You're VERY early-stage investors. Why?!
We believe there is lost opportunity for the thousands of young startups who haven't yet scaled enough to access institutional capital. The critical milestones to receive traditional VC seed investment keep moving farther down the growth curve, leaving a gap in funding at the earliest stages where the greatest financial returns are made.
We set out to conserve the energy normally wasted in fundraising and channel it into growth, creating immediate value for both entrepreneurs and our investors.
In short, we aim to provide early access to capital to help founders prove out a thesis, find early indications of product-market fit, and achieve important traction to secure the next round of funding.
What's your history as investors?
The General Partners have been investing their own capital in seed-stage companies since 2011. As part-time angel investors, GPs have made nearly 100 investments with significant success, including multiple 30x+ returns. Our personal portfolio total market cap exceeds $8B across many verticals, including FinTech, HRTech, IoT, Coworking, EdTech, Travel, Logistics, and Food.
What do you look for in a potential investment?
Here's a glimpse into what excites us when we consider an investment:
- Large and growing market, preferably untapped
- Impressive team of domain experts who are passionate about their mission and exhibit resilience and resourcefulness
- Strong, defensible margins from recurring or predictable revenue
- Customer acquisition advantages
- Capital efficiency and scalability
- Strong network effects and embedded virality
- Multiple potential paths to exit
- BONUS: Accelerating growth rates and engagement metrics
Is there anything you avoid?
While we don't explicitly overlook any industry or sector, here are some "turn-offs":
- Incrementally-better solutions in crowded markets
- Technology that relies excessively on 3rd party data/access
- Businesses chasing declining, not emerging, trends
- Poor historical use of funds
- “Solutions looking for problems”
- Products that require significant investment or long runways before going to market
- Winner-take-all outcomes
At which stage do you invest?
We invest in rounds that precede the Series A (Pre-Seed and Seed, effectively).
We rarely invest off a cocktail napkin unless we've worked with the founder already, but we prefer to be the first institutional money in the door. We want to see a product and some early metrics pointing in the right direction.
Timeline to fund? Average Check Size?
We move quickly and can fill an entire round when it makes sense. Our median check size is $500,000.
How do you work with your companies post-investment?
As entrepreneurs ourselves, we share an appreciation for building sustainable businesses and know that all too often, founders can feel alone, so we do our best to be accessible via email, phone, or our Slack group (available to portfolio company founders).
We facilitate introductions to our community of fellow entrepreneurs, accelerators, and co-investors to help solve problems, connect with customers, and ultimately, raise the next round of capital.
We certainly understand the goal of our entrepreneurs is to build a successful business, so we respect the balance between actively supporting our companies and staying out of their way.
What are some of the beliefs about the future that guide your investment decisions?
We are generalist investors, but we invest based on a core set of thematic beliefs about the future, such as:
Democratization of Information
- Centralized authorities in areas such as education, money, government, and commerce continue to be less important as the availability of information becomes decentralized and democratized.
- Consumer preferences are trending against big brand loyalty. While easier to acquire customers, brands will find it more difficult to retain them, opening the door for micro- and highly specific brands to emerge.
- Democratization and disintermediation will redefine slow-moving industries including Legal, Real Estate, Recruiting, and Logistics.
- Trusted communities will be more important than institutional brand equity in the customer journey.
- 90% of all the data in the world was produced in the last two years and data production continues to accelerate. Finding data is no longer the challenge; rather qualifying, sorting, and using that data is the new challenge and opportunity.
- The evolving data interplay between physical things (Internet of Things) could become as significant as the internet itself.
- Consumers will continue to demand more control over their data.
- The importance of societal structures we've built around scarcity will decline.
- A workplace aligned with social and personal causes will become as important as the work itself.
- Homeownership is less important to newer generations. Landlords will increasingly invest in new, interesting in-building services.
- Debates over the use of Free Time will increase in importance.
Artificial Intelligence and Machine Learning
- Artificial Intelligence will help solve complex problems previously thought to be unsolvable.
- AI will end the need for millions of jobs and will also create as many millions of jobs.
- Science will allow humans to double their lifespan within the next 25 years. Society will be forced to decide if that's what it wants and opportunities will arise with the challenges that accompany significantly increased lifespans.
- Traditional Higher Education is losing relevance, but the need for other forms of education and lifelong learning is gaining rapidly.
What do your most successful investments have in common?
The best outcomes come from a broad, diverse network of supporters, so we heavily leverage our 500+ deep co-investor and expert network to assist in sourcing and diligencing opportunities. Many of our biggest wins have come from warm connections from investors and entrepreneurs with whom we've worked.
A few other observations about the winners in our portfolio:
- The valuation was appropriate for the growth stage when we invested.
- Geography has little to do with success - great companies are everywhere.
- There were very early signs of Product-Market-Fit (PMF) and traction when we invested, though not necessarily in dollar terms.
- The companies were either first-movers or fast-followers in an emerging trend.
- There were some clear early unfair advantages in areas like product, customer acquisition strategy, etc.
What have you learned from your failures?
Humble in victory and honest in defeat, here are a few of the lessons we've learned from our losses:
- Avoid products that customers don't want. Remember the difference between "need to have" and "nice to have."
- Founders need to be the best salespeople in the business. If they can't communicate their value prop quickly, how can customers and early teammates be expected to buy in?
- Heavy churn must be solved quickly.
- Take notice of team volatility; culture is critical, no matter the stage.
- Make sure the company is raising enough money to succeed. Certain products or strategies require more capital to commercialize than others.
- Beware of "over-investment" - raising too much money is a good way to mask underlying issues in a business.
I'm looking for funding. Can we chat?
Please send us a little information and provide us some time to review.
How can I get involved?
Reach out here. We read all inquiries and do our best to respond quickly.