This Memphis-based VC firm has a $52M fund and FedEx, AutoZone as partners

By John Klyce – Reporter
October 18, 2022, 01:52pm CDT
FedEx and AutoZone are partnered with Ridgeline — and in late September, when the Memphis-based venture capital firm held a summit at Crosstown Concourse, the local giants didn’t hesitate to send their top executives.

FedEx president and CEO Raj Subramaniam spoke at the event, along with founder and executive chairman Fred Smith, and FedEx Express president and CEO Richard Smith. Bill Rhodes, AutoZone’s CEO, couldn’t make it, but Jamere Jackson, the company’s EVP and CFO, did.

“It is, surreal, at best,” said Ryan Clinton, a founder and partner with Ridgeline. “Having them attend and be in it with us is a good demonstration to not only our investor network, but also our portfolio companies, that this is a true partnership.”

Moving to the Bluff City
It’s also a partnership that helped bring Ridgeline to Memphis.

The VC firm invests in early-stage enterprise technology companies, and was founded about three years ago — just before the start of the COVID-19 pandemic — by Clinton, Ben Walker, and Andrew McMahon. For a time, the three worked remotely, with Clinton in Los Angeles, Walker in San Francisco, and McMahon in Washington, D.C. But as they discussed where to locate their office, they thought about the changes that had come with the pandemic.

Though people could work from anywhere, they felt that companies should build near their customers. Because Ridgeline had FedEx, AutoZone, and Dollar General as strategic corporate limited partners (LPs), Memphis seemed like an ideal fit. FedEx and AutoZone are based here, and Dollar General’s headquarters is just three-and-a-half hours away, in Goodlettsville, Tennessee.

“We felt the most we could do to be helpful for our portfolio, is to be closer to these large customers here, and act as an organic connective tissue for them to these corporations,” Clinton said.

Connecting major players to new technology
Serving as that connective tissue is one of the primary purposes of Ridgeline, as it won’t invest in just any early-stage tech companies — it looks to invest in ones that can potentially help reshape the economy, and transform large enterprises through innovations in both software and hardware.

While the firm’s LPs, like FedEx, AutoZone, and Dollar General, have invested in its fund, they’re also looking for better ways to access new technology.

“With very mature companies like they are, it’s not as easy to reach back to two folks founding a company, as you would think,” Clinton said. “So, what we help them do is access that nascent early-stage technology market that’s out there. And we’re looking over the horizon at technologies they maybe wouldn’t otherwise consider.”

$52 million
As Ridgeline looks to invest, it’s doing so with an ample amount of resources, as the firm has closed a $52 million fund, which it plans to use to ultimately invest in around 30 startups. This isn’t its first go-round with investing, either, as Ridgeline used a previous fund to invest about $13 million in companies between January 2020 and May 2021.

That first fund, however, helped Clinton and co. realize they wanted a larger fund — which in part led to the $52 million in capital.

“The first time around with the first $13 million we put to work, we were just missing some really fantastic deals,” he said, “And we were not able to fully take advantage of some of the allocations that we had, because we were just a smaller fund.”

Driving value
When Ridgeline’s leaders do consider investing in a startup, they looking a range of variables. This includes standard considerations, like the defensibility of a business’ tech, its addressable markets, and the caliber of its founding team. But they also consider their own ability to add value.

“We only invest in companies where we know we’re able to drive value, and consequently help their evaluation upwards,” Clinton said. “We get involved as makes sense, to help drive growth in the company.”

Clinton, Walker, and McMahon do all have experiences they can use to help their portfolio companies.

Clinton and Walker are West Point graduates who served together in combat operations overseas, and McMahon is a former appointee of the Obama administration. Clinton was also previously a VP of strategy and business development at Universal Pictures, while Walker helped build Deloitte’s Silicon Valley practice. McMahon was chief revenue officer of The Dcode Group, a business development consulting firm serving growth stage startups.

“All three of us have government experience — Ben and I on the military side, Andrew as an appointee — and all that experience helps inform how we can help companies navigate the federal markets,” Clinton said. “And from a personality side of things, between West Point and our time in service, wanting to be helpful, be a teammate, jump in, roll up your sleeves, and help drive the business, [that] is definitely a mentality most folks like us have.”

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