product development, sales help, and human resources and back-office functions. “When these companies start to raise their first seed round or Series A, High Alpha Capital may invest in these companies to continue funding their growth,” Andersen says. He declines to share the typical size of each investment.
Other startup studios have had mixed results, and High Alpha will likely face plenty of potential pitfalls with its model. For one, the studio’s team members must diligently balance their time and resources to support multiple companies at the same time, a challenge that gets more difficult as the startup portfolio balloons. Redstar Ventures, for example, recently limited its focus to building one new startup per year—instead of three—because the pace “was just too much,” co-founder Jeet Singh told BetaBoston.
Andersen doesn’t seem worried High Alpha’s employees will spread themselves too thin. “As companies mature, our time and efforts shift naturally away from the hands-on operating to strategic advising,” he says.
And what’s to stop High Alpha from scrapping the studio and turning its employees’ attention to exclusively building one promising venture? That’s what happened with Boston’s Blade, for example, the former venture studio/seed fund led by Kayak co-founder Paul English. Blade stopped making investments last year in order to work on a new travel tech startup, Lola.
“Yeah, that’s happened several times with startup studios,” Andersen admits. “I guess you can never say never, but High Alpha is not a search fund—we’re in the business of building lots of businesses.”
High Alpha still has a lot to prove, and the Indianapolis business community will undoubtedly watch its performance closely, especially given its founders’ past achievements. But if all goes according to plan, High Alpha will generate impact that goes beyond a return for its investors.
“Our hope is to discover, support, and empower the next generation of tech entrepreneurship in the city (and the rest of the Midwest),” Andersen says.
