5 Questions with Dynamo Ventures’ Santosh Sankar

NVNG had the chance to sit down with Santosh Sankar, co-founder and Managing Partner at Dynamo Ventures, an industry-focused fund that we find intrinsically connected to the Midwestern ecosystem with its emphasis on both supply chain (the movement of goods) and mobility (the movement of people).

Q: Can you tell us about Dynamo’s origin story and superpowers?

SS: Dynamo Ventures was founded by myself, Jon Bradford, Ted Alling, and Barry Large in 2016 to invest in enterprise supply chain businesses at the pre-seed and seed stage. I founded two businesses previously and most recently spent five years on Wall Street in various roles. Jon Bradford brings over 15 years of venture investing experience and seeded three unicorns prior to Dynamo. We are complemented by Partners Ted and Barry, who bring practical operating experience in trucking and brokerage, having sold their freight brokerage ultimately to UPS for $1.8 billion. Dynamo Ventures has an active, hands-on approach to supporting founders at the earliest stages using their industry networks, domain experience, and startup-building knowledge, as evidenced by our 79% portfolio NPS. Some of Dynamo’s key tenets include a commitment to transparency and expediency. As a founder-centric company, we believe in being transparent and expeditious in our operations while maintaining a strong degree of accountability between all parties.

Q: Why are Dynamo and NVNG a good fit?

SS: NVNG is emerging as the anchor in the Midwest ecosystem and brings with it the who’s who of corporate backers, which we believe will be valuable as we continue to grow and mature our firm. We are excited to further expand our corporate network and build deep and long-lasting relationships with NVNG and its corporate stakeholders, as it equips us with an unfair advantage as we source, select, and steward a portfolio of disruptive supply chain startups. With the supply chain industry being a key pillar of the global economy (approximately 10% of global GDP), we’re honored to have this partnership and the trust of NVNG as their supply chain seed fund.

Q: What is your take on the Midwest venture ecosystem and how Dynamo fits in?

SS: The supply chain as an industry unit is one of the largest employers in the Midwest. We’re on the precipice of a once-in-a-generation shift in supply chains that will benefit such communities and economics. As venture investors, we recognize the importance of technology and business model innovation as this trend accelerates and a prerequisite for being competitive on a national and global scale.

Q: Can you share some trends that you are seeing in venture capital within your thesis industry and stage?

SS: It’s no secret that the venture market has been in a state of hangover since early 2023. Leveraging supply chain data which are early indicators of economic health, we’ve been working with our startups since mid-2022 to weather this storm. A few things to be mindful of:

• The growth markets have largely been “on-ice” as investors lick their wounds from snap judgements and frothy valuations from the COVID-era. We are seeing some funds resuming their investment efforts but with a higher bar and focus on business approaching profitability with durable business models and unit economics.
• The Series A market continues to operate in fits-and-starts with most firms inconsistent in their investment decision-making. These firms are trying to ascertain what “great” looks like outside of vanilla SaaS business models. As such, you’re seeing many Series A firms invest at the seed stage, keeping seed valuations elevated for a longer period than most expected (us included), which doesn’t dovetail well with Series A valuations continuing to see a decline (if not a stagnation).
• We continue to see opportunities at pre-seed given our ability to get hands-on with companies at the early stages of formation. Liquidity pressures are also mounting with managers being forced to “get creative” on how they harvest DPI out of TVPI and manufacture cash returns.

On this note, savvy LPs are also increasingly recognizing the value of specialist investors to complement some of the generalist VCs they’ve built exposure to over the years.

Q: In your work at Dynamo, what are you most proud of?

SS: Our first Fund I is already in the top 5% of its vintage (2016) on a TVPI basis and we’re excited to realize that liquidity over the coming years. As part of that maturation, we’re proud of being a small team but one that punches above our weight and upholding operational excellence by relentlessly focusing on our core pre-seed/seed investment strategy, building a strong team that values growing promising talent, and leveraging optimization and automation tools to “stay fit” as an organization.