Ridgeline is a new VC firm that invests in B2B companies with one specific goal in mind: helping its portfolio companies sell to complex organizations that are hard to crack, but can become big customers if they get in.
The Memphis, Tennessee-based firm was founded in 2010. It was started in 2020 by Ben Walker, Ryan Clinton and Andrew McMahon – three individuals who each know a thing or two about complex entities that need better technological solutions from their time working in government agencies. Walker and Clinton met at West Point before deploying to Iraq, while McMahon’s background includes time with the General Services Administration.
Ridgeline isn’t just focused on companies that could be sold to the government — a popular strategy lately — but they think the experience of tracking that process could be useful for some of their portfolios. Instead, he wants to support companies that can help with any complex legacy entity, from the feds to FedEx.
“The corporate world has the same technology problem that the federal government does,” Walker told TechCrunch. I think the dual focus is something unique about the Ridgeline.
Ridgeline has raised $52 million in an oversubscribed initial funding round to support enterprise technology companies at the seed and Series A stages. The company aims to take 5% to 10% ownership in the companies and plans to write checks for up to $5 million, McMahon said. The company is about halfway through deploying its capital and is looking to invest in up to 10 more companies.
Despite the oversubscription, the fund was affected by the volatility in the market earlier this year and caused a few investors to eventually pull out, Walker said. But the LPs the company ended up with, including large consumer conglomerates such as FedEx, Dollar General and AutoZone, prompted the firm to move to Memphis.
“The opportunity to collaborate with them is to strengthen their creative efforts in many ways,” said Clinton. “We have taken a step forward in establishing a headquarters to take full advantage of these relationships and drive value for our portfolio companies.”
Walker adds that the fact that many of the company’s LPs are based in Central America has largely been overlooked by offshore VCs and companies as potential customers for new technology, despite the same problems other legacy corporations face.
“[Working near these companies] It ends up being a big difference in generating and winning deals,” Walker said. “It was one of the reasons we moved to Memphis. You can’t fake that. You can’t have that as a narrative and not be in Memphis and make that happen. It’s still hard to do an enterprise deal anywhere.”
Ridgeline is targeting companies in areas such as manufacturing, supply chain logistics, retail technology and data analytics, among others. The firm has made 18 investments so far, including geospatial intelligence company Planet Watcher and machine learning startup NeuralMagic.
And while Ridgeline hopes to help some of its portfolio companies land contracts with the federal government, McMahon said he’s not looking to push his company in that direction. It’s a long process that isn’t feasible for all startups, and planting time is key.
“It’s always a responsible approach to that market,” he said. “It’s so big, it might have its own gravity. They can quickly become highly defensive from an income perspective. We prefer companies to have a large commercial and enterprise revenue stream and a similar share of government revenue.
While the startup hopes to help the startups succeed, the company’s founders hope their efforts will have a greater impact on the companies and the people of Memphis.
“It allows us to look for companies that grow from the South and an industrial belt that is often overlooked in VC,” Walker said. “It allows us to see things before they appear on the general radar. That’s something we feel Memphis delivers and allows our portfolio to punch above its weight.”
