Refinery Ventures' Second Fund Targets Series A Startups

Refinery Ventures Closes Second Fund with $36 Million

Cincinnati-based venture capital firm, Refinery Ventures, has successfully completed the raising of its second fund, totaling $36 million. This represents more than double the size of their initial fund.

The new Fund II benefits from the support of a diverse group of Limited Partners (LPs). These include Cintrifuse, Great American Insurance, Western and Southern Insurance, and The Cleveland Foundation.

Focus on "Early Scale" Companies

Refinery Ventures concentrates its investments on enterprise and SaaS businesses at the “early scale” stage. Managing Partner Tim Schigel defines this as companies that have already secured seed funding but require additional resources to reach Series A financing.

Schigel explained to TechCrunch that while seed funding is increasingly accessible in the Midwest, many companies struggle to bridge the gap to Series A. They often achieve product-market fit, but transitioning from sales to friends and family to organizational sales necessitates new skills.

The Importance of Hypergrowth Experience

Investors often prioritize the founder's qualities. However, Schigel believes that few founders possess direct experience managing rapid, hypergrowth. This realization was a key factor in the founding of Refinery Ventures almost five years ago.

He emphasizes that founding experience isn't always essential. Individuals who held roles like employee number two or even twenty, and successfully scaled a company from 20 to 200 employees, are ideally positioned to become founders themselves.

“We specifically seek out individuals who have navigated periods of intense growth and understand how to overcome the associated challenges,” Schigel stated.

Schigel’s Background and Perspective

Schigel’s own career provides valuable insight into the complexities of hypergrowth. Initially trained as an electrical engineer, he established connections in Silicon Valley while working with Apple to support Procter & Gamble from Cincinnati.

His experience extends to venture capital and founding ShareThis, a company that tracks shared online content – recognizable by its sideways “V” icon. ShareThis achieved $50 million in revenue within four years.

Prior to Refinery Ventures, Schigel led and managed Cintrifuse, a fund of funds that invested in early-stage ventures across the U.S., including Greycroft, Upfront Ventures, and Techstars.

“This role provided me with a unique perspective on the startup landscape, one that I now apply at Refinery,” he added.

The Impact of the Pandemic

Even before the global pandemic, a trend of founders relocating from coastal areas was emerging. Schigel believes the pandemic acted as a significant catalyst, accelerating this movement.

He notes a substantial increase in inquiries from Midwestern natives seeking opportunities to return home.

Fund I Performance and Future Investments

Refinery Ventures’ first fund invested in nine startups, including Edgybees, Astronomer, Torch, Tealbook, and Folio Photonics. Two portfolio companies, HALO Health and Engage, have been successfully acquired.

The new fund is anticipated to support a similar number of startups, between 10 and 12. Refinery has already made investments from Fund II into companies such as Vantage Robotics, RedCircle, and StoryTap.

A portion of the funding will also be allocated to identifying and investing in dual-use technologies – companies targeting both commercial and government sectors, mirroring the strategies of Edgybees and Vantage Robotics.