A Note From the Scale Team 

It's been quite the month at Scale! We're prepping for Missouri Startup Weekend, launching a Mentor Network, investing (TBD), and building something hugeee we will announce soon.🤫 What's keeping us up at night? The dozens of amazing founders we've met over the last month. With recent advancements in AI that lay the groundwork for future billion-dollar companies, we LOVE the current opportunities to invest. For example, synthetic data generation can advance the US beyond competing countries for geospatial data collection and labeling for sensor fusion data models -- a mouthful, I know... With that, we believe it’s never been a better time to invest in early-stage founders, so apply for our next round of investments of up to $150k.

🏉 Meet the Scale team here | 🏆 Scale portfolio → here

At the earliest stages, we're investing $50k-$150k and white glove support from a team that has built multi-$B tech companies. Apply here.

Join us on March 10-12 for Missouri Startup Weekend. Tickets are on sale now for 25% off with code MOSW2023 here 🚀

🤝 Collaborate with funds & founders in our Flyover Tech community here 

Join our talent network for founding team opportunities😎

Despite a tough period of funding in tech markets in 2022, there's been over $1 TRILLION of VC-Backed exits since 2020. More than 60% of the value of VC-Backed exits over the past decade happened in the last three years.

ChatGPT will create more companies than it kills, and OpenAI won't be the biggest company leveraging its AI. The same thing happened with Intel and semiconductors.

We recently launched the Scale Mentor Network, a collective of successful operators, builders, and subject matter experts empowering people with their knowledge. Apply here to become a Scale mentor. 🦸🏽‍♂️

📈 Macro Trend Report

• INFLATION | Inflation continues to lag compared to the fed's expectations and target rate. Back in November, experts were predicting inflation to drop between 2.8%-3.1% in 2023, but it's looking far from that as food prices maintain their elevation. In fact, inflation rose 0.5% in January 2023.

• TECH EMPLOYMENT | As new AI companies continue to grow, we can't wait to see how employees bring their creative hunger and build exciting new updates to traditional tech products as they leave their jobs (by choice or not) at well-established tech companies to these new ones.

• HOUSING | According to Zillow, January had the second-lowest total of homes on the market ever (825k). Some experts predict that housing prices will remain flat while others will rise. With the current rate and economic environment, it seems hard to believe anything other than prices with decline.

• VENTURE CAPITAL | Since 2010 60,000 pre-seed and seed rounds have been announced in the US. Even if this year looks bleak, in the last 23 years, investors have looked toward the Midwest and Southeast, and we love how these amazing regional data visualizations show these trends.

  • Even if VC funding and valuations are decreasing, we still see more early-stage unicorns than ever, excluding 2021.

  • In 2022, the median pre-money Angel and Seed valuation increased 9.75% (to $4.9M) and 16.7% (to $10.5M), respectively. The median Seed deal value also climbed, while the median Angel deal value dropped slightly. Although early stage deals are somewhat sheltered from the market dip, growth stage valuations declined by a median of 17.1%.[Pitchbook 2022 US VC Valuations Report]

💰 Midwest Economics

• Mercato Partners closed their $400M growth fund for investments into companies built in cities and states that have been underfunded. With an already impressive track record, including investment into our local friends Paytient, we're excited to see that our founding principle that great businesses can be built anywhere is spreading.

• It was a grueling month for public equity investors, with red across the board. Retail investors might as well rely on high-yield savings accounts at this rate.

💰 Midwest Deals

• Moov Financial, based in Cedar Rapids, Iowa announced a $45M Series B to scale their cloud-based financial platform.

• Michigan-based LuxWall announced a $33M Sequence A funding for industrial manufacturing and product improvement for their Internet Zero Glass

• Supply chain design optimization platform Optilogic announced a $13M fundraise led by MK Capital

• Iowa-based Growers Edge secured a $15M Series B extension along with a leadership transition to grow their sustainable agriculture solutions.

• Check out all 80 deals we tracked here for almost $1B total!

🐄 Midwest vs. National Macro Trends

• Unemployment in Missouri remains low at 2.8%, well below the national average of 3.5% and the Midwestern average of 3.6% ✅

• Thanks to decreasing gasoline prices, the Midwest Consumer Price Index dropped to 6.0% compared to the national rate of 6.4% ✅

🧠 This Month's Recommendations

📚 What We’re Reading

• Whether exited or failed, post-startup founders are about three years ahead in seniority of their peers from the same university

• Community is important, especially when building a business

• We're big fans of angel investing, read more about why it's the best here

• Thinking about starting a venture capital fund? Here is a tremendous article on portfolio construction and how to model your fund

🎧 What We’re Listening To

• Scale's Managing Partner Willy Schlacks talks sectors and drivers of upcoming trends [9 min]

• One of the best podcast episodes we've listened to is top 10 lessons of bootstrapping a $200M business with Patrick Campbell (ProfitWell) [74 min]

• Phil Reynolds, Founder of Devstride and Scale Advisor, talks about lessons learned with his first venture Britecore ($90M raised), on Startup Hustle Podcast [59 min]

📅 What We’re Doing

• We can't wait for Missouri Startup Weekend, taking place March 10th-12th, 2023.

  • Check out how the 2022 winner went from an idea to raising money from VC investors in just 7 months

• InvestMidwest is returning next month on April 12th, and we are supporting the efforts at Scale as a 2023 channel partner!

• Who is attending SXSW with us on March 10-19? Well we will be there virtually...

🎮 Midwest Tech of the Month

Our local friends at Healium announced an oversubscribed $3.6M seed round AND a partnership with Mayo Clinic to provide subject matter and development expertise. Their augmented and virtual reality products are already being used in education, healthcare, and military applications, and represent the largest private equity raise by a female-led business in mid-Missouri.

🚀 Scale Portfolio Company Highlight of the Month

Congratulations to our Cohort I company PitaTech for being featured as a top Startup to Watch in 2023 by Beeso Studio.

🛠️ Resources

• View all active angel syndicates here and source angels at First Round's Angel Track here 👼🏽

• Resource page for founders we made here 📒

• Check out the amazing services (e.g., development, FP&A, marketing, etc.) our friends at York offer to early-stage startups at startup pricing here 🤝

• Top AI tools to imbed into your workflows here 🤖

• Build a financial plan for your next 24 months in under 30 minutes here 🤑

• A spreadsheet to value employee compensation here 💸

Why should you angel invest? Because Venture Capital is the sexiest asset class that improves society while producing outsized returns, duh. Also, venture returns have proven to outperform public equities during a recession. -> If you are interested in angel investing, then sign up here 😇

Keep up with our Medium content here 🔖