SeaAhead Catches up with Jon Rotolo, Founder of DTN Ventures

DTN Ventures is an early-stage investor associated with Great Mountain Partners, a private equity firm in New Haven, Connecticut, which was formed to provide institutional investors with guidance for their strategic investment portfolios. The firm offers origination & diligence, management, and governance solutions for investments in several sectors. DTN Ventures is a member and sponsor of the Blue Angels Investment Group.

Interview by Taylor Witkin, Program Manager at SeaAhead

Can you discuss DTN Ventures’ investment mandate? What are you looking for in early-stage investments and how does sustainable impact factor into your decision making? 

We have a broad and opportunistic investment mandate at DTN Ventures. We consider investments in the media industry, healthcare – which has more of a biotech and pharma focus, the energy sector, the transportation sector, fintech, and telecommunications.

What first drew us to bluetech was our location in New Haven, Connecticut, close to Groton and New London. We started looking at the bluetech market around the time that the opportunity zone tax program was put into effect, which generated a lot of opportunities in real estate in the area. We also knew that the coastal region was going to be important for offshore wind development. We started from the perspective of trying to understand what was going to be happening locally in our market around offshore wind, and the enabling technologies that are going to make that whole ecosystem sustainable over time. 

But we're open to all the different segments of the bluetech market, which is one reason why we like it. Bluetech is a diverse ecosystem and there's a lot of crossovers with the sectors that we traditionally invest in; technologies that could be applied into bluetech. Sustainability is important in everything that we do. We have a very broad definition of that because there are many facets to sustainability. There’s no hard and fast rule as to how we define it. But we do think the market overlooks some important aspects of ESG. With early-stage businesses, we are most focused on the “S”, and really interested in culture. A company can use a lot of great marketing buzzwords around sustainability, but that company isn’t going to grow into an impactful business without a strong, mission driven culture.

What does post-investment support look like for DTN Ventures?

One of the things that's nice about DTN Ventures is that we're associated with a bigger asset management platform. We can provide a lot of different types of capital to companies as they grow. So, we don't really think about post investment; we think about next investment.

With most of the businesses that we're getting involved with, they all are going to need a lot of capital, and we do work with a lot of asset management companies throughout the private equity ecosystem – it’s not just venture. On the capital raising side, we can either bring new capital or bring new investors to companies. And we're particularly good at that because we've invested in so many different sectors and because bluetech companies often have technology that crosses over into one or more traditional sectors of the economy. We usually have relationships in those sectors and can bring in both strategic and financial investors as partners.

I think we can also be very useful in helping develop corporate governance, making sure that a growing business gets institutionalized and develops structurally in a way that's going to be attractive to future investors.

And then for companies that are in Connecticut looking for office space, we can offer office space and colocation opportunities with our team.

What do you believe to be the key inflection point within the Blue Economy Sector?

I think there’s a danger in over specifying an investment sector. Bluetech is a useful descriptor now to draw some attention to this universe of companies. But I think that a lot of them will develop businesses that have applications outside of their initial target and should look beyond the blue economy.

I think a key inflection point will be when you start seeing some of those businesses cross out of the blue economy and their products move into other markets, which will attract a much bigger universe of investors. We'll have to see when that happens.

I think the danger to that is whether a lot of founders are really builders, or whether they're sellers. And I think if we have a lot of companies in bluetech that have quick exits to strategic investors in the market, those technologies aren't going to grow and flourish and get out of the blue economy. And I think that's something we're watching closely, to make sure we don't have too narrow a universe of buyers in the market.

What do you see as some of the biggest risks to bluetech investing? Are they unique to bluetech?

I don't think you have as much experience with founders in the bluetech as you might have in other technology sectors. That's just the function of where bluetech is in its lifecycle, where you haven't had 50 years of developing a bluetech investing ecosystem in the same way you have in Silicon Valley. So, where it’s young and there’s less experience, there's more risk. 

What I worry about is that investors come in and have some bad experiences early in the bluetech sector. Managing the pace of capital that comes into the bluetech sector is important Making sure that we have early successes and consistent successes will make it a more sustainable investment ecosystem over time. 

As part of the Blue Angels Investment Group, which pitches have stood out to you or been most excited about?

I would say that the quality of the pitches that we've heard through Blue Angels has been very high. I think that’s a reflection of all the work that the team at SeaAhead is doing to screen and get good teams to pitch. Also, the work SeaAhead puts in with those teams to prepare, to make sure that they have a good edge. So, I wouldn't say that there are any particular ones that have stood out; what stands out is the consistent quality of the pitches that we've heard.

I would also say that I think it's important for investors, including the Blue Angels, to participate in as many of these bluetech-focused groups as possible right now. I think managing the ecosystem and making sure it develops in healthy way is important. This is a time for collaboration, not competition among investors. And I think it's a great time to be a founder. I think you’ll benefit from a very supportive ecosystem, as opposed to what I see in other parts of the tech market where you have venture capitalists competing against each other to get into a company. Which is very good for valuations, but I'm not sure it’s good for those founders in the long run.

What advice do you have for entrepreneurs that are pitching to DTN Ventures and the Blue Angels? What makes a pitch effective?

Raising money is one of the hardest things that you will ever have to do. You’re not just a founder, you’re an evangelist for your company. Investors will be thinking about “product-market fit”. As a founder, you also have to be thinking about “investor-company fit”. You just have to believe in yourself and keep doing it. 

DTN stands for Damn the Naysayers. That mantra came from one of our former partners, one of our mentors, who started a lot of companies. He did a lot of evangelizing for things that were new and markets where he operated. So, we know how hard it is. You just need to believe in yourself and keep going.