Fontinalis: A Deep Dive into Detroit's Mobility-Focused Venture Firm

Fontinalis, a 12-year-old venture capital firm headquartered in Detroit, has established itself as a pioneering investor with a dedicated focus on the mobility sector. This specialized approach wasn't accidental, considering the firm’s founders include Bill Ford, the great-grandson of Henry Ford and current Executive Chairman of Ford Motor Company.

Leveraging Automotive Roots for Investment Success

Despite its strong ties to the traditional automotive industry, Fontinalis has successfully navigated the venture capital landscape, competing with and collaborating alongside prominent Silicon Valley firms. This has resulted in a diverse and impactful investment portfolio.

Notable investments include Postmates, which was acquired by Uber in an all-stock transaction, and Lyft. The firm also provided early backing to nuTonomy, a self-driving technology startup later acquired by Delphi Automotive in 2017 for $450 million.

Recent Investments and Future Focus

Fontinalis continues to invest in innovative companies shaping the future of mobility. Current portfolio companies include:

• Gatik: Developing autonomous vehicle technology for B2B short-haul logistics.
• Robust.AI: Creating an industrial-grade cognitive platform for robotic systems.
• Helm.ai: A developer of artificial intelligence solutions for driverless vehicles.

An Interview with Fontinalis Investor, Dan Ratliff

To gain insights into Fontinalis’s investment strategy and approach to attracting promising founders, we spoke with Dan Ratliff, an investor at the firm who joined nearly seven years ago. The following is an edited version of our conversation.

Detroit Roots and the Firm's Origins

TC: Are you originally from Detroit?

DR: I am a lifelong resident of Michigan, having grown up in the metropolitan area and attended Michigan State University. I’ve lived here my entire life, with a brief period in Nashville for graduate studies, before relocating to downtown Detroit upon graduation.

TC: Where does the name "Fontinalis" originate?

DR: The name is Latin and refers to a private nature preserve club where Bill Ford spent much of his youth. It was a place where he developed his passion for conservation and enjoyed fly fishing. He also playfully noted that the name was unlikely to be already in use.

Funding Structure and Independence

TC: What proportion of the firm’s funding comes from Ford Motor Co.?

DR: Fontinalis was intentionally established as an independent entity. We aimed to avoid being a strategic venture capital fund or a family office for the Ford family. From the outset, we sought funding from external Limited Partners (LPs), attracting 20 to 30 investors for our first fund, including high-net-worth individuals, family offices, and institutional investors. Ford Motor Company was not initially an LP, but has since become an investor, though not a majority stakeholder.

We also have a growing number of corporate investors, including an OEM that remains unnamed, as well as insurance companies. Furthermore, we partner with family offices connected to the mobility and transportation industries, who are keenly interested in the evolution of these sectors.

To date, we have raised $260 million across our various funds.

The Midwest Venture Capital Landscape

TC: That’s a relatively modest amount compared to the current market.

DR: We view the opportunity in mobility as a multi-decade undertaking. However, there's a challenge in the Midwest: a less developed base of angel investors compared to coastal regions. While there are venture funds here, the concentration isn’t comparable to the coasts, where a larger pool of founders and individuals with experience in high-growth companies understand the associated risk-reward dynamics.

Investors in the Midwest tend to be more conservative, often having built wealth in traditional industries rather than high-growth startups. However, the success of companies like Duo Security (acquired by Cisco for $2.35 billion in 2018) and StockX is creating positive momentum and fostering an ecosystem conducive to risk-taking and equity-based compensation.

Investment Thesis: Efficient Movement of People and Goods

TC: Fontinalis has a diverse portfolio, including a cognitive platform for robots. What is the common thread?

DR: At its core, Fontinalis invests in companies and technologies that enhance the efficient movement of people and goods. While automotive is a key component, our scope extends to supply chains, logistics, artificial intelligence, and big data, and their impact on transportation. We invest across all modes of transport – road, rail, bicycle, and air – as well as supporting vertical technologies like cybersecurity and additive manufacturing.

Investment Stages and Value Proposition

TC: Are these primarily seed and Series A investments?

DR: We invest across a range of stages, from seed to Series B, and occasionally in later-stage opportunities. We strive to provide the same value as a strategic investor, but without the inherent constraints. We collaborate with other corporate and mobility-focused VCs, leveraging our network to connect startups with relevant contacts within established companies.

Geographic Focus and Global Reach

TC: Does Fontinalis prioritize funding startups in Detroit and the broader Midwest?

DR: Our mandate is not geographically restricted. We have investments on both coasts, in Boston, Tennessee (home to Fontinalis portfolio company FreightWaves), Switzerland, and Israel. We maintain a global outlook, prioritizing our ability to add value to our portfolio companies.

Detroit as a Venture Hub

TC: With a founding partner, Chris Cheever, based in Boston, has the firm considered relocating from Detroit?

DR: No, two of our founding partners are based here in Detroit. Moreover, many of the companies we’ve funded are establishing a presence here, attracted by the manufacturing infrastructure, the Michigan Mobility Center, and our ability to facilitate introductions and provide on-the-ground support.

TC: Does Detroit have the necessary professional services to support startups?

DR: Over the past five years, we’ve seen a growing number of law firms specializing in startup support establishing offices in Ann Arbor, which is very encouraging. Additionally, the University of Michigan’s Research Corridor, the automotive industry, and the availability of skilled mechanical and electrical engineers provide a strong foundation.

Furthermore, city and state policymakers have made significant investments to strengthen Michigan’s position in the mobility sector, through initiatives like the Office of Future Mobility and Electrification and Detroit’s economic development arm, which actively attracts startups to the city. These efforts are complemented by the real estate revitalization led by investors like Dan Gilbert, who has transformed downtown Detroit with Class A office space.

The Allure of Detroit

TC: I recently spoke with Dan Gilbert about the quality of life in Detroit, and he is a strong advocate for the city.

DR: Michigan and Detroit are truly unique. The suburbs offer excellent school systems, and living in Detroit itself is vibrant and exciting. It feels like a startup city, with new restaurants, construction projects, and a thriving social scene. Yet, it retains its historic character, with many buildings over a century old.

The proximity to the Great Lakes, skiing opportunities, and the outdoors adds to the appeal. While comparisons can be drawn to other startup hubs, Michigan offers a distinctive and promising environment.

A Shift in Talent Retention

TC: Anecdotally, is there a sense that people who grew up in Michigan are now choosing to stay, rather than moving elsewhere?

DR: When I was an undergraduate, the majority of students planned to relocate to Chicago or New York. That trend is changing. Now, more people are choosing to live and work in downtown Detroit. The availability of high-end real estate, walkability, and access to sports, music, and cultural events are major draws. There’s always something to do, from theaters and stadiums to art galleries. Detroit is attracting a diverse range of people.