founders need to remember that. You shouldn’t take money from people you don’t trust or respect because some investors can make life more difficult for founders rather than being the supporters that they’re supposed to be.
Q: Have you had any challenges?
A: Tons. Everything is an uphill battle when trying to grow with a lean team and a limited track record. When Murtaza and I started New Era, our networks were quite small in retrospect. When compared to where we’re at now, our smaller personal networks made it hard to raise capital for our investments, hard to source high-quality deals from trusted sources, hard to get great founders to take our money (they usually don’t need it), and hard to find industry experts who are willing to share time and expertise with us as we discern whether or not to invest in a company during due diligence. Our limited track record and somewhat lack of pedigree by traditional Silicon Valley standards have been the source of most issues, but by simply staying in the game and working relentlessly, it’s amazing how much we’ve realized we can start to overcome our perceived shortcomings.
Interested?
If you’re interested in learning more about New Era Ventures, email Carter Steffes at [email protected]
The best way to overcome most challenges is to run right through them. With every investment we’ve made, we feel we’ve become more discerning decision-makers, better storytellers, more trustworthy stewards of investor capital, and more helpful supporters for founders. We have a TON of work to do in building our brand but I’m pleased with the lessons we’ve learned and how they’ve put us on a trajectory that I’m excited about every day.
Q: Why North Dakota?
Being in North Dakota means a great deal to me first and foremost because it is home. Having the chance to build New Era while remaining near family, friends, and the community I love is an incredible privilege.
While New Era is not a geographically focused fund, having our ear to the ground in the Upper Midwest might give us access to great companies that firms on the coast either haven’t found yet or have overlooked altogether. Alpha is found where the masses aren’t looking, and we’re betting that Middle America will have some hidden gems that don’t feel so hidden to us. In leveraging our network to access investment opportunities in other locations across the US, we can give local investors access to startup deals that they would otherwise have a more difficult time accessing. Furthermore, our startup and capital network in the nation’s startup hubs will prove us effective connectors for local or regional startups that we may fund in the future. We believe this is important because if most companies aspire to reach true venture-scale, they will need expanded access to capital, talent, and customers from around the country, and I think we will be exception partners for that purpose.
New Era Ventures
neweraventures.com
Linkedin | /new-era-vc
