Swell VC: An Interview With Co-Founder Rusty Ralston About Finding Market-Defining Opportunities In Venture Capital

By Amit Chowdhry • Jul 10, 2024

Swell VC, built around a core thesis that you win with people, is an early-stage venture capital firm that invests in market-defining opportunities. Pulse 2.0 interviewed Swell VC’s co-founder and general partner, Rusty Ralston, to learn more about the firm.

Rusty Ralston’s Background

What is Ralston’s background? Ralston said:

”While my co-founder, Jay Patil, and I come from very different backgrounds, we have very similar values. Jay was born and raised in one of the biggest cities on earth, Mumbai. I was born and raised in a small town in Ohio. We met as early employees at a VC-backed AI recruiting startup in New York, which led to working with founders as our customers. Our experience in helping founders build amazing teams led to angel investing and our path into VC.”

Evolution Of Swell Partners’ Thesis

How has your firm’s thesis evolved over time? Ralston noted:

“Our approach to investing is built around one simple belief: startups succeed because of people–which has been consistent since day one. That’s why we thoroughly evaluate each founder on a broad range of traits and also help them thoughtfully build a team that encompasses the top 2% of talent. We’re also focused on preseed and seed-stage founders who are taking huge swings at the bat to define an entire market or industry. We’re not interested in ‘just another’ SaaS company; we look for category-creating opportunities in large markets ($10+ billion) that have the power to transform an entire industry.”

Favorite Memory

What has been Ralston’s favorite memory working for your firm so far? Ralston reflected:

”I have a few — The first is the day that Jay and I left the AI startup where we met and became entrepreneurs. It was Day 1 as founders, we were doing recruiting work with startups before we had any fund AUM and we were completely bootstrapped. We had no revenue and the clock was ticking until the rent was due, and rent is not cheap in Manhattan! We hustled and made it happen, and from that day we’ve been 100% all-in on Swell. Fast forward more than a decade to Fund II — our favorite memory is the day we returned capital and sent out wires to our Fund I LPs. A great feeling!”

Significant Milestones

What have been some of your firm’s most significant milestones? Ralston cited:

”Evolving from early employees at a startup to angel investors and recruiters, to Fund I and now Fund II, we’ve been fortunate to partner with many extraordinary entrepreneurs. Anything we’ve achieved is due to our partnerships with them. Milestones include driving cash returns for our LPs, seeing our first portfolio company hit unicorn status, and being a part of several notable acquisitions. We’ve proved that we belong and can be a top-tier venture franchise, and we’re eager to prove it every day.”

Investment Success Stories

Upon asking Ralston about investment success stories, he highlighted:

“We’ve been fortunate to work with entrepreneurs including Are Traasdahl at Crisp, Will Manidis at ScienceIO, and Alex Greenberg at Loft Orbital, who have all achieved incredible milestones:

Crisp created a new category of data infrastructure in the supply chain. They have become the de facto standard for commerce infrastructure, now collaborating with top CPG brands in the U.S., including powerhouses like Nestle, Kraft, and Unilever. Crisp has raised $85 million in funding.

ScienceIO are healthcare LLM pioneers. Their API to structure medical data yielded products like AI-powered clinical notes and the redaction of sensitive patient data at scale. They were recently acquired by Veradigm in a $140 million deal.

Loft Orbital has created a new category in space tech by building infrastructure to make space simple. They have raised $140M in Series B funding and boast clients like Microsoft Azure, Honeywell, and the U.S. Federal Government. They’re on track to become a multi-billion dollar company.
We’re grateful to play a very small part in their success.

Industry Focus

What are some of the industries that your firm is focused on? Ralston noted:

“We’re focused mainly on B2B infrastructure, AI, and software within sectors like healthcare, space, commerce, and national interests. As one Swell portfolio founder recently said, Swell invests in what actually matters, which means a variety of important industries that affect all of our lives.”

Differentiation From Other Firms

What differentiates Swell VC from other firms? Ralston emphasized:

“The tangible differentiator is our focus on working directly with founders to help them recruit the best teams in the country. This isn’t farmed out to a “talent platform.”

“We truly believe that people determine the outcome of the company, so as GPs we spend our time helping build world-class teams. I’d like to think that an intangible differentiator is that we’re very warm and approachable and have tight relationships with the founders of our portfolio companies. Whether it’s quick advice via text, a strategy session, or unwinding over a drink in NYC — when we go into business together, we do everything we can to serve our companies and help them win.”

Challenges Faced

What are some of the challenges Ralston faced while working at the firm? Ralston acknowledged:

“Being outsiders to venture capital, the challenges to break in and stay in are real. Fundraising when not being a part of the VC club (the school you went to, the VC firm you worked at, etc.) requires a lot of perseverance, faith, and confidence in your abilities. VC is a long game and it takes some time to prove that you’re a great judge of businesses and people, so we’re thrilled to see our investment decisions paying off as our portfolio companies mature into industry leaders.”

Future Firm Goals

What are some of your firm’s future goals? Ralston concluded:

“The goal is always the same — work with the best entrepreneurs on the planet and deliver top-tier returns to our LPs, and leave a positive mark on the planet while we’re here.”