Dec 1, 2020 - Economy

Behind Unorthodox Ventures, one of venture capital's most unique firms

Illustration of a fan blowing cash

Illustration: Sarah Grillo/Axios

Carey Smith founded a company, sold it for a ton of money and became a full-time venture capitalist. Pretty standard evolution. But that's where the ordinary ends.

The intrigue: Smith, who runs Austin-based Unorthodox Ventures, doesn't invest in software. He doesn't think entrepreneurs should give up much equity, and that they should seek to become profitable as soon as possible. He doesn't have return expectations, nor does he have interest in managing anyone else's money.

  • In short, he's an iconoclast in an industry that worships at the altar of pattern matching.

"I'm not a finance guy," says Smith, who bootstrapped Kentucky-based Big Ass Fans before selling it for $500 million to private equity firm Lindsay Goldberg.

  • "With the fan company we always said we had to make money to stay in business, but that wasn't our primary interest."

The backstory: Unorthodox Ventures includes many of his former Big Ass Fans colleagues — with expertise in areas like industrial engineering and marketing.

  • Its portfolio companies range from a startup that makes bidets to an underwater fishing camera to spiked seltzer. Plus, Awkward Essentials, which makes after-sex cleanup sponges.
  • Smith says he wishes there were more industrial manufacturing startups, but has struggled to find them.

Behind the scenes: "Sometimes it's a good idea that really needs help with engineering," says Smith, whose firm can invest up to $10 million per company.

  • "Some entrepreneurs have a tendency to outsource everything ... which can make quality control very difficult and, if you do it in China, you lose your IP rights."
  • He bristled when I asked why he doesn't just run a consultancy, given his philosophies on ROI and founder equity maintenance: "You can... get a prostitute or get married. They involve the same thing, but there's a difference in approaches. We want to be partners with our companies."

The bottom line: Smith's fan company was known for doing things differently, from compensation to pricing to where it manufactured its products. He's now carried that over to venture capital.

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