Huntsville company fills Alabama’s venture capital gap

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A Huntsville-based venture capital studio is filling a long-standing gap in Alabama’s tech ecosystem – access to seed capital.

Mark Two Ventures is funding a $1m seed round for Birmingham-based Astound Research, and plans to inject another $4m into the companies before the end of the year.

“We want the founders to stay here,” said Patrick Cooney, one of the founders of Mark Two Ventures.

Mark Two will provide venture capital to new technology companies to help with product development, software engineering and design. Cooney, as well as Glenn Clayton, both from Alabama, focus on Southern startups.

Clayton launched his first startup from his dorm at UAH in 2004 and has been involved in everything from a software development company to one of the first online marketplaces for tutors. Along the way, he has raised around $35 million for his own ventures. Cooney has raised $170 million in seed capital for his businesses, which range from workforce to consumer pharmacy technology.

And venture capital — the ability to raise money to get your tech business off the ground — has long been a barrier for Alabama entrepreneurs, because the really big capital has historically stayed in the coasts and major metropolitan areas known for their technological success.

Cooney said the COVID-19 pandemic, with the integration of remote work and video conferencing, has made localization a little less of a problem when looking for investors.

But Birmingham and Alabama still face challenges, such as expertise. There’s plenty of talent in the South. But in New York, for example, Cooney said companies can quickly find the money and the smarts to build a venture-backed business.

“I think everything is going in a very good direction,” he said. “We just want to act as a catalyst for that. We are here to do it and we can deploy capital quickly and efficiently.

For example, the company’s first investment. Astound Research is developing a platform to help match academic research expertise with business R&D needs, from life sciences and engineering to computing and agriculture. The company acts as a bridge between academia and industry. But Mark Two is looking for other opportunities.

“If they’re okay with us, and if we’re okay with them, we’ll fund them with $500,000 to $1 million,” he said.

What Mark Two Ventures seeks to do is act as an institutional co-founder, he said, taking talent from a company and building products around it. Using a team that blends software development, design, and business strategy, a way forward emerges.

And Mark Two’s footprint, while southern, is largely decentralized, with offices in Huntsville, Birmingham and Nashville. This allows him to scan the area and act quickly, he said.

“The capital is not the problem,” he said. “It’s a lack of expertise. Most startups die in the seed stage. Many founders have a solution, but never thought about the problems. This is our call to action.

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