Beta Boom is a firm that invests in pre-seed and seed startups that are solving impactful problems for society. Pulse 2.0 interviewed Beta Boom co-founder and managing partner Sergio Paluch to learn more.
Sergio Paluch’s Background
What is Paluch’s background? Paluch said:
“I was born in Poland and immigrated to the United States as a young child. My family settled in Chelsea, Massachusetts in the late 80s, a city that was a little rough around the edges, to say the least. While my community was filled with brilliant people, they often struggled to access their full potential due to their economic situation, immigrant status, skin color, and zip code, of course an observation I made later as an adult.”
“I graduated from Dartmouth College with a Bachelors in Physics and Economics and did graduate research in quantum computing post-graduation. Fascinated by technology and its ability to solve problems, I later settled in the Bay Area – an experience that deeply shaped my professional trajectory.”
“Following roles at companies like Google, my partner Kimmy and I founded a product innovation consultancy where we implemented nearly 100 initiatives for more than 60 clients ranging from YC-backed startups to Fortune 500 companies like Wells Fargo, TiVo, Google and BlackRock.”
“But my ‘aha’ moment came after reading an article about a $400 smart juicer, Jucero, that raised a ludicrous amount of money and failed spectacularly when customers realized that their own hands did a better job squeezing juice than the machine. I remember reflecting, looking around, and realizing that I was living in an elite innovation bubble called Silicon Valley that was unlike the rest of society. That was the day I realized that I was going to leave the bubble and focus on helping tech entrepreneurs who are solving real, meaningful problems.”
“We moved to Salt Lake City and founded Beta Boom, an early-stage VC firm that invests in software solutions that address the most critical needs of the fast growing, yet least served populations – a result of the beliefs I developed as an immigrant paired with the experiences and skills I garnered over a decade of leading innovation projects in Silicon Valley.”
Evolution Of Beta Boom’s Thesis
How has your firm’s thesis evolved over time? Paluch noted:
“Beta Boom has always focused on under-the-radar founders solving meaningful problems, rather than ones that are jumping on trends of building trivial products. Initially, we focused on backing founders beyond Silicon Valley that lacked access to capital due to their geographic location. While we still invest exclusively beyond Silicon Valley, we also found that founders who didn’t graduate from top universities like Stanford or work for FAANG companies were greatly undervalued, despite having the same probability of building billion-dollar startups. Beta Boom’s current focus is on tenacious underdog founders who are solving meaningful problems for society.”
Favorite Memory
What has been Paluch’s favorite memory working for Beta Boom so far? Paluch reflected:
“Because Beta Boom invests in startups across the U.S., we hold periodic virtual happy hours, where we bring together the portfolio companies to hang out, laugh, share stories, and sometimes cry together. Over the years, we’ve had some epic times getting to know our incredible founders during Beta Boom’s virtual happy hour and are humbled to partner with such inspiring and authentic individuals.”
Significant Milestones
What have been some of Beta Boom’s most significant milestones? Paluch cited:
“Our most exciting milestone was closing our second fund: $14.5 million with participation from Ally Bank, Pivotal Ventures (A Melinda French Gates Company), Bank of America, and Atento Capital.”
“Previous milestones include hosting our own Female Founders Summit where we awarded $10K in equity-free prize money and had the pleasure of hosting Sallie Krawcheck (CEO of Ellevest) and Pam Kostka (CEO of All Raise) as keynote speakers.”
“Establishing an independent grant and mentorship program “New Pattern,” which provides funding and resources for skill-building and coaching, was also an exciting milestone. New Pattern Utah was launched in partnership with Womenpreneurs, the Utah Black Chamber and the Sorenson Impact Center and New Pattern Chicago launched alongside P33 and GET Cities, both in 2020.”
Investment Success Stories
After asking Paluch about investment success stories, he highlighted:
“Fiveable from our first fund is a prototypical founder and startup that we love to back. Amanda DoAmaral, Fiveable’s founder, was an AP teacher at a low-income high school in Oakland, California. In the classroom, Amanda worked miracles, bringing the average AP pass rate in her AP History class from just over 20% to over 70%. After Amanda left the classroom after 5 years at Skyline High School, her ex-students kept reaching out to her to tutor them online. She had built a social learning community organically, and we invested in Amanda and Fiveable when she had about two hundred students in her community. Having no technical or entrepreneurial background, Amanda had built a really impressive community and platform and was showing consistent growth, imagination, and hustle.”
“However, no other investors were willing to take a chance on Fiveable and Amanda because she didn’t fit the Silicon Valley founders stereotype. She did not graduate from an Ivy League school, she did not work for a FAANG or any other Silicon Valley startup, and she was based in Portland, Maine not San Francisco Bay Area. Fiveable nearly ran out of money four times in the first year because other investors were not willing to look beyond their bias and see the incredible business that she was building along with her small team. However, her hustle and team’s commitment eventually paid off and Fiveable experienced exponential growth, eventually going on to serve three out of four AP students.”
“Eventually, other VCs noticed that Fiveable was an incredible business and they poured money in, and the company continues to grow to this day.”
Industry Focus
What are some of the industries that your firm is focused on? Paluch noted:
“Beta Boom invests in fintech, digital health, and the future of work, areas with the greatest opportunities to address unmet needs. We have already invested in 20 companies including Bolder Money, an online money coaching program, Canopie, who’s addressing the maternal mental health crisis, NOMA AI, which leverages AI to help clinical teams mitigate risks of medical complications, and WEDEVX, which upskills blue-collar workers into high-paying tech jobs.”
Differentiation From Other Firms
What differentiates Beta Boom from other firms? Paluch affirmed:
“Our approach is extremely untraditional, from the way we find and evaluate founders to the way we support them.”
“First is sourcing – our model extends well beyond exclusive networks (where many of the problems in VC stem from) as we’ve created a pipeline that’s wide-reaching and growing rapidly across the U.S. We focus on investors, accelerators, and organizations that are based in rising tech hubs across America’s Heartland, leading to more than 2,500 deal opportunities each year across 49 states.”
“Next is the way we evaluate founders – we’re not interested in founders who come from Silicon Valley or went to an Ivy League school; in fact, our scorecard detracts points that are attributed to pedigree. What we’re looking for are founders with lived experience, ability to execute, grit and perseverance in the face of adversity – founders who are intimately connected to the problem they’re trying to solve.”
“And lastly is the way we support our founders – we become fully embedded within each startup, serving as an extension of their team for 6+ months. We roll our sleeves up and jump right in to help founders overcome day-to-date challenges; they tell us this is unlike what they’ve experienced from other investors and programs.”
Challenges Faced
What are some of the challenges you faced while working at the firm? Paluch acknowledged:
“As a founding partner, I’ve always been convinced that the only way to create outsized returns in a crowded industry like venture capital is to do something fundamentally different from the status quo rather than trying to do things marginally better. Beta Boom has always been a contrarian investor. When most VCs chase Ivy League alumni, we eschew them. When most VCs throw money at hot rounds, we avoid them. When other VCs chase trends like VR and Crypto, we invest in boring problem spaces that have broad and persistent market appeal.”
“However, being different means that Beta Boom was not readily accepted into the “cool crowd.” Instead, we’ve had to earn our way into other investors and LPs mindshare through the success of our portfolio companies. This has been a long, difficult process that has often felt like swimming against the current, but as our portfolio continues to do better, folks continue to get more and more interested in what makes Beta Boom unique from the thousands of other venture capital funds.”
Future Goals
What are some of Beta Boom’s future goals? Paluch concluded:
“We aspire for Beta Boom to be the go-to destination for tenacious underdog founders who are undervalued by other investors because they don’t fit the Silicon Valley founder profile. We want to consistently deliver top-decile returns, fund after fund, by investing in overlooked founders solving meaningful problems that improve the lives of broad segments of society.”
