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Apr 10, 2017

Venture Capital Is for More Than Tech: Why Non-Tech Venture Capital Firms Could Be the Future


For many, the term venture capital conjures images of Silicon Valley startups.  Teenagers in garages being handed seven-figure checks. Coders with computer-covered kitchen tables writing the next great app or program. These are not unreasonable assumptions. From dot-coms to software and more, venture capital has been the brass ring that so many young tech companies have sought. But the Silicon Valley glamour has distracted from the very real (and very profitable) world of non-tech venture capital.

Breaking the Spell

The illusion that a company must be a technology-focused entity in the heart of the Santa Clara Valley is just that, an illusion. It’s a fabrication that distractions from incredible possibilities of non-tech venture capital investments. There are a number of highly successful VC firms that represent companies not in regard to their industry but in regard to their viability. Any well-managed company in any industry is worthy of investment, and some of the strongest venture capital firms already know this.

Non-Tech Success

Tippmann Pneumatics Inc. had been growing and thriving for nearly two decades. In fact, they had been around almost as long as the venture capital firm that came calling when Tippmann realized their growth was so astronomical they needed an investment for new management. Summit Partners – a VC firm that invested over $5 billion in companies like McAfee and WebEx – saw everything they looked for in an investment:  revenue, profit, strong management and an unparalleled product. That product? Paintball guns.

Tippmann was more than just some anomalous investment. At the time of their acquisition, non-tech venture capital opportunities made up nearly 60% of Summit’s investments. And they are not alone. Major venture capital firms from New York to California have found value in everything from bag-makers to makeup producers.

The Shifting Landscape

While Summit Partners embraced a more balanced approach to tech vs. non-tech investments, not all venture capital firms have always been as equitable. The allure of the next Facebook is often enough to make firms but all their investment eggs in the tech basket. But even more tech-heavy investment firms like Accel Partners have begun to drift toward a 50-50 split between tech and non-tech venture capital investments. And shifting landscapes is more than just a metaphor. The concentration of investments in the tech world take place in San Francisco, Los Angeles, New York City and Boston. The greatest opportunity for investments beyond these four cities is in the realm of non-tech venture capital. As VC firms begin to explore opportunities beyond the Big 4, they are going to be more open to companies like Tippmann Pneumatics, which was established in Fort Wayne, Indiana.

If Not Tech, Then What?

We’ve already seen companies who produce everything from makeup to paintball guns, but the opportunity for non-tech venture capital investment is incredibly wide and growing exponentially. There has been a well-established history of investments in the worlds of medicine and finance, and those will most likely continue to grow. Other industries that show exceptional promise include manufacturing, agriculture, renewable energy and more. Tech is not going away, but the opportunity for non-tech venture capital could prove to be incredibly profitable.

Davalyn Corporation has been providing industry leaders with forward-thinking talent for nearly three decades, and they recognize the need for venture capital firms to attain dynamic candidates that not only have a proven record of success in tech investments, but the ability to capitalize on the opportunities presented by non-tech venture capital investments.

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