Huntsville firm is bridging Alabama’s venture capital gap

A Huntsville-based venture investor studio is bridging a long-standing gap in Alabama’s tech eco-system – access to startup capital.

Mark Two Ventures is funding a $1 million seed round for Birmingham-based Astound Research, and plans to pump an additional $4 million into companies before the end of the year.

“We want founders to stay here,” said Patrick Cooney, one of Mark Two Ventures’ creators.

Mark Two will provide venture capital for new tech companies to aid in product development, software engineering and design. Cooney, along with Glenn Clayton, both from Alabama, are focused on startups in the South.

Clayton launched his first startup from his dorm room at UAH back in 2004, and has been involved in everything from a software development company to one of the first online marketplaces for tutors. Along the way, he raised about $35 million for his own companies. Cooney raised $170 million in early stage capital for his companies, which range from labor force to consumer pharmacy technology.

And venture capital – the ability to raise funding to get your tech company off the ground – has long been an obstacle to Alabama’s entrepreneurs, as the truly big money historically has stuck with the coasts and large metro areas with reputations for tech success.

Cooney said the COVID-19 pandemic, with the mainstreaming of remote work and video conferencing, has made location somewhat less of an issue when looking for investors.

But Birmingham, and Alabama, still face some challenges, such as expertise. There’s plenty of talent in the South. But in New York, for example, Cooney said companies can quickly find the money and the brainpower to form a venture-based company.

“I think it’s all trending in a very good direction,” he said. “We just want to act as a catalyst for it. We’re here to do this and we can deploy capital quickly and efficiently.”

Case in point is the firm’s first investment. Astound Research is developing a platform to help match university research expertise to corporate R&D needs, from life sciences and engineering to computer science and agriculture. The company acts as a bridge between academia and industry. But Mark Two is looking for other opportunities.

“If they’re a fit for us, and we’re a fit for them, we’re going to fund them with $500,000 to $1 million,” he said.

What Mark Two Ventures look to do is act as an institutional co-founder, he said, taking a company’s talent and building products around it. Using a team that mixes software development, design, and business strategy, a way forward emerges.

And Mark Two’s footprint, while southern, is largely decentralized, with offices in Huntsville, Birmingham and Nashville. That allows it to sweep the area and act quickly, he said.

“The capital isn’t the problem,” he said. “It’s lack of expertise. Most startups die in the seed stage. A lot of founders have a solution, but never thought about the problems. That’s our call to action.”