David Miles
Matthew Kinley
Two longtime Greater Des Moines investment professionals are joining forces to launch a $125 million venture capital fund that will focus on investments in early- to midstage companies in the financial technology and health care sectors. 

David Miles, owner of Miles Capital Inc., has partnered with Matthew Kinley, executive vice president of Pappajohn Capital Resources, to form ManchesterStory Group. The Des Moines-based venture capital company will specifically focus on insurance-relevant innovations, also known as the insurtech sector. 

“We see tremendous investment opportunity in our target sectors, which together comprise 25 percent of the U.S. economy,” Kinley said. “There is significant potential for digital transformation in both sectors, and each is integrally connected to and impacted by insurance.” 

On Friday, the firm filed regulatory paperwork for its first close on $31 million in investments, and the company is looking to raise a total of $125 million by its final close on the fund. 

ManchesterStory — a name that combines Kinley’s hometown of Manchester with Miles’ hometown of Story City — has attracted a half-dozen insurance companies that have committed capital to the firm and its portfolio companies.

“What we think differentiates us is the fact that we are backed by a number of insurance companies from across the country,” said Miles, who has 30 years of experience in insurance asset management. “We offer a way not only to bring capital to entrepreneurs who are bringing interesting technologies to fintech and health care. We can also connect insurers to them. We think the strategic relationships we can bring are really a unique offering; we’re not aware of anyone who’s doing what we’re doing.” 

Although fintech venture investments experienced headwinds in 2016 due in part to economic uncertainty, technology and consumer demand trends should make fintech “the most dynamic sector for venture investing in 2017,” according to a November 2016 report, “The Pulse of Fintech,” by KPMG. While North American fintech investments dropped below $1 billion in the third quarter of 2016, the number of deals — 96 — was more than 50 percent higher than the number in Asia, according to KPMG. 

Des Moines venture capitalist and philanthropist John Pappajohn is among a group of additional private investors in the fund, which has both Iowa and out-of-state investors, Kinley said. 

Further announcements are expected this year as initial investments in fintech and health care companies are made, the partners said. 

Kinley and Miles, who have known each other since 2004, worked together on a renewable energy project, Countryside Renewable Energy. “Although market conditions didn’t allow that to come together, we had a good experience,” Miles said. “We started talking several months ago about putting together a fund, and that got a receptive hearing.” 

Greater Des Moines’ status as an insurance hub, and in particular the connections that the Global Insurance Accelerator has enabled with innovative insurtech startups, makes Des Moines an ideal spot to base the venture fund, Miles said. 

“Thanks to the GIA and others that recognize that innovation in insurance technology is really needed and that customers are demanding a better experience and better options, we feel there is a tremendous opportunity in the industry right now,” he said.

Although ManchesterStory has no formal partnership with the Global Insurance Accelerator, both Miles and Kinley have been mentors in the program. “We plan to continue to collaborate with them,” Miles said. “If we are able to add anything to what they’re doing, we would be pleased and happy to do that.” 

Miles, who transitioned out of the CEO role at his firm, Miles Capital, more than two years ago, will continue as chairman but will focus most of his time on ManchesterStory, he said.  

And for Kinley, “This is a way for me to stay in the venture capital business here in Des Moines with the development of an institutional fund,” he said.