Despite the headlines around unicorns and larger funding rounds, Atlanta venture capital leaders Michael Cohn and Sean O’Brien still recognized a problem for local seed-stage companies. Namely, that it is still hard to raise the first few rounds of institutional capital within the region.
“For founders who raised capital from Angels, we learned that many entrepreneurs were dissatisfied with the value of the input and support these investors provided. And for founders who raised from coastal VCs, there was a pull to relocate to the coasts to take full advantage of their local platforms. Both of these scenarios are suboptimal for the development of our ecosystem,” Cohn told Hypepotamus.
Cohn and O’Brien launched Overline as one of the region’s first founder/operator-led funds. “We offer founders an alternative to time-sucking angel rounds while providing a deep bench of operating partners available to support them at the earliest stages of growth,” added Cohn.
The team just closed an oversubscribed $27.4 million first fund. Atlanta-based partners include Mailchimp, Cox Enterprises, Social Leverage, Hallett Capital, and Atlanta Tech Village founder David Cummings.
“As with our initial close, our subsequent closes included many of the region’s high-profile founders, business leaders, and investors. We were also successful in attracting investments from a few funds in other parts of the country, whose partners are excited about how the startup ecosystem is developing here in Atlanta and throughout the Southeast and who wanted access to deal flow here in the region,” O’Brien said. He added that 40% of the fund commitments came from corporate and institutional investors, with 94% coming from across the Southeast.
Overline has already invested in several growing companies, including Atlanta-based PadSplit, Relay Payments, Grubbly Farms, and Press Sports.
While their portfolio includes startups tackling everything from feeding chickens to getting people appropriate housing, Overline’s team says it is dedicated to deploying its capital in the Southeast in order to bridge the traditional funding gap.
“Only 7% of founders we surveyed prior to raising the fund were able to raise institutional capital in their seed round. Founders in the Southeast have historically been left to either piece together $1 million rounds by gathering $25,000 or $50,000 angel checks—which took them out of their business for months—or getting on a plane to find funding partners on the coasts,” added O’Brien.
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Photo by Akhil Yerabati on Unsplash