Navigating the VC Landscape with Blair Garrou

Timecoded Guide:

[00:00] Podcast begins - Navigating the VC Landscape: Blair Garrou on Securing a $160 Million Round, the VC’s Role, and Crafting a Roadmap to Profitability

[01:06] Moving from Boston to Houston & working at the Houston Technology Center

[12:22] Houston Angel Network (HAN) & the origin of Mercury Fund

[18:33] Closing their fifth fund & working in a hybrid startup environment

[23:40] Banking on middle America investors vs the coastal venture trends

[29:57] Growth vs profitability & the struggle of switching on a dime

[34:56] How AI might become the next VC & looking towards 2024’s financial future

What is Mercury’s origin story and how did you get into venture? 

After moving to Houston to be with his wife, Blair wore a lot of hats on his journey to venture. He worked with the Houston Technology Center, the Houston Angel Network, and Genesis Park before finding his way to the DFJ Network, where DFJ Mercury was born. Eventually spinning off on its own, Mercury aims to invest in the middle of the country, bridging the funding gap for software engineers in cities like Houston, Detroit, and Boulder.

“We went from city to city, building relationships, helping to build these ecosystems and finding these really interesting deals. Ultimately, when I spun Mercury out, we thought that we could be one of the go-to software firms in the middle of the country for entrepreneurs.”

How was your experience raising your fifth fund with Mercury? 

Even with shifting markets and economic uncertainty, Mercury successfully closed its fifth fund, raising over $160 million. Blair explains that not only is the timing advantageous in the current environment, this fund also has allowed them to invest in incredible projects taking place in surprising entrepreneurship hubs like Greenville, South Carolina. Post-COVID lockdown, tech has boomed in middle America and Blair is excited to help these startups thrive.

“It still took a while, but more and more institutions are seeing that if you can put money to work in the middle of the country, the entrepreneurs a lot of times are more coachable, they're more capital efficient, and you can build some really good businesses with some great returns.”

What is the VC role as it relates to startups? 

Having been involved in venture for over a decade, Blair’s definition of the venture capitalist role has changed. Now, Blair sees his role as an investor as wearing many hats, including therapist, advisor, and governance representative. Blair hopes to give entrepreneurs and founders a framework for success, helping them avoid common pitfalls and embrace emerging trends. Finally, one of Blair’s favorite aspects of the role is being able to learn something new from every startup he works with. 

“The job is part advisor, part therapist, and then there's the governance role, where it's not about the entrepreneur, it's about you representing on the board, all the shareholders and you've got to wear that hat. It's such a blessing to do what we do, but I love it because it's lifelong learning.”

What advice would you give startups in this current economic environment?   

Growth used to be the name of the game, but recent economic trends have instead emphasized profitability. Blair explains that this can be a very hard change for many entrepreneurs, who may need to pivot their services and make massive changes to their business plans. To survive in such a tumultuous environment, Blair recommends entrepreneurs focus on the relationships they build with their investors and seek advice from experienced professionals often.

“I think entrepreneurs before were building and just going out to get money because they needed the fuel, like going and gassing up your tank with a gasoline driven car. Build a relationship, take that time and I think people will be in good shape.”