Mischievous is not the word you want to hear about the person managing your investments. At least not until you get a little context. Someone who’s mischievous doesn’t settle for the norm. James Burgum was just that kind of kid, saying that he was in “constant motion.” He grew up and “evolved to push the status quo.” He’s now a partner at Arthur Ventures, a venture capital (VC) firm. These firms specialize in the high-risk world of investing in new, unproven businesses. Why? Because when there’s a payout, it’s often huge. Accel gave $12.7 million to a little startup called Facebook. Seven years later, the investment was worth $1.9 billion.
Faecbook is right at home in Silicon Valley. That is the go to for investors interested in finding tech startups. Except if you’re a status quo questioner like Burgum. Arthur Ventures prides itself on investing anywhere but Silicon Valley. It’s also exclusively investing in business-to-business (B2B) companies. Take the home consumer out of the buying and selling, and you’ve got B2B. Picture a food producer needing to buy salt. Only with Arthur Ventures, it’s all in the tech sphere. “Software is one of the greatest inventions to improve human productivity…It’s pervasive. It’s in everything we touch…It truly is transformational,” says Burgum.
A lot of traditional investors shy away from tech-based startups because of the high risk. Odds are, a startup will fail. As in 90% of them will fail. This Forbes article lays out why.
Loss is part of being a venture capitalist. Burgum remembers a particularly painful failed investment. He didn’t say how much he lost, but it’s definitely way more than a million. “It’s nauseating. It’s real money…and it’s not yours. There are investors who have entrusted us.” Burgum says that sting fuels his desire to act responsibly. “You will have some companies that outperform and get you 10 times your returns…and some that are zero, so it averages out to the middle somewhere. Our goal is to drive a 3x return.”
Arthur Ventures manages portfolios for investors, but it keeps an eye on the state’s economy. “The capital piece is an important part of the tech ecosystem…and in North Dakota today, we are deficient,” says Burgum. By itself, Arthur Ventures manages $65 million. The company wants to see a total of $1 billion under management across multiple money-managing agencies. “It’s a little bit of a shocking goal,” he admits, but argues that “capital acts like gravity. Jobs flow downhill toward capital.” He also has to admit that it goes beyond the state’s economy. He gets a charge from working with tech entrepreneurs. “I thrive off of their passion to disrupt the status quo.”