Jenae Pitts is managing partner and director of operations for OneTen Capital. She came to Buffalo, N.Y., from Oklahoma, where she took a dental services organization through an aggressive growth phase, from 26 to 54 offices within three years. Now, she is passionate about helping young companies accelerate their growth through development of enhanced business processes, and believes that “Buffalo was built on radical engineering accomplishments and the best are yet to come.”
Tell me a little about your background and what inspired you to become involved with venture capital.
Through working with a number of early-stage and growth companies, I have developed an appreciation for how truly difficult it can be to transform an idea into a business. Securing the capital required is daunting--and for many entrepreneurs, completely uncharted territory--but the early challenges of mastering your product, creating market attraction, and executing on your plan are compounded by the fact that it often must happen simultaneously and in concert with a number of other moving parts … all with really limited resources.
Additionally, in hardware and engineering companies (which is our focus), the capital requirements are high and arrive early. So, I wanted to get involved with venture right at the intersection of financing and operations, which is a special feature of OneTen Capital’s Coalition Investing model.
How did OneTen Capital come about?
In thinking about some of these gaps left by venture and the challenges of being a hardware or engineering startup, and considering the strengths and missed opportunities of this region, we saw that there is both the need for what we provide and a dearth of resources to address the need. OneTen was born to help aggregate the capital and the resources to bringing the two together.
Does it differ from traditional venture capital organizations? If so, how?
Yes, OneTen helps hardware and engineering-based innovation companies raise money, but then remains intimately involved long term, rolling up our sleeves alongside the founders to enhance results. For the portfolio company, we provide a power-packed tactical team, the added benefit of our experienced advisory board, and weekly on-site support. Our hope is that by getting involved early and remaining engaged after the funds transfer, we can help off-load some of the fundraising stress so the companies can continue doing what they do best, relieve some of the learning curve pressure by handling business points that are sometimes not core strengths, and provide guardrails by surrounding them with experienced and engaged advisors who have already journeyed from idea to market or to an exit.
Our model is a departure from the traditional venture model, which charges a management fee each year regardless of the company’s success. We believe this is a misalignment of incentives. Instead, we do well only if the company does well and if we have added value.
To a certain degree, a “good deal” fits a formula in venture, and good ideas are overlooked because the deal doesn’t fit. Having a serial entrepreneur for a founder is a good example of a sought-after deal feature, but every serial entrepreneur has to have a first. We invest early energy into where we can be additive or bring in resources to strengthen the deal we are about to do before we do it.
How does Coalition Investing differ from traditional investing models?
Typical venture capital depends on making small investments into a large number of companies (because many are statistically destined to fail), and then doubling down on the ones that show promise a year or two later. The idea is that one or a couple rise to the top and pay for the sins of the rest.
This can be crippling for a young company, because raising money by chunks of $25,000 is excruciating when you should be putting every energy into growing the business.
OneTen is flipping the script on typical venture capital by finding deals that are de-risked beyond that first round, helping them to raise meaningful capital that will put the company in a position to succeed, then staying intimately involved to guide and support them. In doing this, we circumvent the scattershot approach and increase our chances for success (investor returns).
This provides an interesting avenue for WNY enthusiasts who would like to put some capital out onto the field, invest in Buffalo's future, and get involved operationally.
What kinds of businesses align with your organizational vision, and how can entrepreneurs with those kinds of businesses connect with OneTen Capital?
OneTen specializes in working with innovative hardware engineering companies in the early stages. Ideally, they are nearing completion of their technology and product development and have a charted pathway to customers. At this point, we are pretty accessible and can be reached through our website or at firstname.lastname@example.org.
Additionally, and in the spirit of strengthening the ecosystem, we are enthusiastic about partnering with legacy organizations around WNY that believe they could be helpful to these startups in some way. We would be happy to connect about ways to get involved.
How many businesses does OneTen Capital currently work with? Is there a maximum number?
We are currently working with Vader Systems and are looking to be working with a maximum of five companies by next summer.
What are some current opportunities that you are most excited about? Why?
We are watching the aerospace, defense, automotive, and retail industries closely, because they are taking extremely innovative steps and are primed for massive upticks in advancement with the expansion of 3D printing, robotics, and now, possibilities in material science.
As a startup yourself, do you bring a new perspective to the capital space?
Both as a startup and a newcomer to Buffalo from the Wild West, I do bring a different perspective to the space. I came to town from Oklahoma City, and OKC’s revitalization story parallels Buffalo’s in many ways. This is an energized time to be in Buffalo, and we may also do well to look for ideas from the other iron-belt cities like Cleveland, Detroit, and Pittsburgh that are having great success attracting capital and building healthy ecosystems.