Ashton Kutcher: Searching for startups at SXSW

Key Points
  • Ashton Kutcher's company, Sound Ventures, held a pitch competition at SXSW, the annual tech and culture confab.
  • Sound Ventures and Benioff invests a total of $400,000 in a new company.
From left to right, Salesforce CEO Marc Benioff, Guy Oseary, Matthew McConaughey and Aston Kutcher.
Stephen Desaulniers | CNBC

At South by Southwest Ashton Kutcher isn't just the star of 'Two and a Half Men' and the producer of Netflix series, 'The Ranch.'

The former "That 70s Show" regular happens to be the ultimate tech investor, with an enviable track record: He was an early investor in Twitter, Uber, Spotify, AirBNB, and many more. For hundreds of entrepreneurs in Austin, he offered the potential for their startup to win funding, and the kind of high-profile attention that could bring their company to the next level.

Kutcher has been a fixture at SXSW for years. This year, the actor and Guy Oseary, his fellow partner at Sound Ventures, hosted a startup competition called Perfect Pitch for early-stage entrepreneurs.

After over 200 companies applied, the list was whittled down to five companies.

Hundreds of people attending SXSW filed into a restaurant in downtown Austin to watch the CEOs do a quick two-minute presentation to a panel of judges, after which they peppered them with questions for six minutes. In addition to Kutcher and Oseary, Salesforce CEO Marc Benioff and actor Matthew McConaughey also judged the competition.

"We are based in L.A., we see a ton of companies out of San Francisco and New York. What we wanted to do was recognize and realize that companies come from everywhere…they come from the Midwest, the south, come from all across the world," said Kutcher in an interview after the competition wrapped up.

"We've been coming to SXSW for years, but [now are] actually doing something that is meaningful for companies, that actually shows and inspires the entrepreneurial spirit across the country in every market," he added.

And Kutcher says the competition is designed to improve Sound Ventures' chances of finding a winner: "The more companies you look at, the higher probability that you are going to find something that's great and I think we found something great today."

That "something great" is an educational platform called 'LearnLux,' which offers online tools for financial literacy. LearnLux considers itself a disruptor of the financial services industry, helping millennials learn personal finance skills and connect them to the resources they need.

'Founder first principle'

The competition was for a $100,000 investment, but Kutcher and his team were so enthusiastic, that they upped Sound Ventures' investment to $200,000, and Benioff invested an additional $200,000 as well.

"When you see a company on paper, it can look really good. But we have a founder first principle for the things we invest in. For us it's really about investing in people we want to stand by, go to war with, battle with and build something great that's really impactful," said Kutcher, speaking about LearnLux CEO and co-founder Rebecca Liebman.

LearnLux's Liebman said the investment could be a game changer.

"It's amazing to have Sound on board. Ashton has made a bunch of investments in [financial technology] like Acorn, so I knew that he had experience there and understood the industry," Liebman told CNBC. "So I hope they are as involved as possible and we can really use them a distribution channel, since everyone knows their name."

The other four finalist companies ranged across industries: 'A.I. Software,' a bot for enterprises to help companies digest their internal information; Daymaker, a platform for kids to give to others in need; Issue Voter, a Wikipedia for Legislation; and Omnivirt, an AR/VR ad platform for brands and publishers.

Sound Ventures managing partner Effie Epstein explained that the fund focuses primarily on seed stage through series B investments, but doesn't limit the types of companies it bets on.

"Financial services is something we're spending a lot of time on. Health care services is another area," Epstein said. "We invested in a couple of fertility companies… We are broad, we are looking for great teams and founders and we try to fuel them."

...Because we can't hold public stock as a fund, it's sort of a bummer for me when the company goes public, because then it moves on to someone else's plate and we don't hold the stake in it.
Ashton Kutcher
investor and actor

Kutcher told CNBC that staying away from a focus on a single, or couple of verticals, has been key to his successful track record.

"You don't know what the future is going to be, so if I'm trying to look 10 thousand miles out, I'm not predicting the future, the entrepreneurs are predicting the future and based on what they are predicting, that's where our investment is going to go," Kutcher stated.

And unlike most investors, Kutcher said he's not investing for liquidity, but to build companies.

"Oddly because we can't hold public stock as a fund, it's sort of a bummer for me when the company goes public, because then it moves on to someone else's plate and we don't hold the stake in it," he added. "Liquidity is fantastic and it's great for our limited partnerships and we are mindful of it."

But Kutcher pointed to the fact that when a company is supported by a private market, "they can actually really focus on doing the necessary things to change the world that they are trying to do, as opposed to trying to make shareholders happy."

Now, with Spotify going public — Kutcher was also an early investor in the streaming music platform — he is excited, but with reservations.

"I think these companies are really smart waiting as long as they are waiting to go public, and that being said, it's not the path for everyone," Kutcher told CNBC. "I think companies should probably go public earlier because the way they are built, they will have more success in the public market, so it's sort of a mixed bag."

Correction: An earlier version of this story misstated Effie Epstein's title.