Dirty, Dull And Dangerous, With C2 Ventures Founding Partner Chris Cunningham

Chris Cunningham, founding partner, C2 Ventures

Chris Cunningham spent most of his career in ad tech, including stints at ironSource and Unacast. He founded the mobile social ad company appssavvy back in the day (as in, the year before the first iPhone had even come out).

But he doesn’t invest in ad tech.

When Cunningham first launched C2 Ventures, an early-stage investment firm, in 2014, he decided to zero in on what he called the “really, really boring verticals.”

In other words, “dirty, dull and dangerous,” as Cunningham described the investment philosophy on this week’s episode of AdExchanger Talks. “What does that mean? Old economy legacy industries ripe for disruption … if it’s not sexy, we’re excited.”

Dull is the new black

But boring is sexy, depending on your perspective, Bill Wise, Mediaocean’s CEO and co-founder, told AdExchanger.

Wise is one of numerous ad tech, marketing and media notables who’ve thrown in with C2 Ventures, a list that also includes Geoff Ramsey (recently retired co-founder of eMarketer), Rich Antoniello (the founder and former CEO of Complex Networks), Jennifer Prince (chief commercial officer of the Los Angeles Rams), Peter Naylor of Hulu, Ari Paparo and John Ebbert, AdExchanger’s founder. (Hi there, John!)

“I’d put it like this: Nobody cares about their plumbing or their electricity until it doesn’t work – and then they really care,” Wise said. “Maybe you can categorize plumbing or infrastructure as a less sexy business, but it never goes away. Using AI or ML to understand road construction, say, or auto insurance, would have been impossible 10 years ago and it’s hard to do. But once you’ve done it? That’s a very sustainable business.”

And it’s a thesis that resonates.

Cunningham joined forces with Matt Olivo, a former CFO but not an ad tech vet, in 2018 before launching the first C2 fund the following year. Now C2’s portfolio – the firm has backed nearly 90 founders so far – includes a wide range of pre-Series A startups focused on building enterprise software and robotics with a little bit of mar tech thrown in for good measure.

Tarform, for instance, produces custom motorcycles made to order. Koffie is an insurance company catering to autonomous vehicle owners. Medmo is a healthcare platform that provides access to affordable medical imaging services for the uninsured and underinsured. Civ Robotics is a construction tech startup for land surveying. Rens makes waterproof sneakers from recycled coffee and plastic.

Matt Olivo, general partner, C2 VenturesMagellan AI is one of C2’s few advertising-related investments. The company, which was introduced to Cunningham in early 2019 by one of C2’s angel investors, Kevin Weatherman,  currently VP of enterprise at Moloco, is a SaaS platform that automates podcast advertising and analytics.

Over the past 12 months, Magellan has helped advertisers spend and monitor more than $500 million on podcast advertising through its platform.

“Some VCs are always chasing the latest trend, like ‘how does my company fit into the metaverse,’” said Cameron Hendrix, Magellan’s co-founder. “Chris and Matt value the same things we value: cash flow and market opportunity.”

Several C2-backed companies have already exited. In early 2020, smart exercise mat company Otari sold to Peloton, and earlier this year the travel tech company Amadeus bought Kambr, a startup that offers revenue management solutions for airlines. C2’s first-ever investment, a CRM management software company called Boostr, raised $7 million in 2020, tripling its valuation.

In the trenches

And now C2 is launching two new funds: a second seed fund worth just north of $20 million and $2.55 million for pre-seed investments through its Tributary Fund. C2 plans to make 20 investments from the $20 million fund – roughly seven a year – at around half a million a pop, with the rest reserved for when those companies hit their Series A.

One of the first beneficiaries of the second fund is a startup called Steelhead Technologies, which has tech to help modernize and streamline internal processes at manufacturing plants. Steelhead announced its $2.2 million seed round on Tuesday.

But C2’s mission is to dole out more than money, Cunningham said.

Founders need advice and access to people with domain expertise as much as they need cash. It’s a particularly appealing proposition, said LA Rams CCO Prince, who told AdExchanger that part of what attracted her to C2 is that its investors are also involved with companies pre- and post-investment.

C2 calls on its partners and investors to provide guidance and mentorship for the companies in its portfolio, including insight into their own previous “pain and mistakes” as founders themselves.

“I believe you have to have been a founder to be a good VC, because you draw empathy,” Cunningham said. “I’m not the guy that killed it … I’m the guy that did a lot of good things and had some singles and doubles, but I’m here to share my lessons with you.”

Also in this episode: investing during a recession, everyone has a “super power” (they just need to figure out what it is), learning from past mistakes and examples of some good (and some very bad) business advice.

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