Graeme Thickins on Tech

Reflections & analysis about innovation, technology, startups, investing, healthcare, and more .... with a focus on Minnesota, Land of 10,000 Lakes. Blogging continuously since 2005.

Category: Investing

chart showing software stock declines the week of Feb 7, 2026

A Fascinating Saga Continues: AI Disrupting Enterprise Software

February 10, 2026 / / 0 Comments

This past week was another brutal one for software companies, as evidenced by the big stock declines you see here (as of market close on Feb 7). This week may have been better for some than the week before, but not by much. Some observers are starting to refer to what’s happening as the “SaaS apocalypse.” Fox Business called it a “$1 trillion rout in U.S. software giants” and labeled it “the software Armageddon.”

Just what exactly happened this first week of February to cause the latest shock to the industry? A single move by an AI company juggernaut. As Fast Company put it, one Anthropic update wiped billions off software stocks. It begins: “Investors fear Claude Cowork’s new agentic features threaten entire categories of SaaS tools.” The article continues:

“Tech workers have been worried for years about the AI tidal wave coming for their jobs, but their bosses are starting to worry now, too.

“Stocks plunged this week as fears escalated that AI advancements will take a bite out of business for many software, data, and professional services companies. The market losses are tied to updates to Anthropic’s AI-powered workplace productivity suite, Claude Cowork, which threatens to replace some software tools ubiquitous in the professional world.”

But despite many in the tech world piling on to the prevailing opinion that enterprise software is dead, there are a few voices speaking out with a viewpoint that all is not lost for the software industry. One example is cited in the closing paragraph of the above Fast Company article:

“Not everyone deeply invested in AI agrees. Nvidia CEO Jensen Huang swatted away worries that AI would eat the traditional software industry after the stock bloodbath that began on Tuesday. ‘There’s this notion that the tool in the software industry is in decline, and will be replaced by AI,’ Huang said, emphasizing that relying on existing software tools makes more sense than reinventing the wheel. ‘It is the most illogical thing in the world, and time will prove itself.’ ”

Another skeptic is Steven Sinofsky, a former Microsoft exec who’s a board partner at Andreessen Horowitz (a16z). Here’s a (long) opinion piece he published this week: Death of Software. Nah. Additionally, an article in The Economist argued a bit against the prevailing dire view: Why software stocks are getting pummelled. Are investors overestimating the risk from AI? (May require a free subscription.)

And the Fox Business article cited above ends with this note: “Despite the stock market turbulence this week, the Dow Jones managed to cross the historic 50,000 level, underscoring the continued exuberance surrounding the AI race.”

For a fascinating, deep-dive analysis of the situation, Ignite Insights published this (very long) post on its Substack just days ago: The Great SaaS Unbundling. Where Software Value Actually Goes When Agents Arrive. (May require subscription.)

(Note: This post first appeared on the blog of my client Timmaron Group.)

From Bootstrapping a $70M Company to Leading a VC Fund: Lessons for Founders

December 13, 2025 / / 0 Comments

Twin brothers Rob and Ryan Weber, founding partners of Great North Ventures, have raised two funds and invested in more than 50 startups to date and counting, throughout the Midwest and the rest of the county. Well before that success, however, they were founders themselves of their own ventures, beginning in their 20s, and they learned a lot the hard way in their life as “operators,” a label they proudly wear. From that experience, it’s no surprise they have actionable advice for entrepreneurs in today’s world of AI and fintech. I recently interviewed Rob and Ryan to hear some of the stories they willingly share as hard lessons for founders launching startups today.

We begin with a story from their early bootstrapping days with their startup, Freeze.com , which they founded in Minnesota in the late 1990s. “We raised an angel round of $320,000 in the spring of 2000, just before the dot-com bubble popped,” said Rob. “We were generating around $50k a month in free cashflow from advertising revenue from our prior dot-com publishing business, so we didn’t really feel we needed the cash from the angel round. However, we were excited to bring on a couple of those angel investors as board members to provide us mentorship and guidance.”

In the year after this angel round, Rob and Ryan hired their first dozen employees and were on the verge of launching their core optimization back-end system, which they had been incubating. “Meanwhile, our monthly cashflow began to decline very quickly,” said Rob, “as the majority of our ad revenues came from dot-com startups that had run out of funding. We were down to less than $100,000 in the bank and were losing money every month.”

That led to a particularly mentally difficult period, Rob said. “I remember one week I couldn’t force myself to walk up the stairs to our office, and the anxiety was causing a serious lack of sleep. Luckily, I got help and worked through this very difficult time.” AI illustration depicting Rob Weber dreading to go upstairs to the office

Rob and Ryan’s board – a benefit of that angel round – advised them to reduce their operating costs and conserve cash to weather the storm. “At age 21, my brother and I had to let go a third of those first employees. It was first time we’d ever had to experience a layoff. It was hard.” However, the pair managed to launch their back-end system, and pretty quickly start to generate significantly more free cashflow with the help of their remaining team.

They were definitely back on track. “By 2005, we had scaled to $30 million in annual revenue and $5 million in EBITDA,” said Rob. I asked him what were the hard lessons he and his brother took away from that very difficult early period.

“Number one, raise cash when you don’t know if you need it,” he said. “It will be easier to do and you never know what the future will bring to your business. And, two, remember your business doesn’t define who you are. Founders sometimes lose track of this because they commit so much energy to their business.”

Because Rob and Ryan have lived the founder’s journey literally from a cold start (pun intended), and now evaluate founders for a living, they have more valuable lessons they can share to help today’s founders. The ones from the early days are especially instructive, as founders who bootstrap successfully for survival often are the ones that VCs find the most promising to fund.

Profitability Isn’t Optional, and Metrics Are Critical

Moving from survival to profitability was a journey the brothers obviously conquered. “When we were just starting out, we had pretty good aggregate metrics for our web traffic, such as how much traffic we were getting each day, from which search terms, and so forth,” said Rob. “But we had no idea how the traffic was converting and contributing to our revenue generation.” Once he and Ryan launched their optimization system, they had much better granularity as to how traffic was converting. “That allowed us to run experiments and optimize for efficiency,” said Rob. “The vast majority of our competitors had no such optimization system, so our revenue and free cashflow started to soar.”

This focus on metrics remains essential for startups today, the brothers point out. “Most lack granular KPI measurement for their businesses, which causes them to make decisions based on intuition alone,” said Ryan. “And that does not scale well.”

There’s a problem with the “growth-at-all-costs” mindset of many venture-backed companies, Rob points out. “Such heavily funded companies can get by with a poorer understanding of the KPIs that drive their business. Even though they operate inefficiently, they can continue to afford to burn lots of cash.” The key takeaway here is that founders mustbuild a fundamentally sound business first, Rob maintains. “Capital should amplify a great business, not create a temporary one.”

The Unfair Advantage of Technical DNA

Both Rob and Ryan studied computer science in college. They didn’t do coding or design work themselves once they launched their startup, “but we were very active and curious about how our team was developing our core systems,” said Rob, “and very involved in product design decisions.”

Ryan added: “Our background studying math and computer science caused us to take a pragmatic, analytical approach to decision making. I also think our technical background made us more relatable across our team. We always placed a high degree of value on technical roles, whereas some companies overvalue sales, for example.”

How involved were Rob and Ryan with their team? “We were very much ‘in the trenches’ understanding how our business was growing,” said Rob. “We were able to make effective decisions quickly. What changed over time as we scaled our business was the need to build a team that was also very entrenched in the technology aspects of our business, and to empower them to make decisions.”

The key lesson here for founders, both brothers agree, is that a deep understanding of your technology, product, and market is your most defensible asset. And having a team that also gets that is mandatory.

Scaling with Scarcity Breeds Creativity

Can a lack of resources help drive a founder to seek his or her own solutions? “We didn’t have a large enough engineering team to automate everything, so we would do a lot of tasks ad hoc,” said Rob. “One example was how we scheduled email campaigns to our opt-in email list. Because that list had grown into the millions, we couldn’t schedule one big email campaign because it would crash our email server. So, instead, for about a year in the early days, I had to break up email campaigns into a series of smaller campaigns and set an alarm to remember to check on them and start up new campaigns. This created a lot of interruption in my personal life – which basically didn’t exist! Eventually, we developed better email scheduling tools, but you do what it takes to grow – and we did.”

The brothers ran their startup – by this time named W3i, and later NativeX – with an intense focus on capital efficiency and a culture of ownership. “When others on the team see how you’re willing to accept certain hardships or personal sacrifices in growing your business,” Ryan noted, “it makes them more willing to take that on themselves. Our early team very much all had this founder mindset.”

The lesson for founders is this: Constraints can actually be a good thing. They force you to build a lean, resilient, and resourceful team.

Looking Through the Investor’s Lens: The Great North Ventures Thesis

When the Weber brothers look at a pitch now, they admit they must see past the flashy growth numbers to the underlying unit economics. “In nearly every first call,” said Rob, “I ask how much capital has been invested into the business to get to where they are now. It isn’t so much how much revenue they’re generating relative to what they’ve burned, but, rather, how much have they really accomplished with the capital that’s been invested?”

With their experience, they ask themselves: Is this a real business, or just a story the entrepreneur seeks to fuel with capital? “I once invested a small angel check into a startup that raised a Seed round pre-launch. I remember the startup burned through all the Seed capital and ultimately never even launched their product. This stuck with me. There are many ‘founders’ out there that, even if they were able to successfully raise a Seed round, still would not be able to organize a team to deliver a well-crafted product that solves a real problem.”

What smart investors like the Webers look for are founders who are obsessed with their business model and their unit economics, not just the funding they seek.

“A really good example of what we call ‘Seed-strapping’,” said Rob, “is our portfolio company WithMe, which began in Chicago, whose founder proudly admits he raised the least amount of capital necessary.”

Investing in Founder-Market Fit

How does Great North Ventures evaluate founding teams today? “I’m looking for founders who have uncovered a market tailwind that is being underutilized and, as such, have created the opportunity to solve a problem in a new way that wasn’t possible before,” said Rob. “Often, this is through the unleashing of an emerging technology where incumbents are slow to adopt.”

Rob goes on: “When Ryan and I were teenagers, in the mid-to-late ‘90s, Internet usage was exploding and, although there were many people in the world experimenting with web publishing, there was a huge imbalance. That is, the opportunity created by the rapid, widespread adoption of the Internet was far greater than the number of web publishers putting up new websites.”

Ryan adds: “Ideally, the founders we look at have been tinkering with whatever technology they plan to unleash so they have mastered the skills required to properly harness it within their business.”

Essentially, the Weber brothers back founders who have a unique, almost unfair, insight into the problem they’re solving. It’s the “Why you?” question.

“Typically, I see the unique insight coming from one of two areas: technology-driven or market-driven,” said Rob. “Founders who have mastered a new technology can often deploy their skills into any number of vertical markets, which can provide them an advantage over incumbents. Think back to the late ‘90s: no one at giant Walmart was going to take on Jeff Bezos when it came to pioneering in e-commerce, despite Bezos having no retail background. Market-driven insights can be very powerful, too, especially in more complex industries where problems are super obvious outside of the industry. When founders have a more market-driven insight but lack technical skills, that’s okay. But we strongly prefer they have a cofounder or early team member who has strong technical skills to complement them.”

Net-net, the brothers look for evidence that the founders are the only people in the world who can build this specific company.

Investing in Capital Efficiency

It’s helpful to look at how the Weber brothers view a startup’s request for capital. Just a number means little – it’s the strategic plan that matters.

“I’ve often seen that, even when startups are competing in the same market, how they deploy capital is frequently more important than the total capital raised,” said Rob. “I’ll give one example from our portfolio. We have a startup in our portfolio called Inhabitr, which was also originally founded in Chicago (but now in California). It provides an AI-powered platform for B2B furniture procurement. Around the time we led their Seed round, a handful of other competitors raised much larger early funding rounds. While Inhabitr invested in its core AI capabilities and chose to partner with others in the furniture retail space, their competitors invested heavy amounts of capital into developing their own inventory and warehouses. Over time, most of Inhabitr’s competitors significantly underperformed because of this poor deployment of capital.”

The Webers’ bootstrapping background gives then a keen eye for founders who will treat every dollar of investment with the same care they’d treat their own last dollar.

Thus, they look fora clear, credible plan for how their fund’s capital becomes a force multiplier for the founders’ existing resourcefulness.

“One thing we often see,” said Ryan, “is startups burning large amounts of capital to fund their unproven go-to-market strategy. A better approach is to deploy small amounts of capital in the early going to develop expertise in one, scalable market channel. Once they’ve mastered that channel, that’s the time to plow capital into it.”

Conclusion: The Best Founders Think Like Investors

The Webers believe, whether you’re bootstrapping or raising millions, the goal is the same: build a durable, valuable company. They know the best founders are always thinking about the long-term health and defensibility of their business.

What final piece of encouragement would Rob and Ryan add? They jointly advise: “Cultivate an unwavering focus on your customers and the problem you’re solving, and let that guide you in key decisions. The investment you make into systems that allow you to understand your customers at the most granular level will likely be your most profitable investment.”

If you’re a founder building with this mindset, and you’re a fit for Great North Ventures’ investment strategy, Rob and Ryan want to hear from you.

To learn more about Rob and Ryan Weber’s background, check out my prior post here.

———-

Note: This post first appeared on the Great North Ventures website, with my byline, and here’s my bio that appeared with it:

Graeme Thickins is a startup advisor and an investor in Great North Ventures Fund I. He is also an angel investor in two subsequent Great North portfolio companies. He has written previously for and about Great North Ventures and its founders over several years.

 

How Two Midwest VCs Have Mastered Success Through Multiple Tech Cycles

September 9, 2025 / / 1 Comment

For twin brothers Rob and Ryan Weber, founding partners of Great North Ventures in Minnesota, entrepreneurship began in college, just as the Internet was taking off in 1996. As computer science majors (and Rob later switching to entrepreneurial studies), they learned quickly that Internet traffic could be monetized. Over a few years, they built several websites that became profitable businesses before they even graduated.

headshots of Rob and Ryan Weber

Rob Weber (left) and Ryan Weber, Founding Partners of Great North Ventures.

They tell a favorite story. An LA company wanted to buy their business and flew them out. They’d never flown anywhere, and were too young to rent a car, so they brought along their mom, whom they introduced as their marketing consultant. But they decided not to sell. Why should they, when they were enjoying making lots of money, having come from humble beginnings? But their real passion was to continue building things no one else was doing. When the dot-com crash came in 2000, they were well positioned to weather the storm, having consolidated their businesses into a profitable entity that, being based in Minnesota, they playfully named Freeze.com.

This is the story of how they moved on from winning in that early tech cycle to master those that followed, and how they positioned themselves to win in what is now the biggest cycle of them all.

Investing in Others’ Ideas

In the early- to mid-2000s, not only were Rob and Ryan running their successful Freeze.com business, which grew to some 30 employees, but they soon became angel investors on the side, backing promising businesses they saw some of their peers starting. And that brought them rewards later when they realized exits from some of these investments. It was a harbinger of things to come, as they went on to became successful VCs in later years. (More on that soon.)

What happened just a few years after the dot-com era was the dawning of another huge cycle, driven of course by mobile technology — and most notably by the iPhone, beginning in 2007. The Webers’ business, which had by now adopted the name W3i, jumped on the opportunity to benefit from the explosion of opportunity that presented itself in mobile advertising.

Lessons Learned

Looking back, what did the Weber brothers learn from their experience in those first two tech cycles?

“In our high school to early college days, we spent 1996 to 2000 marketing our different websites, so that by the time we launched Freeze.com, we already had an in-depth understanding of how to grow an Internet publishing business efficiently,” said Rob. “While others were burning huge amounts of VC capital in the late ’90s, we were growing a bootstrapped publishing business built on a strong foundation. What really set us apart from other dot-com businesses at the time was our proprietary business intelligence system, which gave us a competitive advantage in optimizing traffic acquisition and site optimization, including proprietary A/B testing systems.”

“We were heavy users of performance data,” said Ryan. “We pushed the limits of data center capacity in the early 2000s, actually having to build out our own.” (Note: well before the cloud tech cycle.) “We ran thousands of experiments optimizing our website using A/B testing through our proprietary back-end publishing technology. That allowed us to dominate the category of free PC software versus other rivals for many years, leading to strong profitability. We built recommendation systems early-on using data we collected to optimize the performance of our website.”

Rob added: “When the dot-com bust occurred in 2000, the tide went out on thousands of VC-backed dot-com businesses. Those that survived and thrived were the ones that focused on iterating quickly and taking a very analytical approach to delivering efficient, lasting growth.” Freeze.com was indeed one of those.

Technology Was Paramount

Ryan Weber recounted lessons learned as the brothers built their expanded business, W3i, and leveraged the latest technology advances, including AI and ML (That business was later renamed NativeX.) “We recruited Dr. James Shanahan, a PhD in machine learning then affiliated with UC Berkeley. Under his guidance, we developed predictive advertising models that leveraged non-personally identifiable data we collected from our embedded SDK in popular iPhone and Google Play apps and games. Our prediction models were leveraged to increase conversion rates for our advertisers.”

NativeX’s ad tech allowed developers to make more money off their apps. For example, Sega was one gaming firm that partnered with NativeX to boost its mobile advertising revenue. “We operated in the mobile ad tech space,” said Rob. “There were hundreds of competitive companies. We had a successful exit — most didn’t. Applovin became one of the other big winners. Their team delivered incredibly high-performing AI models.”

Rob offers some insightful history in this regard. “Early on, Amazon performed extensive experimentation and A/B testing to optimize customer lifetime value. Unlike many competitors who focused on short-term profits, Amazon’s foundational ‘customer obsession’ and long-term perspective led it to make strategic bets on what would build loyalty and increase customer spending over time. This was similar to the system we built early on with Freeze.com. Obviously we didn’t achieve the scale of Amazon, but with a similar approach, we grew very fast and efficiently.”

In the early days of the App Store, which launched in 2008, the most common way to make money from an app was to charge for it, often 99 cents. “But just like with the web, over time it was the free apps that quickly went on to dominate the traffic on mobile,” said Rob. “And just like the Facebook games, which grew extremely quickly just prior to this time period, free-to-play games leveraging virtual currencies dominated the top-grossing charts in the App Store. We knew that not all popular free games and apps were great for driving demand for virtual currency, so we focused on creating a system to help games and apps that had poor monetization to make more money. Just like earlier when we focused on PC software categories that generated excessive amounts of traffic but that consumers were unwilling to pay for.”

Leveraging Some Heavyweight Experience

The Weber brothers never really needed outside investment as they grew their profitable businesses. But, in their journey to grow W3i / NativeX, they realized that taking some angel investment from certain key, longtime Silicon Valley tech execs, whom they had met, would bring value to their business. These investors became valuable advisors and mentors as the brothers expanded the business to 170 employees. They were successful operators who guided them at critical junctures. And they benefited when NativeX went on to be acquired in 2016.

“We also tapped the strength of the technology ecosystem here in our own state of Minnesota, in terms of managing and leading as a data-driven technology business,” said Ryan. This was as the mobile tech cycle was leading right into the cloud cycle. “We hired Andy Johnson as our CEO. Andy’s background as an executive at various companies gave him a front-row view of the world’s leading database marketing solutions and some of the organizational and business requirements to scale such a business, which was helpful to us for our digital advertising model.”

NativeX built the technology it needed and also leveraged other talent in the San Francisco Bay Area. With the aforementioned Dr. James Shanahan, an adjunct professor at Berkeley, Ryan said they were able to recruit top PhD students to work for them that were primarily looking to gain experience before commanding top market wages. The competition for this talent was fierce, Ryan recounts. “But the key was having a leader who was a competent mentor and coach. Shanahan was very personable, encouraging his team to be a part of the company and to fully engage in team-building activities. He knew the stakes were high and went out of his way to build and retain key talent. Also, Shanahan was active in the industry, striving to understand the state of the art. That included, extremely early-on, following advances in neural networks and their breakthrough uses of ‘deep learning’ – foundational research sparking massive interest in AI, which eventually led to LLMs – and seeking to figure out the trajectory and potential for our business.”

“At W3i, we had only built our A/B testing capabilities internally, and we outsourced multi-variable optimization to companies that had capabilities using statistical and machine-learning systems, including one that came out of MIT,” said Ryan. “But as we evolved to NativeX, we required high-capacity systems that could train offline models, using statistical and machine-learning in an ensemble approach, which could then be deployed to make decisions based on predictions in less than 200 milliseconds. With NativeX, we essentially built an intelligent ad server for determining the effectiveness of ads served towards a targeted outcome for the advertiser.”

While NativeX was reaching its full potential in May 2014, VentureBeat, a tech innovation news outlet, ranked the Webers’ company No. 6 on a list of the top-10 most effective monetization companies. Fast forward, in February 2016, Mobvista announced plans to acquire NativeX as part of its global expansion in a deal reported to have paid gross proceeds of about $25 million in cash.

Moving On to Their Next Big Act

After NativeX was acquired, the Webers made a significant transition in their careers. With their notable success as operators in the dot-com cycle and, later, in the mobile and cloud tech cycles now behind them, they took some time to think about their next move.

“Ryan and I had been successful angel investors for 10 years at that point, but we had never talked about launching a fund until a year after we sold NativeX,” said Rob. “We had seen a small number of new VC funds spring up, and we felt we could deliver more value to founders by sharing our operational knowledge with them. We knew the operational guidance provided by most VC funds was shallow, because most general partners had never scaled a business before and lacked perspective.”

Startup founders will invariably say they prefer VCs who are former operators. They know they’ve been in their shoes. They’re very aware the road is far from easy. Like them, operator VCs have clawed their way through the tough times, pitched endlessly, suffered all the turn-downs, built teams, and struggled to get to product-market fit. The Weber brothers were confident that founders wanted investors who not only get all that, but have actually lived through it.

So, in 2017, the brothers embarked on the launch of their first VC fund, which they initially called Great North Labs (later changed to Great North Ventures). They ultimately raised just under $24 million for that first fund.

Was that transition from operator to VC difficult? Did the idea of pitching investors rather than customers mark a radical change for them? “We were blessed to find early support from limited partners who knew about our success as founders and angel investors from our prior 15-plus years of history with startups,” said Rob.

Looking back, Rob said: “If you had walked into our office while we were growing our W3i / NativeX business, on the walls throughout there were LCD screens with the KPIs for our budget and the KPIs related to our business. We knew hour by hour exactly how we were doing. I miss that part of it, the real-time operating aspect. You don’t get that in an investment business. As a VC, you don’t control businesses, you just own small percentages of your portfolio companies. But when you’ve seen things work and not work, you do get to make suggestions. That’s the value with an operator-led fund such as ours. We’ve been there.”

Ryan added: “Yes, we certainly provide mentoring and coaching as an operator-led fund. We also have many supporters who have scaled businesses. So, we’re serious about actively helping our founders, either ourselves or by tapping our supporters who have the right domain expertise. In addition, we have relationships with local talent and international talent, and that includes full-time, fractional, and agency-type contractor relationships. We know at which stage it would make sense to put any of these in the seat.”

Looking for the Best Founders

So, how do the Weber brothers agree on deciding to invest in a given startup? What key things do they look for?

Says Ryan: “At Great North, we’re founder-first and economics-driven. We back gritty, insight-led teams solving urgent problems in large markets.”

Rob adds this: “Number one, I’d say we look for ‘blue ocean’. Have the founders identified a new market space, or a new approach to an existing market, and become a ‘one-of-one’ company with no meaningful direct substitutes? Number two, we look for customer acquisition advantage. Companies that have identified an efficient way to scale.”

What are some key traits these VC brothers look for in a founder before investing? That was an easy response for Rob: “We like those that demonstrate speed of execution early on.”

And he expanded: “Another value we look for in entrepreneurs is accountability. By that, I mean don’t be a victim. Don’t let people tell you no. I think you’ll see this pattern with successful entrepreneurs. They’re going from zero to one with or without you, and you’re either on the bus or you’re off. But they’re doing it. They’re not waiting for someone to decide if they can do it. They’re doing it.”

When Ryan is asked his take, he has even more to say: “Grit plus velocity. Founders who are relentlessly resourceful, ship and learn fast, and show consistent weekly progress. We look for founders that have a clear, data-backed thesis and a deep empathy for the user and their problems.”

Finally, Ryan said. “We look for ‘talent and selling magnetism.’ Can they recruit A-players and win customers and partners with crisp, metrics-driven storytelling.”

Early Success Leads to Fund II

Great North Fund I, closed in 2018 at just under $24 million, has 15 remaining portfolio companies and is fully deployed, except for limited follow-on investments. Fund I breakout companies in Fintech and Proptech have achieved scale, and continue to grow very quickly and capital efficiently, including Branch and WithMe.

With the Webers’ background in publishing optimization, Great North has even invested in certain Media Tech companies, such as Featured.com and Pear Commerce.

The success of Fund I led to Great North Ventures closing its Fund II in 2022, at a much larger total of $41 million, with many new limited partners participating. That fund is now invested in 27 companies to date, with approximately $15 million of its funds remaining to be deployed, including as follow-on investments.

Now the Great North Ventures team also has its sights on the launch of Fund III. Stay tuned!

The Biggest Big Tech Cycle of All Now in Full Swing

Today, it’s quite clear the era of AI innovation is here and rapidly taking hold. Great North Ventures is actively investing what it sees as the best opportunities, positioning the firm for even more success in its role as an experienced investment partner. Its latest investment themes have focused on vertical AI applications, fintech, proptech, and enterprise productivity.

What’s an example of these themes that Great North Ventures sees today? And what are some portfolio companies leveraging these themes? “I’ve heard others cite ‘SaaS-plus’ – but I call it embedded finance,” said Rob. “The Total Addressable Market for many vertical software companies can appear small but, through embedding financial products, the expansion revenue can exceed the expectations of most. We first saw this with one of our earlier angel investments, FieldNation. We are now seeing similar expansion opportunities in companies in our portfolio like HLRBO. We also like to invest in the infrastructure companies that are supporting this trend, such as Yardstik and LendAPI, both also in our Great North Ventures portfolio.”

Inspired By Break-Out Startups

When judging a VC firm, one of course looks at the growth of the companies in its portfolio. That growth has been impressive for the Webers. It’s also informative to ask these twin brothers what inspires them to further success – namely, what’s a favorite break-out startup that’s not in your portfolio?

“I admire what the founders of Sezzle have been able to build,” Rob said. “From our earliest conversations with them, when they were just starting, they were adamant the existing Buy-Now-Pay-Later companies like Affirm and AfterPay were not serving under-banked consumers well. They found there was an enormous opportunity to use AI and other available data to make better credit decisions.” (Note: Sezzle was founded in Minnesota in 2016, and was just ranked the second-fastest growing public company in the state, up from 18th fastest the prior year.)

Ryan cites another one: “I admire Brad Dwyer at Roboflow from Des Moines, Iowa. He’s the archetypal ‘builder.’ He learns by shipping, turns frontier tech into practical workflows, and iterates ruthlessly from real user pain. He’s also a community catalyst and talent magnet, consistently expanding the circle around the company. This is a Midwest breakout that reflects the traits we prize.”

Where Great North Ventures Goes From Here

A recent study by MIT found a 95% failure rate by enterprises trying new Generative AI tools. Yet startups are succeeding by creating visible wins in narrow workflows, then expanding. The same study finds a 67% success rate in full deployment.

“Think in terms of the last mile of AI,” Rob Weber contends. “In this GenAI mega cycle, the startups that deliver immediate value are going to win.”

The Weber brothers are quick to identify the unique value proposition of their planned Great North Ventures Fund III. It is based on their team having demonstrated a successful entrepreneurial and investing track record through past mega innovation cycles – dot-com, mobile, and cloud – which gives them the unique ability to attract the top startups and talent fueling today’s mega-cycle: Generative AI. “The largest gains businesses are seeing from GenAI,” according to Rob Weber, “are coming from startups that are solving narrowly focused problems and expanding outwards. We believe these are ideal conditions for a small, vertically focused VC fund.”

As they look to continue their investment from Fund II, and from the future Fund III, Rob and Ryan define their firm as operator-investors focused on Vertical AI and Embedded Finance — a pairing they believe will produce the most capital-efficient, defensible companies of the next cycle. The firm’s sweet spot is seed-stage teams turning frontier capability into practical, measurable outcomes, fast. Great North is active in real estate/proptech, financial services (banking, payments, lending, insurance), and media/advertising tech – areas with clear pain, measurable outcomes, and fast commercialization. The firm invests both in full-stack vertical apps and in infrastructure that lets those apps embed finance safely and quickly.

Bottom line, they say: “We back founders who can ship, prove, and compound – turning AI into workflow, and workflow into durable fintech economics.”

———-

Note: This post first appeared on the Great North Ventures website, with my byline, and here’s my bio that appeared with it:

Graeme Thickins is a startup advisor and an investor in Great North Ventures Fund I. He is also an angel investor in two subsequent Great North portfolio companies. He has written previously for and about Great North Ventures and its founders over several years.

My Predictions Post for 2025: All Bets Are Off

February 5, 2025 / / 0 Comments

[Disclosure: This post was in no way, shape, or form written by “A.I.” It is purely “H.I.”]

Well, it’s now early February, so I got through the whole month of January without writing my perennial New Year’s predictions post. Last year, it look me three weeks into January before I gathered up enough angles to blather about. This year, there were tons of predictions swirling around in my head around yearend that I thought were bound to come true — but those were so obvious to me that I thought spewing them out would sound stupid. or just plain boring. So, the spirit never moved me to hammer out a post.

an AI-generated image of men looking at a Predictions Market wall display

Image created by me using ChatGPT’s DALL-E.

This year, I think I’ll just revisit my last year’s predictions and crow about how many were right — or that exceeded my expectations. I’ll also grade any that were wrong or “to be determined.” Here we go, with my words from last year’s post stated first in italics:

• AI … The hype curve has peaked. Enjoy the ride down into the trough of disillusionment. I won’t say anything more because… are there any more words to say at all that haven’t already been said about AI in 2023? A breather is needed for sure, because the hype has been getting out of control as we sit here in early 2024. (Note: I am not anti AI, I am anti *AI hype*… ) Verdict: WRONG! The hype did not let up, I’m sure you all agree.

• Startups … I predict the number of startups will pick up somewhat in 2024 (from 2023’s dismal number). Verdict: RIGHT! According to Crunchbase, the overall number of startup formations, as measured by global venture funding, did slightly increase in 2024 compared to 2023, with the majority of this growth attributed to the significant rise in investment directed towards AI-related startups.

• VC … In 2024, I will not be surprised if more VC funds shut down. Pitchbook reported in December that 38% of VCs “disappeared from dealmaking in 2023.” Verdict: RIGHT! Consider this recently from Pitchbook: “More venture firms than ever are becoming zombies. In 2023, 15,303 unique investors participated in at least one VC deal in the US. But this year, that figure has dropped to 11,425 investors, according to the Q3 2024 PitchBook-NVCA Venture Monitor.” Ouch.

• Apple … My price target for $AAPL shares is $220 by yearend… Verdict: RIGHT! But, actually, the share price of my favorite stock  exceeded that number, by a lot: it was $250 on 12/31/24! (Okay, I can’t pass up the temptation to predict a price by the end of 2025. Let’s go with $290!)

• Sports / National … Will gambling on NFL games get out of control? One senses that a crackdown must be coming. Right on cue, Minnesota legislators are trying to have sports betting legalized in our state. Verdict: RIGHT! Sports gambling TV commercials increased in frequency, as any viewer of pro sports on TV can attest — yuck!! But WRONG! – no gambling crackdown appeared that I have seen. Perhaps in some states? Here in Minnesota, thankfully, sports betting still has not been legalized.

• Sports / Local … The Vikings will do better. Which isn’t saying much. And Gopher football damn-well better improve as well! 2023 was embarrassing. One highlight in 2024: we’re finally going to the Rose Bowl! Verdict: RIGHT! On both counts. And my personal favorite of the year was getting to see that Gopher win vs. UCLA in-person at the Rose Bowl! Some awesome memories.

• Higher Ed … College enrollments will continue to drop nearly everywhere, but prices will of course not fall nearly as fast… if at all? Verdict: RIGHT! At both public and private non-profit four-year colleges, there was a 6% decline in enrollment in the fall of 2024. For 46 states, Inside Higher Ed found the average drop was almost 7%. What about costs? In 2024-25, average tuition and fees increased by 2.7% for in-state students at public four-year institutions, and by 3.9% for students at private nonprofit four-year institutions, before adjusting for inflation.

• Minnesota State Government … Complete DFL control will end — it has to! Verdict: Unfortunately, TBD. If you live here (or, if not, you may have seen national coverage), our legislature is still completely dysfunctional — not even in session at this late date! Don’t get me started on this. [Update 2/7/25: progress! So, this pick could turn into a RIGHT!]

• Anywhere But the City … Within the state, the escape from the central Twin Cities to the metro area suburbs and rural MN will continue… Verdict: RIGHT! The populations of Minneapolis and St. Paul both appear to have decreased in 2024 compared to 2023. Minneapolis has had an annual decline of 0.44% per year since 2020. And St. Paul’s decline has been even more during that time, though specific 2024 data is not yet available. Meantime, census data shows the populations of the suburbs and prime out-state locations (meaning where property valuations are especially increasing) are both on the rise. The population of Crow Wing County, for example (which encompasses part of the Brainerd Lakes Region), grew by 3.69% since 2020, with an estimated growth rate of 0.61% in 2024. And, in a study entitled “The Best Places to Live in the Midwest” conducted by Consumer Affairs, Plymouth MN ranked among the top 10 best Midwest cities to live in, while its larger neighbor Minneapolis ranked in the bottom five. (Sigh, it used to be a great city.)

• The Media Business …. Let me go out on a limb 🙂 — the media industry will continue to contract in 2024. Many more jobs will be lost. Verdict: RIGHT! Nearly 15,000 jobs were eliminated in 2024 across broadcast, television, film, news, and streaming — “extending a two-year run in which the news and entertainment businesses were dealt body blows,” as reported by The Wrap.

Not a bad performance for me, with eight RIGHTS and only two WRONGS (plus one TBD). But, as far as making a long list of predictions for 2025?  I’ve decided that all bets are off! Why? Well, with an improving economy, a promising outlook for increased M&A activity, and, yes, even a better environment for early-stage startup funding, it could be a blockbuster year. So, frankly, it’s beyond my wildest imagination to make predictions right now!

Yes, I remain, as always, an unapologetic optimist!

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