On this episode of the Bourbon Friday Show we had the opportunity to talk with Brian Matthews, Co-Founder and General Partner of Cultivation Capital, about the role they play in early-stage venture capital funding in St. Louis.

Educating for Early Stage Investing

In many ways, venture capital (VC) indicates the strength and willingness of a city to invest in the new ideas and companies that reside within its boundaries—and it’s VC groups like Cultivation Capital make that possible.

For those who may not be familiar, Cultivation Capital is a VC firm located in St. Louis. It’s comprised of a series of funds which are focused on a number of different industries and a number of different stages within the ecosystem.

According to Matthews, the companies Cultivation Capital typically looks to invest in have $500,000 to $2,000,000 in annualized revenue and are growing at 10 to 20 percent month-over-month.

The venture capital firm also seek out companies that are in the pre-seed or seed funding stage. Not only does this help out companies that are earlier on in their startup journey, it also allows Cultivation Capital to aid those companies for longer, since the funding for earlier rounds isn’t typically as competitive.

Good News and Bad News for the St. Louis Ecosystem

While it’s true that the St. Louis startup pipeline is booming, with 750 to 1,000 new companies currently seeking funding in various stages, there isn’t nearly enough capital readily available for companies in the early stages.

Many times, this issue can be solved by having a few big exits in the region, which allows investors to recoup their money and then reinvest it in growing companies; but Matthews believes that there is still a lot of money on the sidelines.

Though the general opinion for many investors is that investing in these earlier stage companies is too risky, many groups like Cultivation Capital and other angel investor groups are trying to change the tide.

In addition to showing potential investors a proven track record of success in this type of investing, education about vetting potential companies and implementing the right processes are also key. In the end, if done correctly, Matthews believes that these types of investments could not only prove less risky than originally thought, but also provide higher rates.

Bourbon Innovation

As always, the Bourbon Friday team does their best to choose a fitting drink for the occasion.

The bottle this week was Angel’s Envy Bourbon. This particular bottle was chosen especially for our guest, Matthews, who enjoys both baseball and wine.

First off, this Angel’s Envy Bourbon is finished in port wine barrel—which gives it an overall softer and a bit sweeter tone. Finishing is one of the few processes that can legally be used to enhance the flavor of bourbon.

Additionally, the Angel’s Envy distillery where this bottle is made, is located in Louisville, KY, directly across from the Louisville Slugger Park.