After co-founding Deviate Labs, a marketing agency, with his partner Raymond, Chad found himself at a crossroads. The ebb and flow of client work left them with periods of downtime, and their entrepreneurial spirits couldn't bear to see resources go to waste. It was during one of these lulls that the seed of Deviate Ventures was planted.
"We always naturally have periods of full utilization on client work followed by periods with more slack in the system," Chad explained. "To keep our resources fully utilized, we launched Deviate Ventures."
The idea was simple yet ambitious: create a venture arm that could flex with the agency's workload, allowing them to invest time and resources into promising startups during slower periods. They decided to call it Deviate Ventures, staying true to their brand's identity of charting unconventional paths.
As they began to flesh out the concept, the team faced their share of challenges. The biggest hurdle? The long game of early-stage investing.
"The biggest challenge we face is the path to liquidity or cash flow," Chad admitted. "Our Deviate Ventures projects are very early stage, so it will take 10+ years in many cases before we will have a meaningful monetary exit."
Despite the uncertainties, the Deviate team pressed on, fueled by their collective passion for innovation and growth. They developed a three-pronged approach: founding companies (often inspired by client projects), making passive investments, and taking equity stakes in exchange for their marketing services.
Then, in 2020, the world changed. As the COVID-19 pandemic swept across the globe, Deviate Labs saw 40% of its clients disappear almost overnight. It was a moment of crisis, but also of opportunity.
"When COVID hit in 2020, we had 40% of clients churn," Chad recounted. "We decided to retain our full team and invest heavily in Deviate Ventures. That was truly when Deviate Ventures was formed."
As they navigated this new landscape, Chad and Raymond quickly learned valuable lessons. One of the most crucial? The importance of a proven track record in the world of venture capital.
"I thought we could raise capital from limited partners right away," Chad reflected. "After speaking with a few people that fund micro-VCs, it was clear we needed a proven investment track record before we could raise."
This realization didn't deter them. Instead, it fueled their determination to build a strong portfolio and demonstrate their value as investors.
Today, Deviate Ventures represents a significant portion of the company's focus. "It represents anywhere between 20-40% of our agency resource allocation at any given time," Chad explained.
As Chad reflects on the journey from his college dreams to the reality of Deviate Ventures, he can't help but feel proud of what they've accomplished. The path may have deviated from his original plan, but the destination – making a meaningful impact in the world of startups and innovation – remained the same.
"Every team member has made a meaningful contribution over the years," Chad emphasized, highlighting the collaborative spirit that drives Deviate Ventures forward. In the end, Deviate Ventures stands as a testament to Chad and Raymond's ability to adapt, innovate, and turn challenges into opportunities. It's not just about deviating from the norm – it's about creating new norms and shaping the future of entrepreneurship.