Brokrete wants to be the “Shopify of construction”, raises $3M Seed led by Xploration Capital

With the pandemic affecting every aspect of life and industry, it’s no surprise that digitization is coming to construction fast. Construction suppliers are increasingly under the same pressure as other sectors to perform at a higher level. We’ve seen the rise of companies like Dozer, Reno Run, and Toolbox try to address this, but often the model is closer to a vertical integration one rather than something more open. Even with that, it’s still the case that to order concrete or bricks, construction companies have to negotiate each time, while simultaneously record keeping.

This is the argument of Brokrete, which bills itself as the “Shopify of construction.”

The startup has now raised a $3M seed financing round led by Xploration Capital, which was joined by unnamed new strategic investors and existing investors. The startup graduated from Y Combinator’s winter cohort last year. Other strategic investors include Ronald Richardson, Avlok Kohli (CEO of AngeLlist Ventures) and the MaRS Investment Accelerator Fund (IAF). The funding will be used to expand in North American and European markets. Brokrete also launched an e-commerce platform for suppliers in the construction industry it calls Storefront.

Jordan Latourelle, the company’s founder and CEO said: “Construction today is a largely offline, $1.2 trillion market where legacy commerce is the norm. Brokrete’s Storefront product equips suppliers with the tools required to enhance their operations by orders of magnitude. I founded Brokrete after seeing an industry left behind by e-commerce giants. Now we are becoming the operating system for e-commerce in the construction industry, while staying easy and affordable at the same time.”

Brokrete says its platform is code-free, white-labeled, multi-channel, and industry-specific to sell and manage orders online. Suppliers get an iOS and Android app for e-commerce to receive offline orders from more ‘traditional’ customers. It then provides order management, payouts, dispatching, logistics, and real-time delivery. There are also financial and operational ERP integrations. Brokrete claims to works with 1000+ contractors and to have a 250+ supplier network. 

Latourelle told me: “We’re giving the construction industry an opportunity to use it on a Shopify way, and create their own store. It’s like a branded storefront for suppliers.”

Eugene Timko, Managing Partner at Xploration Capital said: “Construction is one of the few remaining large industries with mostly undigitized supply chains. Historically the key problem was the lack of real-time access to actual stocks which prevented producers and distributors from going online. Now with Brokrete’s end-to-end solution, these businesses can not only sell through Brokrete’s marketplace but can also enable their own direct online channels. Similar to Shopify, this has allowed many thousands of previously offline businesses to start accepting orders online.”

#android, #angellist, #avlok-kohli, #ceo, #e-commerce, #europe, #managing-partner, #operating-system, #retailers, #shopify, #storefront, #tc, #toolbox, #y-combinator

Extra Crunch roundup: Seed stage basics, SaaS marketing live chat, Zoom’s Five9 buy

A famous poem advises us not to compare ourselves with others, “for always there will be greater and lesser persons than yourself.”

The same holds true for startup fundraising; the size of your seed round will be determined solely by your company’s immediate needs and the investors you’re working with.

“Remember that fundraising is not the goal,” says three-time YC alum Yin Wu. “Building a successful business is.”


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Use discount code ECFriday to save 20% off a one- or two-year subscription


If you are an early-stage founder who’s seeking clarity about apportioning equity — or if you’re biting your nails over how much to raise — read this primer. It’s also a useful overview for early employees and co-founders who may be new to startup financing.

Topics covered:

  • How financing works: SAFEs versus equity rounds
  • How much to raise
  • How to arrive at your valuation

Thanks very much for reading Extra Crunch! I hope you have a great week.

Walter Thompson
Senior Editor, TechCrunch
@yourprotagonist

Twitter Spaces: SaaS marketing with MKT1 founders Emily Kramer and Kathleen Estreich

MKT1 Co-Founders Green

Image Credits: MKT1

Join us today at 2 p.m. PT/5 p.m. ET/10 p.m. London for a Twitter Spaces conversation with Emily Kramer and Kathleen Estreich, founders of MKT1, a partnership that advises SaaS startups.

In addition to their work with individual companies, they also run founder workshops, a job board and a marketer-led syndicate.

Emily has built marketing teams from scratch at companies like Asana, Carta, and Astro, and Kathleen has scaled and led marketing and operations teams at several high-growth startups, including Intercom, Box, Facebook and Scalyr.

If you have an Android device or an iPhone and a Twitter account, click here to join the conversation or set a reminder:

https://twitter.com/i/spaces/1vAxRwkMWgzKl?s=20

Duolingo’s IPO could cast golden halo on edtech startups

Alex Wilhelm and Natasha Mascarenhas look into recent figures from U.S. edtech giant Duolingo.

It announced a first price range of $85 to $95 per share, which Alex and Natasha note “feels strong.”

“If Duolingo poses a strong debut, consumer edtech startups will be able to add a golden data point to their pitch decks,” they write. “A strong Duolingo listing could also signal that mission-driven startups can have impressive turns.”

But if it struggles?

“The wave of consumer edtech apps may lose some enthusiasm about going public.”

Outdoorsy co-founders detail how they expanded the sharing economy to RVs

Outdoorsy-founders-series

Image Credits: Bryce Durbin

Seven years ago, ad executive Jen Young and tech entrepreneur Jeff Cavins stepped away from the careers they’d built to launch Outdoorsy, an RV rental marketplace.

Last month, they announced a partnership with high-end camping company Collective Retreats and raised a $90 million Series D and $40 million in debt to speed up an already impressive rate of growth.

To learn more about their approach to building a transportation company that caters to people who crave a taste of nomadic existence, Rebecca Bella interviewed Young and Cavins for Extra Crunch.

Their conversation explored the impacts of COVID-19, their business strategy and why they decided to take on $30 million in debt financing:

Jeff Cavins: We like to look at macro trends as a business and I think U.S. monetary policy is going to get us all in a little bit of trouble. So we wanted to lock in a credit facility for the company at advantageous terms.

Cleo Capital’s Sarah Kunst explains how to get ready to raise your next round

Sarah Kunst at Disrupt SF 2017

Image Credits: Steve Jennings/Getty Images for TechCrunch

TechCrunch virtually sat down with venture capitalist and Cleo Capital managing director Sarah Kunst at our latest Early Stage event. Kunst joined us to chat about preparing for raising capital in today’s frenetic fundraising environment, digging into the gritty mechanics for the audience.

This post rounds up a few favorite excerpts from the chat, starting with Kunst’s notes on how to make a killer pitch deck.

She also offered advice regarding incorporation, how to find a co-founder and when startups are too large to join an accelerator.

In an increasingly hot biotech market, protecting IP is key

Protecting IP is key for biotechs

Image Credits: Klaus Vedfelt (opens in a new window) / Getty Images

The good news for biotech startups is that investment in the sector is soaring.

“Along the way, founders will need to procure additional investments, develop strategic partnerships and stave off competition,” Kevin A. O’Connor, a partner in the Intellectual Property practice group at Neal Gerber Eisenberg, writes in a guest column. “All of which starts by protecting the fundamental asset of any biotech company: its intellectual property.”

ServiceMax promises accelerating growth as key to $1.4B SPAC deal

Female worker working on a machine in factory. Woman in uniform operating a machine.

Image Credits: Luis Alvarez / Getty Images

Alex Wilhelm and Ron Miller dug into ServiceMax, a company that builds software for the field-service industry, after it announced it would go public via a SPAC.

“Broadly, ServiceMax’s business has a history of modest growth and cash consumption,” they write. “It promises a big change to that storyline, though. Here’s how.”

The head of Citi Ventures on how, and why, to leverage corporate venture arms like his

At our recent Early Stage event, we had the opportunity to talk with Arvind Purushotham, the managing director and global head of Citi Ventures, about how startups should think about corporate venture arms, including what a check from an enterprise like Citi can mean, and how to leverage that kind of goliath once it’s already a financial partner.

For founders trying to understand the benefits and potential pitfalls of working with a corporate venture arm versus a more traditional venture team, it’s worth zipping through this discussion.

Robinhood targets IPO valuation up to $35B amid warning that crypto incomes are slipping

Alex Wilhelm considers what Robinhood’s first IPO price range ($38 to $42 per share) means for the U.S. consumer fintech giant and whether we can expect it to raise the range again before it debuts.

In picking apart Robinhood’s latest filing, Alex noticed an aside about decreased crypto trading volume.

“Because Robinhood deals with consumers, who might decide to trade less in time, it has more uncertainty in its future growth than, say, Zoom,” he notes.

The Zoom-Five9 deal is a big bet for the video conferencing company

Video Conferencing Software Zoom Goes Public On Nasdaq Exchange

Image Credits: Kena Betancur / Getty Images

Zoom plans to spend a little less than a sixth of its value on Five9, which sells software that allows users to reach customers across platforms and record notes on their interactions.

Alex Wilhelm notes “that Five9’s revenue growth rate is a fraction of Zoom’s.”

“The larger company, then, is buying a piece of revenue that is growing slower than its core business. That’s a bit of a flip from many transactions that we see, in which the smaller company being acquired is growing faster than the acquiring entity’s own operations.

“Why would Zoom buy slower growth for so very much money?”

AngelList Venture’s Avlok Kohli on rolling funds and the busy state of VC

Few companies have deeper insights into the day-by-day state of venture capital than AngelList.

According to the company’s data, over 51% of the “top tier U.S. VC deals” involve their platform and tools, giving them a remarkably expansive view of everything going on.

AngelList Venture CEO Avlok Kohli joined us at TechCrunch Early Stage to discuss topics ranging from the state of the market to his thoughts on why there’s suddenly so much money flooding into VC (sending valuations to the sky), and where AngelList could go from here.

#angellist, #duolingo, #entrepreneurship, #extra-crunch-roundup, #five9, #growth-marketing, #mkt1, #outdoorsy, #sarah-kunst, #servicemax, #special-purpose-acquisition-company, #startups, #tc, #verified-experts, #yin-wu

Hyper is a new fund that offers $300k checks and promise of a media slingshot for founders 

Hyper is a $60M early-stage fund co-founded by Josh Buckley, Product Hunt’s CEO along with writer, founder and designer Dustin Curtis. Two ex-Sequoia operators are part of the team at launch as well. Malika Cantor as Partner and GM and Ashton Brown as Head of Program. The fund launches today and is self-described as ‘inspired by the Product Hunt community’. 

The team will be writing $300k checks for 5% of very early companies in any arena that seems promising to the partnership in a fixed deal structure that mirrors Y-Combinator. 

The fund will exist as a ‘sister company’ to Product Hunt (though it’s going to technically own it). Product Hunt, however, is the first of what the team says will be many companies it will own, create and operate in order to provide ‘direct value’ to its portfolio companies. 

I had a chat with Buckley, Curtis and Cantor about the new fund and company and the way that they hoped to differentiate Hyper in a world of aggressively service-oriented venture firms. 

The short version is: distribution. It’s hard to argue with the overall assumption that the Hyper team is working under — capital is majorly commoditized. Frankly, sometimes that’s all you want from an investor whose value add is more of a thorn in your side than anything. But, especially at the early stage there are a few funds and firms that offer a strong value outside of writing checks in the form of, say, hiring, sales introductions or board members that have relevant operational experience. 

Where Hyper differs, says Buckley, is that they see distribution as the biggest value add for a nascent startup at the stages where the firm hopes to invest. Product Hunt is one opportunity that he points to as an example. It’s an established launch pad to an audience of extreme early adopters that can provide a seed of a real user base — Hyper itself is launching via a post on the platform. 

I’ll let the Hyper team’s words spell out what they say is its thesis:

Hyper believes that every company (B2B or B2C) needs access to distribution channels to find customers, users, and talented employees to join their teams. Hyper works with early-stage companies at three key junctures in a startup’s journey:

  • Initial customer acquisition and validation (often at the pre-Seed stage)
  • First product/company launch and hiring (often at the Seed stage)
  • Scaling customer acquisition and fundraising (before the Series A)

Founders who go through the program will remain a part of the tight-knit Hyper founder community long past their Series A.

Over the past few months, Buckley says that Product Hunt has grown headcount by around 50% in part to boost its ability to act as an enhanced distribution channel. 

A short list of some of the people involved as advisors, mentors or investors themselves includes Alexis & Serena Williams, Alfred Lin of Sequoia, Garry Tan of Initialized, Harry Stebbings, Jeffrey Katzenberg, Naval Ravikant, Owen van Natta, Ryan Hoover, Ryan Tedder of OneRepublic and Sriram Krishnan of a16z. 

It’s a pretty eclectic group, but if you squint you can see the shape of the ambitions that Hyper has reflected in the parties involved. A mix of media, venture and product figures is probably the right way to go if you want to back yourself into a media empire funded by venture capital returns. 

They’ll be building additional media products as well, especially ones that focus on areas of hyper growth and high interest in order to both generate deal flow and to feature companies in the portfolio. Interestingly, unlike many marketing-operations-disguised-as-journalistic-enterprises, Curtis says that they want these to be real, functioning media companies and that startups funded by Hyper will be presented on those sites and platforms in clearly defined sections that make it clear that they are part of the program. 

As an example, the team is careful to state that Product Hunt will remain a ‘neutral platform’ for launching products and that Hyper companies will get clearly marked slots on the site. 

Surrounding those placements will be content that is produced by editorial media arms independent of the fund (though, in the end, funded by the profits of the fund). They’re not quite up to giving specifics about how they’re going to power these media properties initially but the funds management fees as well as most of its profits from carry will go towards cultivating the distro side. The other part of the ‘most’ will, one assumes, go to the individual investors. Curtis says that there could be other ways to obtain capital to speed up this process that is allowed by the unique structure of Hyper like debt or equity financing. 

Hyper itself is trying to establish two lines of business. A portfolio of wholly owned companies like Product Hunt (which still counts AngelList as a majority investor and Ravikant on its board) and other new media brands. And the other component which includes the portfolio of Hyper funds (plural theirs) and a founder program that includes mentorship, twice-a-year-events, and other future efforts — eventually. 

The mentorship component that Hyper hopes to add for founders in the fund is an 8-week founder program that includes individuals from “partners” like Andreeessen Horowitz, AngelList, Sequoia Capital, the Twenty Minute VC Podcast and Product Hunt helping founders to solve ‘key challenges’. Some of the participants are investors in Hyper, though none of the funds participated themselves The group includes some close to home figures as well, in Product Hunt GM Ashley Higgins and founder Ryan Hoover.

The program will also offer office hours with experts, an exclusive Product Hunt launch event and a Public Hyper Demo Day and Investor Demo Day to participate in within a year of being in the program.

The Hyper concept sounds fresh in combination, if not in components. An enormous amount of ink has been spilled, for instance, on the spinning up of the VC media apparatus as a bullhorn for a tech-optimism POV. But most of that content is understood to be talking the firm’s book and not intended to be seen as journalism. Though the media publications that Hyper is planning on forming have yet to be realized, there is enough of a differentiating spark here that could make it a unique play that attempts to straddle the worlds of editorial and venture. 

I have thoughts about the way that venture and media interact, as you might imagine given what I do and waves hands at the masthead where we are having this little chat. Combining a media and investing apparatus is not a new concept — as TechCrunch readers will know. But it’s not without its complexities. Enthusiast media that works does so for a couple of major reasons, in my opinion:

  • Genuine obsession with the subject matter. The writers, editors and even business people involved must have a crazy thirst to understand and contextualize the subjects that they write about. There can be no in-between here, as they are speaking every day to an audience that is just as obsessed with it as they are and can detect any level of commitment to it that is less than 100%. 
  • A patina of either trust or candor built over time. You can go into it with some bona-fides that you buy with a big name hire or series of them, and the reputations that they’ve built elsewhere. But if you’re full of shit, you’re going to lose — no matter how well positioned and funded you are. You may ‘win’ long term by turning what you’re doing into something else, a broad interest publication in niche clothing, for instance. But you won’t win at the enthusiast level.
  • An intense, punishing commitment to momentum. The further you delve into any niche, the more knowledgeable your audience will be. This means that you must produce uniquely insightful, crisp, well-researched content every day and you must do it with a level of granularity that surpasses anyone else in your niche. Your audience lives and breathes this stuff so if you’re telling them things they’ve already read on 3 message boards, in private texts or in their work slack then you’ve lost. You’ve got to get subcutaneous and not just superficially so. 

And when you add in a layer of complexity that is proudly announcing your vested interests in the success of particular companies, it just ups the level of difficulty massively. I don’t think that it’s at all impossible to run a fund that feeds a media arm, but it’s definitely a ‘doing a really hard thing while also on fire’ kind of operation.

Which doesn’t mean that Hyper can’t pull it off. Product Hunt is the model for what they’re trying to do, creating close-to-the-ground media that attracts as many operators and investors as it does early adopters. Duplicating that in a variety of publications and events, however, is not easy at all. 

I will say that a bet on distribution as value add is still one of the better stabs that I’ve seen lately. The capital is, as Buckley told me, readily and generically available. And having your calling card be “we can help the first 10, 20 or 30 thousand people know that you even exist” isn’t a bad situation at all. It works.

This is, after all, what we do at TechCrunch, we just don’t take a cut. 

The announcement today is the Hyper the fund, and the fact that they’re opening applications to a small cohort of 25 companies. The applications are planned to open for roughly 4 weeks every quarter and the deadline for this tranche is August 10th, 2021 at midnight PT. The second cohort will open in November 2021. 

The fund is taking applicants worldwide though notes that some countries present legal complexities for investment. 

#advisors, #alfred-lin, #angellist, #ceo, #corporate-finance, #dustin-curtis, #entrepreneurship, #finance, #garry-tan, #harry-stebbings, #head, #horowitz, #hyper, #jeffrey-katzenberg, #josh-buckley, #media, #money, #naval-ravikant, #owen-van-natta, #product-hunt, #ryan-hoover, #sequoia-capital, #sriram-krishnan, #tc, #venture-capital

AngelList Venture’s Avlok Kohli on rolling funds and the busy state of VC

Few companies have deeper insights into the day-by-day state of venture capital than AngelList. According to the company’s data, over 51% of the “top tier U.S. VC deals” involve their platform and tools, giving them a remarkably expansive view of everything going on.

AngelList Venture CEO Avlok Kohli joined us at TechCrunch Early Stage to discuss topics ranging from the state of the market to his thoughts on why there’s suddenly so much money flooding into VC (sending valuations to the sky), and where AngelList could go from here. We started with a presentation wrapping together everything Kohli is seeing in the industry right now, followed up by a largely audience-driven Q&A.

I’ve embedded the full interview at the bottom of this post, but here are some highlights:

AngelList’s growing focus on founders

Kohli says he never expected to end up in the venture industry, but the potential for AngelList to grow into something entirely new drew him in:

“I definitely did not think of venture as the industry I would be in. What actually attracted me to it wasn’t necessarily venture, it was actually the makings of a financial platform and being able to build tools and products that eventually extend to founders. When I stepped in, a lot of our tools were built for GPs and LPs — really the funder side — and how you’d reduce the friction and get more people coming into venture. Really leaning into the solo capitalist movement, and having more LPs coming in.

Then there’s also this opportunity to start building founder products, which obviously is near and dear to my heart. I do think there are a lot of things we can do to improve not just the fundraising experience, but also the downstream products that they can use. All the way from banking, to spend management, to cap tables, the whole nine yards. I think there’s so much we can do there.” (Timestamp: 10:11)

When I later asked him to elaborate on what those founder-focused products might look like, Kohli expanded:

#angellist, #avlok-kohli, #early-stage-2021, #ec-early-stage-2021, #ec-how-to, #event-recap, #funding, #tc, #venture-capital

MAGIC Fund raises $30M to scale its global founders-backing-founders fund

Influential entrepreneurs like Paul Graham and Naval Ravikant always preach the need for startups to have founders-turned-investors on their cap table. As Ravikant puts it, “founders want to know that the people they are taking money from have first-hand experience.” 

His platform AngelList has helped individual founders-cum-investors source and participate in deals via collectives. However, some venture firms have taken this up a notch by bringing founders to create a fund and invest together.

Today, one of such, MAGIC Fund, a global collective of founders, is announcing that it has raised a second fund of $30 million to continue backing early-stage startups across Africa, Latin America, and Southeast Asia.

Since the firm’s first fund which launched in 2017, MAGIC has invested in 70 companies at pre-seed and seed stages across these emerging markets. Some of these companies include Nigerian fintech Mono, Novo, Payfazz, and Retool, a startup nearly valued at a billion dollars.

MAGIC Fund has 12 founders who act as general partners. TechCrunch caught up with managing partner Adegoke Olubusi and operating partner Matt Greenleaf about the fund’s thesis and activities.

Olubusi, who had built and exited a couple of startups over the years, also dabbled with angel investing for some time. In 2017, Olubusi’s current startup Helium Health got accepted into Y Combinator. It was there he met more founders like him who were angel investors with impressive portfolios. The interesting bit? Each founder wanted to invest in other companies during YC’s Demo Day.

“So about three years ago, I was at YC, and I was going to invest in my own batch. I was pitching on the day, but I was also listening to other pitches. However, it wasn’t just me; there were many other founders as well,” Olubusi said.

After building and exiting multiple startups, some founders turn into angel investing to support startups and respective their ecosystems. The problem is they tend to go alone and are stuck in cutting checks in their local markets, which limits opportunities.

Some MAGIC portfolio companies

Here’s a scenario. In 2016, when unicorns Flutterwave and Kavak raised their seed rounds in Nigeria and Mexico respectively, an African biotech founder who knew about Kavak and a Latin American edtech founder interested in African fintech would not have had the capacity to evaluate those deals even if they wanted; the reason being a lack of reach and experience in both the industry or geography

Olubusi and the other founders knew this would be a limitation in the long run if they went solo. Thus, they decided to create MAGIC. The idea was to bring global founders together with diverse skillsets in diverse industries and geographies to evaluate deals better and drive value for each other. Hence, they can participate in two unicorns instead of one.

“Instead of us investing individually because obviously, we have somewhat limited capacity in terms of how much time we have as founders because of our respective companies, why don’t we collaborate on a strategy together, and co-invest together?”

“The way we thought of MAGIC was a fund of micro funds built by founders for founders,” Greenleaf continued.

Fund of micro funds but more than money

In some of the personal conversations I’ve had with founders about their investors, a recurring theme has been that the most useful investors didn’t necessarily sign the biggest checks. It’s a theme Olubusi also relates to all too well.

“It was like every time we think about it, everyone who gave the most money rarely had time for us. It was so frequent that we all identified this as an actual thing. What actually drove value for us were other investors who were founders and operators, and other experienced people who were able to help us find product-market fit and fight regulators. These were actually the people in the trenches with us.”

Olubusi believes the early-stage part of investing particularly in pre-seed and seed is where VCs who are founder-operators find their sweet spot. They are extremely valuable when startups are trying to figure out product-market fit. And unlike traditional investors who are looking to get multiples on investments, Olubusi argues that for founders-investors, what matters is how much value they can drive.

Image Credits: MAGIC Fund

MAGIC’s play is even more essential considering that it plays in emerging markets where on-the-ground operational help is needed in industries with numerous unknowns and uncertainties.

“There is so much money in the market now and early-stage decision making at pre-seed and seed should be left in the hands of founders. Because think about it really, in order to make an evaluation of whether I should invest in a healthcare or fintech company in Africa, it makes sense to have those who’ve spent years battling through it in the trenches, make those decisions. And what we’re trying to do with the fund is publish as much information as possible and keep performing at the 100 percentile and say this is still the best strategy and is very scalable.”

MAGIC Fund 1 was $1.5 million which came from the pockets of all 12 GPs. Olubusi says the investments performed 5x over the period of three years. As some of these companies exited, their founders invested in MAGIC and came on board as Fund 2 partners. 

MAGIC has also enlisted additional investors who, according to Olubusi, are respected for their investing abilities and ecosystem support. For instance, Olugbenga Agboola, CEO of Nigerian fintech unicorn Flutterwave is known across the African tech ecosystem as a founder who goes out of his way to help established and up and coming fintech companies. Hendra Kwik of Payfazz has such a reputation in Southeast Asia as well. They, alongside other founders, join MAGIC as limited partners.

Per the firm’s statement, one-third of the entire fund was contributed by the founder GPs. For its LPs, diversity play is taken into consideration as 50% of them are black while 33% are women. Some of them include Michael Seibel, Tim Draper, Rappi’s Andres Bilbao, Paystack’s Shola Akinlade, Katie Lewis, Octopus Ventures’ Kirsten Connell, among others.

Magic Fund 2 will be writing $100k to 300k checks in pre-seed and seed stages with a focus on fintech, healthcare, SaaS and enterprise, crypto, developer tools, and emerging markets.

What does the fund look for in founders? Olubusi gives two answers. One, MAGIC wants to back founders that have incentives to stick through the hard times of a company.

“At pre-seed and seed, you don’t have enough data about a company to make an investment decision. Your bet is entirely on the founder and the founding team. What we know, having done this several times, is that things get harder. So when we’re looking at the founder, we’re evaluating whether or not the founder has the grit to stick through the toughest times which are going to come up.”

The second indicator factors if the founder has the willingness, openness, the flexibility to learn and use that knowledge to succeed. Greenleaf believes these strategies have incredibly helped the firm fund exceptional companies and maintain good relationships with founders.

“Most of these founders don’t view us as their investors. They view us as fellow founders who are helping them along their journey. I think that also ties into them keeping it real with us and allows us through that relationship as see how they are as a person, and not just as a founder. That’s kind of one of the things that have worked in our favor,” he said.

#africa, #angellist, #asia, #finance, #funding, #latin-america, #retool, #southeast-asia, #startup-company, #startups, #tc, #venture-capital

Hear top VCs Albert Wegner, Jenny Rooke, and Shilpi Kumar talk green bets at the Extreme Tech Challenge finals

This year, TechCrunch is proudly hosting the Extreme Tech Challenge Global Finals on July 22. The event is among the world’s largest purpose-driven startup competitions that are aiming to solve global challenges based on the United Nations’ 17 sustainability goals.

If you want to catch an array of innovative startups across a range of categories, all of them showcasing what they’re building, you won’t want to miss our must-see pitch-off competition.

You can also catch feature panels hosted by TechCrunch editors, including one of the most highly anticipated discussions of the event, a talk on “going green” with guest speakers Shilpi Kumar, Jenny Rooke, and Albert Wenger, all of whom are actively investing in climate startups that are targeting big opportunities

Shilpi Kumar is a partner with Urban Us, an investment platform focused on urban tech and climate solutions. She previously led go-to-market and early sales efforts at Filament, a startup focused on deploying secure wireless networks for connected physical assets. As an investor, Shilpi has also focused on hardware, mobility, energy, IoT, and robotics, having worked previously for VTF Capital, First Round Capital, and Village Global.

Jenny Rooke is the founder and managing director of Genoa Ventures, but Rooke has been deploying capital into innovative life sciences opportunities for years, including at Fidelity Biosciences and later the Gates Foundation, where she helped managed more than $250 million in funding, funneling some of that capital into genetic engineering, diagnostics, and synthetic biology startups. Rooke began independently investing under the brand 5 Prime Ventures, ultimately establishing among the largest life sciences syndicates on AngelList before launching Genoa.

Last but not least, Albert Wenger, has been a managing partner at Union Square Ventures for more than 13 years. Before joining USV, Albert was the president of del.icio.us through the company’s sale to Yahoo and an angel investor, including writing early checks to Etsy and Tumblr. He previously founded or co-founded several companies, including a management consulting firm and an early hosted data analytics company. Among his investments today is goTenna, a company trying to advance universal access to connectivity by building a scalable mobile mesh network.

Sustainability is the key to our planet’s future and our survival, but it’s also going to be incredibly lucrative and a major piece of our world economy. Hear from these seasoned investors about how VCs and startups alike are thinking about Greentech and how that will evolve in the coming years.

Join us on July 22 to find out how the most innovative startups are working to solve some of the world’s biggest problems. And best of all, tickets are free — book yours today!

#albert-wenger, #angel-investor, #angellist, #energy, #etsy, #fidelity-biosciences, #filament, #finance, #first-round-capital, #gates-foundation, #genetic-engineering, #gotenna, #investment, #managing-partner, #money, #president, #prime-ventures, #startup-company, #tc, #techcrunch, #tumblr, #union-square-ventures, #united-nations, #village-global, #yahoo

Hustle Fund wants to help spawn a new generation of angel investors

Kara Penn is the mother of four daughters and owner of Mission Spark, a management and strategy consulting company.

And now, thanks to Hustle Fund, she is also an angel investor.

Hustle Fund is coming out of stealth today with Angel Squad, a new initiative aimed at making angel investing more accessible to more people. To more people like Colorado-based Penn.

We believe that in order to increase diversity in the startup ecosystem, one thing that we must do is increase diversity — whether it be in regard to gender, race or geography — amongst angel investors,” said Hustle Fund co-founder and general partner Elizabeth Yin.

Via Angel Squad, Hustle Fund specifically aims to build an inclusive investor community, make minimum check sizes low and accessible (think as little as $1,000), provide “angel education” and give investors a way to invest alongside Hustle Fund.

“There’s been this misnomer, or at least I had this incorrect assumption that in order to become an angel investor, you have to be super rich and write $25,000 checks,” Yin told TechCrunch. “But the reality is actually in Silicon Valley, there are all these people running around investing $1,000 checks…and that’s something that’s a lot more accessible than then most people might think. And, part of the value of having this group is then we can accumulate a bunch of smaller checks to then write one larger check for a company.”

So far, Penn has invested in five startups across a range of sectors including real estate, food, apparel and finance. 

She describes herself as “a complete novice” in angel investing, and so far, she’s loving the experience.

I love Hustle Fund’s perspective that great hustlers can look like anyone and come from anywhere,” Penn told TechCrunch. “I’ve enjoyed being in a supportive community with differing levels of expertise, but where every question is welcomed.”

The experience is also broadening her exposure to technology and AI, the collection and use of data and the creation of new marketplaces in ways she never would have been exposed to before.

“As someone whose own company focuses exclusively on strategy in social impact organizations, I am also looking for how founders identify and bring to market creative solutions to complex problems, as well as exposure to a network of innovative people looking to solve hard issues in smart ways,” Penn said. “This exposure is helping me begin to think about applications of these approaches to difficult social problems.”

For some context, Hustle Fund is a venture firm founded by Elizabeth Yin and Eric Bahn, two former 500 Startups partners, with the goal of investing in pre-seed software startups. The firm has traditionally operated by investing $25,000 in a company, usually with a minimum-viable product, and then works with the team to help them grow. It does around 50 investments per year, according to its website. 

It recently closed on $33.6 million for a new fund.

“One of the things most important to us is this bigger mission of wanting to change the way the startup ecosystem is,” Yin said. “I noticed both as an entrepreneur and while running an accelerator, if you have a certain resume, went to certain schools, or were a certain race or gender, you have advantages in starting a company and getting funding. For many people, if you don’t tick those boxes, it can be very challenging. That’s why we’re investing in a lot of founders from all walks of life.”

Hustle Fund Venture Partner Brian Nichols had started a syndicate of Lyft alumni on AngelList. After doing a few deals, he opened up the syndicate to people outside of AngelList.

“I found there was a wide range of people looking to diversify into private markets, from all over the world with all types of backgrounds,” he said. “Hustle Fund and I had similar taste in companies I was investing in and I built a relationship with them in co-investments.”

Today, he’s helping run the fund’s Angel Squad initiative. So far, it has had two cohorts with over 150 investors total and true to the fund’s mission, those investors have been more diverse than typical angel syndicates: 46% of the members are female, 9% are underrepresented minorities and 32% are people who work outside of tech with professional roles such as lawyers, doctors and artists. Just one-third are based in Silicon Valley.

Every week, Angel Squad hosts an event which ranges from networking to a peek behind the curtain at opportunities at Hustle Fund is considering investing in to talking through why or why not to take a meeting with a founder.

“Imagine starting from zero, and if you could skip a bunch of steps and have Elizabeth (Yin) tell you how to do this before you lose a bunch of money in the process of evaluating a startup,” Nichols told TechCrunch. “Angel Squad is exactly what I wish had existed three or four years ago when I became interested in investing.”

Silicon Valley, Yin acknowledges, can be intimidating but the reality is that no one is an expert in everything.

“We’re trying to cultivate an environment where people are very kind — we have a no asshole rule, and that is a safe space where people can learn and feel like they can ask questions, and not have to know everything about angel investing. The reality is most people don’t. And we want to bring new people into this system.”

Besides not being an a-hole, other criteria in becoming a Squad Member include being able to add value and being an accredited investor.

“With rounds as competitive as they are today, we are looking for people who want to be actively supportive of the portfolio companies we’re investing in,” Nichols said. “Every person who wants to join the program is interviewed by someone from our team, who asks questions such as ‘What can you help a founder with?’ We are not looking for passive capital. That’s not super helpful at this point in the ecosystem.

#angel-investing, #angel-investors, #angellist, #co-founder, #colorado, #diversity, #elizabeth-yin, #entrepreneur, #entrepreneurship, #eric-bahn, #finance, #food, #funding, #hustle-fund, #investment, #lyft, #minimum-viable-product, #money, #pennsylvania, #private-equity, #real-estate, #silicon-valley, #startup, #startup-company, #startups, #tc, #venture-capital, #venture-capitalists

Snack, a ‘Tinder meets TikTok’ dating app, opens to Gen Z investors

Snack, a video-first mobile dating app designed with a younger generation in mind, is opening itself up to Gen Z investors. The startup today announced the launch of its own Gen Z Syndicate on AngelList, which will allow Gen Z community members, influencers, creators and others to participate in the company’s upcoming $2 million SAFE, alongside other funds and angel investors.

The company in February announced $3.5 million in seed funding for its modern, TikTok-style dating app where users post videos to a feed which others then like in order to be matched. Snack believes videos allow users to better showcase their interests and lifestyle, as well as show off their personalities in ways static photos cannot. When two people like each other’s videos, they’re invited to direct message one another.

The experience is very much like engaging with a TikTok that’s built for dating. In fact, Snack is one of the first apps that will be adopting TikTok’s new Login SDK for third-party apps, which gives Snack’s users the ability to reshare their TikTok videos to their dating profiles.

Image Credits: Snack

Snack’s founder, Kim Kaplan, has a history in the dating app market. She previously led product, marketing and revenue at Plenty of Fish, which later sold to Match Group for $575 million in 2015.

“If you think about Plenty of Fish, we really launched off of Google SEO,” Kaplan explains. “Then you had Zoosk and Badoo, which launched off of Facebook — when it was a really early platform and it was easy to get traffic from it. Then you had Tinder and Bumble, which launched off of mobile-first. They were the first apps to come out and design and build with mobile in mind versus the rest of us which were desktop, trying to cram everything into a mobile phone,” she says.

“And I fundamentally believe now that the right opportunity is the distribution on TikTok, as well as influencers. I think that combination of TikTok being the new distribution channel is going to be a massive opportunity — and that’s what we’re trying to leverage,” Kaplan says.

Longer-term, Snack is likely to grow beyond the young, Gen Z demographic. Already, the app is attracting users in their 20’s and early 30’s, thanks to its TikTok ties. But as TikTok naturally ages up, so will Snack.

Snack began fundraising in September of last year, then hired the team, built the app and launched in late February.

Image Credits: Snack

“We’re only about eight weeks into this right now, but we’re seeing a lot of excitement, a lot of user growth,” Kaplan says. “Because of that excitement that’s kind of building, people — a lot of really interesting people — came to the table and said they wanted to invest. But I didn’t have any room left in the previous rounds, so I decided to open up a SAFE.”

As part of that SAFE, Snack is carving out a certain amount to create its own syndicate. That way, Kaplan notes, “we don’t have any carry fees with another person, and [we’re] opening it up to Gen Z investors that want to participate in the round.”

Originally, the carve-out began at $100,000 but there is already enough interest that Kaplan says she expects it to go higher — perhaps a couple hundred thousand or larger, based on demand.

Among the Gen Z investors are VCs who have heard about Snack, but whose fund primarily invests at a later stage. Others are just people the company has been working with and getting advice from while building out the the app.

For example, Kaplan had reach out to the Gen Z Mafia, a group of technologists working to make venture capital and startups more inclusive, to help consult on Snack. The group’s leaders, Emma Salinas and Nicholas Huebecker, are credited with helping Kaplan come up with Snack’s pretzel logo and its brand name.

“Video first dating allows a unique sense of expression that you can’t portray with a few well-crafted words and filtered pictures,” said Huebekcer, of his interest in Snack. “For a mobile-first generation, this new form of authenticity will grow to be necessary. Snack allows users to express their real selves just like they do on TikTok, Snapchat, and other platforms we love,” he added.

Technology investor and Founder at The Innovation Armory, Samuel Natbony, is also joining the SAFE, alongside Monique Woodard (Cake Ventures), Backbone Angels, Shakti Ventures, Christian Winklund (previously CEO of dating app Skout which sold to Meet Group), Andrew Wilkinson and others.

“I want Gen Z to have a seat at the table and help shape what Snack becomes,” says Kaplan. “I want them to have that voice and participate, and be a champion for Snack,” she adds.

#angellist, #apps, #dating, #dating-apps, #funding, #gen-z, #mobile, #mobile-applications, #online-dating, #snack, #tiktok, #video, #video-apps, #video-dating

Figure raises $7.5M to help startup employees better understand their compensation

The topic of compensation has historically been a delicate one that has left many people — especially startup employees — wondering just what drives what can feel like random decisions around pay and equity.

Last June, software engineers (and housemates) Miles Hobby and Geoffrey Tisserand set about trying to solve the problem for companies by developing a data-driven platform that aims to help companies structure their compensation plans and transparently communicate them to candidates.

Now today, the startup behind that platform, Figure, announced it has raised $7.5 million in seed funding led by CRV. Bling Capital, Better Tomorrow Ventures and Garage Capital also participated in the financing, along with angel investors such as AngelList co-founder Naval Ravikant, Jason Calacanis, Reddit CEO Steve Huffman and other executives based in Silicon Valley.

The startup has amassed a client list that includes other startups such as fintechs Brex and NerdWallet and AI-powered fitness company Tempo. 

Put simply, Hobby and Tisserand’s mission is to improve workflows and transparency around pay, particularly equity. The pair had both worked at startups themselves (Uber and Instacart, respectively) and ended up leaving money on the table when they left those companies because no one had properly explained to them what their equity, which changed at every valuation, meant.  

Figure co-founders and co-CEOs Miles Hobby and Geoffrey Tisserand. Image Credits: Figure

So, one of their goals was to create a solution that would provide a user-friendly explanation of what a person’s equity stake really means, from tax implications to whether or not they have to buy the stock and/or hold onto it.

“I’ve gone through the job search process many times before and there’s all these complex legal documents to understand why you’re getting 10,000 stock options, but obviously we knew the vast majority of people have no idea how that works,” Tisserand told TechCrunch. “We saw an opportunity there to help companies actually convey the value to their candidates while also making them aware of the potential risks of owning something that’s so illiquid.”

Image Credits: Figure

Another goal of Figure’s is to help create a more fair and balanced process about decisions around pay and equity so that there’s less inequality out there. Pointedly, it aims to remove some of the biases that exist around those decisions by systematizing the process.

“We saw a void in this kind of context around equity…and knew that there had to be a better way for companies to structure, manage and explain their compensation plans,” Hobby said.

To Hobby and Tisserand, Figure is designed to help stop instances of implicit bias.

“Compensation should be based on the work that you’re doing, and not gender or ethnic background,” Tisserand told TechCrunch. “We’re trying to give that context and remove biases. So, we’re trying to help at two different stages –– to surface inequities that already exist and make sure there are no anomalies, and then to help stop them before they can exist.”

Figure also aims to give companies the tools to educate candidates and employees on their total compensation — including equity, salary, benefits and bonuses — in a “straightforward and user-friendly” way. For example, it can create custom offer letters that interactively detail a candidate’s compensation.

“Our goal is for Figure to become an operating system for compensation, where a company can encode their compensation philosophy into our system, and we help them determine their job architecture, compensation bands and offer numbers while monitoring their compensation health to provide adjustment suggestions when needed,” Hobby said.

Post-hire, Figure’s compensation management system “helps keep everything running smoothly.”

Anna Khan, general partner of enterprise software at CRV, is joining Figure’s board as part of the funding. The decision to back the startup was in part personal, she said.

“I’d been investing in software for eight years and was alarmed that no one was building anything around pay equity when it comes to how we’re paid, why we’re paid what we’re paid and on how to build equity long term,” Khan told TechCrunch. “Unfortunately, discussions around compensation and equity still happen behind closed doors and this extends into workflow around compensation — equally broken — with manual leveling, old data and large pay inequities.”

The company plans to use its new capital to expand its product offerings and scale its organization.

#angellist, #anna-khan, #artificial-intelligence, #better-tomorrow-ventures, #bling-capital, #crv, #economy, #enterprise-software, #entrepreneurship, #figure, #finance, #funding, #fundings-exits, #hiring, #instacart, #jason-calacanis, #naval-ravikant, #operating-system, #private-equity, #recent-funding, #reddit, #silicon-valley, #startup, #startup-company, #startups, #steve-huffman, #talent, #uber, #venture-capital

Persona lands $50M for identity verification after seeing 10x YoY revenue growth

The identity verification space has been heating up for a while and the COVID-19 pandemic has only accelerated demand with more people transacting online.

Persona, a startup focused on creating a personalized identity verification experience “for any use case,” aims to differentiate itself in an increasingly crowded space. And investors are banking on the San Francisco-based company’s ability to help businesses customize the identity verification process — and beyond — via its no-code platform in the form of a $50 million Series B funding round. 

Index Ventures led the financing, which also included participation from existing backer Coatue Management. In late January 2020, Persona raised $17.5 million in a Series A round. The company declined to reveal at which valuation this latest round was raised.

Businesses and organizations can access Persona’s platform by way of an API, which lets them use a variety of documents, from government-issued IDs through to biometrics, to verify that customers are who they say they are. The company wants to make it easier for organizations to implement more watertight methods based on third-party documentation, real-time evaluation such as live selfie checks and AI to verify users.

Persona’s platform also collects passive signals such as a user’s device, location, and behavioral signals to provide a more holistic view of a user’s risk profile. It offers a low code and no code option depending on the needs of the customer.

The company’s momentum is reflected in its growth numbers. The startup’s revenue has surged by “more than 10 times” while its customer base has climbed by five times over the past year, according to co-founder and CEO Rick Song. Meanwhile, its headcount has more than tripled to just over 50 people.

When we look back at the space five to 10 years ago, AI was the next differentiation and every identity verification company is doing AI and machine learning,” Song told TechCrunch. “We believe the next big differentiator is more about tailoring and personalizing the experience for individuals.”

As such, Song believes that growth can be directly tied to Persona’s ability to help companies with “unique” use cases with a SaaS platform that requires little to no code and not as much heavy lifting from their engineering teams. Its end goal, ultimately, is to help businesses deter fraud, stay compliant and build trust and safety while making it easier for them to customize the verification process to their needs. Customers span a variety of industries, and include Square, Robinhood, Sonder, Brex, Udemy, Gusto, BlockFi and AngelList, among others.

“The strategy your business needs for identity verification and management is going to be completely different if you’re a travel company verifying guests versus a delivery service onboarding new couriers versus a crypto company granting access to user funds,” Song added. “Even businesses within the same industry should tailor the identity verification experience to each customer if they want to stand out.”

Image Credits: Persona

For Song, another thing that helps Persona stand out is its ability to help customers beyond the sign-on and verification process. 

“We’ve built an identity infrastructure because we don’t just help businesses at a single point in time, but rather throughout the entire lifecycle of a relationship,” he told TechCrunch.

In fact, much of the company’s growth last year came in the form of existing customers finding new use cases within the platform in addition to new customers signing on, Song said.

“We’ve been watching existing customers discover more ways to use Persona. For example, we were working with some of our customer base on a single use case and now we might be working with them on 10 different problems — anywhere from account opening to a bad actor investigation to account recovery and anything in between,” he added. “So that has probably been the biggest driver of our growth.”

Index Ventures Partner Mark Goldberg, who is taking a seat on Persona’s board as part of the financing, said he was impressed by the number of companies in Index’s own portfolio that raved about Persona.

“We’ve had our antennas up for a long time in this space,” he told TechCrunch. “We started to see really rapid adoption of Persona within the Index portfolio and there was the sense of a very powerful and very user friendly tool, which hadn’t really existed in the category before.”

Its personalization capabilities and building block-based approach too, Goldberg said, makes it appealing to a broader pool of users.

“The reality is there’s so many ways to verify a user is who they say they are or not on the internet, and if you give people the flexibility to design the right path to get to a yes or no, you can just get to a much better outcome,” he said. “That was one of the things we heard — that the use cases were not like off the rack, and I think that has really resonated in a time where people want and expect the ability to customize.”

Persona plans to use its new capital to grow its team another twofold by year’s end to support its growth and continue scaling the business.

In recent months, other companies in the space that have raised big rounds include Socure and Sift.

#angellist, #artificial-intelligence, #coatue, #driver, #funding, #fundings-exits, #identity-verification, #index-ventures, #machine-learning, #mark-goldberg, #persona, #recent-funding, #saas, #san-francisco, #startup, #startups, #tc, #travel, #venture-capital, #verification

How to attract large investors to your direct investing platform

Many fintech startups have tried to become a market-maker between investors and investment opportunities. However, the challenge with this two-sided market is: How do you get the investors to show up? It’s hard enough to get retail investors, but family offices and other large check writers are even more challenging to lure.

I’ve been meeting lately with an increasing number of family offices interested in investing directly into companies in lieu of via funds. As a result, I’ve started investigating some of the online platforms that enable direct investing, for instance, those focused on:

Tim Friedman, the founder of PEStack, observes that the interest in direct access to alternatives has been so strong that “platforms like Delio have emerged, which provide technology to allow institutions that already have relationships with buy- and sell-sides to quickly launch robust private investment platforms. Delio built a ESG-focused direct private investment platform for Barclays’ wealth management division, for example.”

Note that I’m specifically excluding from this analysis firms that help investors access investment funds, for instance CAIS, Context365, iCapital Network, OurCrowd, Palico, PrimeAlpha, and Trusted Insight. Investors there are outsourcing the decision-making about individual investments to the general partners.

#angel-investment, #angellist, #column, #ec-column, #ec-how-to, #funding, #private-equity, #venture-capital

Internal rates of return in emerging US tech hubs are starting to overtake Silicon Valley

Tech innovation is becoming more widely distributed across the United States.

Among the five startups launched in 2020 that raised the most financing, four were based outside the Bay Area. Prominent VCs like Keith Rabois of Founders Fund, David Blumberg of Blumberg Capital, and Joe Lonsdale of 8VC have moved out of the Bay Area to new emerging tech hubs, which AngelList defines as Austin, Texas; Seattle; Denver; Portland, Oregon; Brooklyn, New York; Nashville, Tennessee; Pittsburgh; and Miami.

The number of syndicated deals on AngelList in emerging markets has increased 144% over the last five years.

The number of startups in these emerging markets is growing fast, according to AngelList data, and increasingly getting a bigger piece of the VC pie.

AngelList compared the performance of startups based in emerging tech hubs to startups in Silicon Valley by internal rate of return (IRR), which measures the rate of growth these investments have generated. AngelList defines “Silicon Valley” as San Francisco, Palo Alto, Mountain View, Oakland, San Mateo, Berkeley, Redwood City, Menlo Park, San Jose, Santa Clara, Sunnyvale, Burlingame and San Carlos.

According to AngelList’s data, startups in emerging tech hubs have an aggregate IRR of 19.4% per year on syndicated deals on AngelList. Syndicated deals on AngelList in Silicon Valley have an aggregate IRR of 17.5% per year.

Total value to paid-in (TVPI), which is the return multiple net of fees, is also slightly higher for AngelList deals in emerging tech hubs (1.67x) than Silicon Valley (1.60x). This means for every $1 invested into startups based in emerging tech hubs, the investor’s portfolio is now valued at $1.67, compared to $1.60 for Silicon Valley startups.

This data is based on a sample of nearly 2,500 syndicated deals on AngelList dating back to 2013, with returns current as of January 1, 2021.

Investors we spoke with offered a variety of reasons for the rise of these emerging tech hubs, including cheaper taxes outside the Bay Area, lower cost of living and a wider distribution of talent brought on by the COVID-19 pandemic.

#angel-investor, #angellist, #column, #ec-column, #entrepreneurship, #founders-fund, #private-equity, #san-francisco, #startup-company, #tc, #united-states, #venture-capital

Jake Paul looks to knock out the venture capital world with Anti Fund

During every economic boom, there are startup investors who appear on the scene from new corners. Some churn out; others earn the respect of the old guard over time.

Jake Paul would be happy to be in the latter camp. Then again, the 24-year-old didn’t become a social media star by being conventional. Little wonder that Paul is now jumping into venture capital with an outfit that’s branded the Anti Fund. Newly formed with serial entrepreneur Geoffrey Woo, the endeavor is traditional in some ways but has a decidedly different point of view, say the two.

Some of the basics: Anti Fund is not a discrete pool of capital but is instead using AngelList’s Rolling Funds platform, which enables investors to raise money through a quarterly subscription from interested backers. Among those who’ve already committed capital are Marc Andreessen and Chris Dixon of Andreessen Horowitz.

Why choose a rolling fund instead of a traditional fund? For one thing, Paul and Woo were drawn to its Rule 506(c) structure, which enables issuers to broadly solicit and generally advertise an offering. Because Anti Fund plans to focus largely on consumer-focused brands and next-generation creator platforms in particular, “we want to be able to promote and advertise our fund,” says Woo, who most recently founded a nutrition-based food and beverage company and earlier in his career sold a company to Groupon.

Paul also wants to ensure his fans can get involved if they want. “I have followers are different reasons, and they want to be involved in what I’m doing. If they’re involved in our fund, then that’s more people rooting for us and our portfolio companies to win. We almost create this army that’s pushing all of these companies forward.”

Anti Fund plans to write checks of between $100,000 and $1 million to one to two startups every quarter. The goal, says Paul, is to be the “biggest rolling fund on AngelList” investing “around $10 million to $20 million a year.”

Anti Fund is just the newest effort to come from the world of social media influencers. As we reported earlier this month, the management company of another YouTube star, MrBeast, has dived into the world of venture capital with a $20 million fund it assembled with commitments from social media creators. Dispo, a photo-sharing app cofounded by YouTube star David Dobrik also attracted widespread attention and funding earlier this year. Not last, a new startup called Creative Juice just raised funding to provide equity-based financing to YouTube creators. MrBeast, whose real name is Jimmy Donaldson, is among its investors.

“I think a lot of creators with newfound wealth — a lot of YouTubers or Instagram models — don’t necessarily know what to do with their money,” says Paul, who has already diversified into boxing, making his professional boxing debut last year. “I’m trying to lead the way.”

Neither Paul nor Woo is new to startup investing. Woo has invested in roughly 20 startups on his own, including Paribus, an email widget that saved consumers money and that was acquired by Capital One. Paul, meanwhile, previously cofounded another small venture outfit called TGZ Capital that he says participated in the funding rounds of 15 startups.

One of these is Quip, a seven-year-old oral care company that has raised $62 million in funding, according to Crunchbase. Another company backed by Paul is Triller, a social video app that briefly became the most-downloaded free app in the App Store last summer when bigger rival TikTok was facing an uncertain future in the U.S.

Triller has since lost enough of that momentum that talk of going public via a special purpose acquisition vehicle has yet to lead to a tie-up, six months after the company reportedly began exploring the possibility. Still, as a stakeholder, Paul is keeping it in the headlines, including by providing it with exclusive rights to stream a pay-per-view boxing match between himself with former MMA wrestler Ben Asken on April 17.

Interestingly, it’s because Paul moved from L.A. to Miami to train for the fight that he met Woo, a Californian who visited Miami this past January for what was supposed to be a weekend trip and wound up staying. The two say they happened to hit it off at a tech event and, after establishing they had mutual friends, connected over their interest in performance nutrition, with Paul investing in Woo’s newest company, HVMN.

Last month, they decided to partner on Anti Fund, too.

Whether the two succeed as business partners will take time to learn. Certainly, they both have a strong work ethic. Woo has started three companies since graduating from Stanford with a computer science degree. Though Paul makes what what seems an inordinate amount of money for creating YouTube videos, he has created thousands of them in order to amass his more than 20 million followers.

It’s also clear that, as with his social media career, Paul is taking boxing seriously. During his most recent fight, in November, he knocked out former NBA player Nate Robinson in the second round. His first boxing match, against fellow YouTuber AnEsonGib in January of last year, also ended in a knockout just 2 minutes and 18 seconds into the fight.

Many professional athletes see the fights as mere stunts, given Paul’s famous made-for-video antics, from a short-lived marriage, to disregarding the concerns of neighbors in West Hollywood, to being charged by police last June for criminal trespass and unlawful assembly connected with the looting of an Arizona mall.

An obvious risk is that the best deal-makers in the world will see Anti Fund as a stunt, too, or else that something that Paul says or does will ruffle feathers. As industry watchers know, investors’ excitement over Dobrik’s Dispo dissipated quickly after Business Insider first detailed various accusations of misconduct against members of the Dobrik’s online squad, including an accusation of rape against one of Dobrik’s friends that allegedly took place during a video shoot.

Paul, who finished high school online in order to pursue a career as an influencer, is well aware of the Dobrik scandal. It’s because he has grown up in plain view, in fact, that he’s not concerned about something from his past threatening his future.

“It’s definitely [risky to be in my position]. Your life is put on display when you choose to be a celebrity and specifically a vlogger. But because I’ve lived online, everyone’s seen everything already,” he says.

He also thinks that “VCs and people in the business world understand more and more how to work” with influencers and other celebrities who have enormous followings and are bringing them along as their careers evolve. “At the end of the day,” he says of business partners, “if someone is a good person and you have a relationship established with them, that’s what really matters.”

#angellist, #chris-dixon, #groupon, #influencer, #marc-andreessen, #miami, #social, #social-media, #tc, #triller, #venture-capital, #youtube

Robert Downey Jr. is launching a new ‘rolling’ venture fund to back sustainability startups

A little less than two years ago, when the actor, producer, and investor Robert Downey Jr. unveiled his new, sustainability focused initiative called the FootPrint Coalition at Amazon’s re:MARS conference it was little more than a static website and a subscription prompt.

Jump cut to today, and the firm now has five portfolio companies, a non-profit initiative, and is launching a rolling venture fund, Footprint Coalition Ventures, at the World Economic Forum’s Digital Davos event.

With the new rolling fund, managed through AngelList, Downey Jr.’s initiative sits the intersection of two of the biggest ideas reshaping the world economy — the democratization of access to capital and investment vehicles and the $10 trillion opportunity to decarbonize global industry.

It’s another arrow in the quiver for an institution that aims to combine storytelling, investing, and non-profit commitments to combat the world’s climate crisis.

Rolling funds and the revolution in finance

There’s a revolution happening in finance right now, whether it’s the rise of the Redittors trying to avenge the malfeasance of short-sellers and big institutional investors that’s happening through investments in stocks like Blockbuster, Nokia, Gamestop and AMC, or the new crowdfunding sources and rolling funds that are allowing regular investors to finance early stage companies, things on Wall Street are definitely changing.

And while the public market gambles are undoubtably minting some new millionaires, opening up access to interesting startup investments is a thesis that’s a stark contrast to the cynicism of day-trading gambles.

Both could leave investors with less than zero in some cases, but with rolling funds or crowdfunding, there’s a real opportunity to build something rather than just sticking it to the man.

Unlike traditional venture funds, rolling funds raise new capital commitments on a quarterly basis and invest as they go, hence the “rolling”. Investors come on for a minimum one-year commitment, and invest at a quarterly cadence. In Downey Jr.’s fund that commitment amounts to $5,000 per quarter for up to 2,000 qualified investors (and a smaller number of accredited ones), according to a person with knowledge of the firm’s plans.

“The idea of opening [the fund] to real people, rather than the ivory tower of the institutional bigwigs… It’s a little bit more slamdance than Sundance [and] I kind of dig it,” said Downey Jr.

A guide to recognizing FootPrint Coalition Ventures

FootPrint Coalition Ventures will be split between early and late stage investment funds and will be looking to make six investments per year in early stage companies and four later stage deals.

Helping Downey Jr. manage the operations are investors like Jonathan Schulthof, who previously founded LOOM Media, which leverages smart urban infrastructure for advertising, founded Motivate International, which manages bike sharing services in cities across the U.S., and served as a managing partner for Global Technology Investments. Schulthof is joined by Steve Levin, who co-founded Team Downey, Downey Jr.’s media production company and Downey Ventures, which invests in media and technology companies. 

The firm already has four companies in its portfolio through investments it made using the founders’ own capital. And while those investments were all under $1 million, the firm expects that the size of its commitments will grow as it raises additional cash. Footprint Coalition has also maintained pro-rata investment rights so that it can increase the size of its stake in businesses over time. And the investments it made to date were sized in anticipation of potential for follow-ons at much higher valuations.

A venture fund inside of a coalition

The initiative that Downey Jr. hopes to build is more than just an investment arm. Both he and his co-founders see the investment side as a single piece of a broader platform that leverages the massive social following Downey Jr. has created and the storytelling skills he and his team have mastered through decades spent working in the movie business.

That broader team includes Rachel Kropa, the former head of the CAA Foundation, who will lead scientific and philanthropic efforts and serve as the fund’s Impact Advisor and liaison to the scientific and research communities, according to a statement.

Rachel Kropa, former head of the CAA Foundation who joined Footprint Coalition to lead scientific and philanthropic efforts last year, will serve as the fund’s Impact Advisor and liaison to the scientific and research communities.

“The idea that the content that we made can be related back to the individual is very powerful,” said Kropa. “This problem is so intractable and interconnected across the world. It does matter that the fish that you eat are made using a sustainable feed.”

Kropa is referring to a piece that the FootPrint Coalition put out around sustainable aquaculture tied to the group’s recent investment in Ÿnsect, a company that makes protein from crickets for use in animal feed and human food.

“Our content around Cellular Agriculture, exemplifies the type of content we can create in the course of taking a deep dive into a particular industry. Though we have not (yet) invested in the space, we do believe there are interesting stories to tell,” said one person who works with the company.

That media is additive to activate the group’s audience, and is not something that it charges for — or considers part of its investment valuation. “We’ve been creating edited video segments with Robert doing voice over and overlaying animation all of which we’ve been posting to social. We do this for free to the companies, and we don’t charge / strong-arm / cajole for warrants, advisor shares, or the like in return,” the person said.

Weird science and sustainability

While Ÿnsect is one example of a company that the FootPrint Coalition has backed that’s doing something which may be a little outside of the purview of most of Downey Jr.’s following, other businesses like the bamboo toilet paper company, Cloud Paper, and the new investment in the sustainability focused financial services company, Aspiration, have definite direct consumer ties.

That balance is something that Schulthof said the firm was looking for as it pursues not just environmental and sustainability returns, but, more concretely, profit.

“We look at things that are meaningful and impactful [and] I get to be purely capitalist. The question is this a good opportunity is something that has to do with its margins, its scale, its risk profile, the people involved and fundamentally what are the terms… do we think the company will deliver value to investors,” said Schulthof. “We’re looking for returns.”

The opportunity for returns is enormous. As the group noted, the ESG sector – funds that focus on the Environmental, Social and Governance issues – continues to grow rapidly Part of the broader stakeholder capitalism movement, impact investing funds have topped $250 billion, and sustainability assets have doubled in value over the past three years.

“We see two powerful trends working together to support the environment. First, engaging content and media distribution enable us to create a passionate community from Robert’s 100 million followers and to use that audience to access great investments. Second, a turnkey technology platform now enables us to manage a broad set of individual investors,” said Schulthof in a statement. “Venture funds traditionally have high minimums that exclude only the wealthiest individuals, or endowments and foundations. With much lower minimums and shorter investment periods, we can now offer access to these same companies to a much broader group. When these investors further ignite our passionate audience, we hope to set a positive feedback loop in motion with environmental technologies as the ultimate beneficiary.”

 

#advisor, #amc, #angellist, #animation, #aspiration, #cloud-paper, #corporate-finance, #crowdfunding, #davos, #economy, #entrepreneurship, #finance, #funding, #gamestop, #head, #investor, #managing-partner, #media-production, #money, #nokia, #private-equity, #sundance, #tc, #technology, #united-states, #venture-capital, #world-economic-forum, #ynsect

Cosmos Video – a ‘Club Penguin for adults’ to socialise and work – raises $2.6M from LocalGlobe

All over the world startups are piling into the space marked “virtual interaction and collaboration”. What if a startup created a sort of ‘Club Penguin for adults’?

Step forward Cosmos Video, which has a virtual venues platform that allows people to work, hang out and socialize together. It has now raised $2.6m in seed funding LocalGlobe with participation from Entrepreneur First, Andy Chung and Phillip Moehring (AngelList), and Omid Ashtari (former President of Citymapper).

Founders Rahul Goyal and Karan Baweja previously led product teams at Citymapper and TransferWise respectively.

Cosmos allows users to create virtual venues by combining game mechanics with video chat. The idea is to bring back the kinds of serendipitous interactions we used to have in the real world. You choose an avatar, then meet up with their colleagues or friends inside a browser-based game. As you move your avatars closer to one another person you can video chat with them, as you might in real life.

The competition is the incumbent video conferencing platforms such as Zoom and Microsoft Teams, but calls on these platforms have a set agenda, and are timeboxed – they’re rigid and repetitive. On Cosmos you sit on the screen and consume one video call after another as you move around the space, so it is mimicking serendipity, after a fashion.

As well as having a social application, office colleagues can work collaboratively on tools such as whiteboards, Google documents and Figma; play virtual board games or gather around a table to chat.

Cosmos is currently being used in private beta by a select group of companies to host their offices and for social events such as Christmas parties. Others are using it to host events, meetup groups and family gatherings.

Co-founder Rahul Goyal said in a statement: “Once the pandemic hit, we both saw productivity surge in our respective teams but at the same time, people were missing the in-office culture. Video conferencing platforms provide a great service when it comes to meetings, but they lack spontaneity. Cosmos is a way to bring back that human connection we lack when we spend all day online, by providing a virtual world where you can play a game of trivia or pong after work with colleagues or gather round a table to celebrate a friend’s birthday.”

George Henry, partner, LocalGlobe: “We were really impressed with the vision and potential of Cosmos. Scaling live experiences online is one of the big internet frontiers where there are still so many opportunities. Now that the video infrastructure is in place, we believe products like Cosmos will enable new forms of live online experiences.”

#angellist, #christmas, #citymapper, #club-penguin, #co-founder, #computing, #entrepreneur, #europe, #google, #groupware, #internet-culture, #microsoft, #president, #tc, #telecommunications, #teleconferencing, #video, #video-conferencing, #virtual-reality, #virtual-world

Floww raises $6.7M for its data-driven marketplace matching founders with investors, based on merit

Floww – a data-driven marketplace designed to allow founders to pitch investors, with the whole investment relationship managed online – says it has raised $6.7M / £5M to date in Seed funding from angels and family offices. Investors include Ramon Mendes De Leon, Duncan Simpson Craib, Angus Davidson, Stephane Delacote and Pip Baker (Google’s Head of Fintech UK) and multiple Family Offices. The cash will be used to build out the platform designed to give startups access to over 500+ VCs, accelerators and angel networks.

The team consists of Martijn De Wever, founder and CEO of London based VC Force Over Mass; Lee Fasciani, cofounder of Territory Projects (the firm behind film graphics and design including Guardians of the Galaxy and BladeRunner 2049); and CTO Alex Pilsworth, of various Fintech startups.

Having made over 160 investments himself, De Wever says he recognized the need for a platform connecting investors and startups based on merit, clean data, and transparency, rather than a system built on “warm introductions” which can have inherent cultural and even racial biases.

Floww’s idea is that it showcases startups based on merit only, allowing founders to raise capital by providing investors with data and transparency. Startups are given a suite of tools and materials to get started, from cap table templates to ‘How To’ guides. Founders can then ‘drag and drop’ their investor documents in any format. Floww’s team of accountants then cross-checks the data for errors and process key performance metrics. A startup’s digital profile includes dynamic charts and tables, allowing prospective investors to see the company’s business potential.

Floww charges a monthly fee to VCs, accelerators, family offices and PE firms. Startups have free access to the platform, and a premium model to contact and send their deal to multiple VCs.

Floww’s pitch is that VCs can, in turn, manage deal-sourcing, CRM, as well as reporting to their investors and LPs. Quite a claim, given all VCs to-date handle this kind of thing in-house. However, Floww claims to have processed 3,000 startups and says it is rolling out to over 500 VC’s.

In a statement, De Wever said: “In an age of virtual meetings and connections, the need for coffee meetings on Sand Hill Road or Mayfair is gone. What we need now are global connections, allowing VCs to engage in merit-based investing using data and metrics.” He says the era of the Coronavirus pandemic means many deals will have to be sourced remotely now, so “the time for a platform like this is now.”

AngelList is perhaps its closest competitor from the startup perspective. And the VC application incorporates the kind of functionality seen in Affinity, Airtable, Efront and Docsend. But AngeList doesn’t provide data or metrics.

#angellist, #business, #ceo, #cofounder, #companies, #crm, #cto, #entrepreneurship, #europe, #head, #london, #martijn-de-wever, #massachusetts, #private-equity, #startup-company, #tc

Spearhead launches $100M fourth fund to transform founders into top-notch VC investors

Venture capital continues to get a founder makeover.

Two years ago, I profiled Spearhead, a new program and fund created by Jeff Fagnan at Accomplice and Naval Ravikant, the co-founder of AngelList, to mentor leading founders into becoming the next-generation of angel and seed investors. The premise is and remains simple: offer founders with great networks and hustle $1 million in capital to go out and start writing angel checks and build their own portfolio. Provide a bit of infrastructure and support to guide their decisions, but otherwise, empower founders to learn the craft of investing, and in the process, perhaps even improve their own fundraising prowess.

Well, a lot has changed in the early-stage world, both broadly and with Spearhead over the past nearly three years.

In the last few months (partly driven by AngelList’s push), rolling funds have erupted to completely transform the solo and first-time capitalist world. Rolling funds allow newly-minted VCs to raise smaller amounts of money over time rather than raising a whole fund first, which dramatically lowers the barriers to begin startup investing. How does Spearhead fit into such a world? That’s where the program’s new fund comes into play.

Spearhead announced today that it has raised $100 million for its fourth fund. The basic outline of the program remains the same, but what’s changed is what happens after the formal Spearhead program has finished. “Top-performing founders” will now get $5 million to stake a follow-on rolling fund, as determined by an LP committee. Half the fund is dedicated to follow-on investments, which means that $50 million will be invested in the pro-rata stakes of Spearhead investments. In an interview, Ravikant said “we’re scaling the dollars but we’re reducing the classes” and Fagnan chimed in saying “deeper, fewer bets.”

Applications for the fourth class of Spearhead founders are now open.

Jeff Fagnan and Naval Ravikant of Spearhead. Photo via Spearhead.

Spearhead isn’t built around formal lectures or material, but instead is designed to be an active community that helps train founders for two years and more to learn the art of investing. “We write down the guidelines on how to invest — the stuff that can be taught — on one sheet of paper,” Ravikant said. “And it’s pretty basic stuff … there’s no rocket science here. The work is in the actual day-to-day execution.” The real learning takes place around live deals where it’s all about the discussions between the partners and the other Spearhead participants and alumni.

Spearhead shared some data about where the program stands after about three years. Across three classes, 56 founders have joined the program (with eight unicorns represented), funding 380 startups with $18 million in capital. Among the founders in the program are Alexandr Wang of Scale AI (which was just offered funding at a $3 billion valuation according to The Information), Laura Behrens Wu of Shippo (which raised its Series C earlier this year) and Peter Reinhardt of Segment, which was just bought by Twilio for $3.2 billion.

“We’re an investor, we’re not running a scout program,” Ravikant said. “We are the first and most value-added limited partner in a new GPs career, and just like Y Combinator is sort of pulling these companies into existence, from school kids who otherwise would not have gotten the time of day, we are pulling these funds into existence by helping the founders who until now have been dabbling in angel investing and knew that down the road, they’d have to learn how to be a VC or an angel.”

As Spearhead has matured, the team has learned which founders have succeeded, and what their blind spots are. “The most successful founders in my mind that are Spearhead leads are people who did not consider themselves an angel investor before joining the program,” Fagnan said.

The challenge though has been, ironically for these people, ambition. “The main issue has just been investing too little,” Ravikant said. “They’ve been very timid starting out — as angels they’re used to writing 25 or 50K checks and the idea of writing a 100K or 200K or 500K check is very intimidating.” So, “the mistake so far has been just investing too little, but the quality of that is very very high.”

With Spearhead’s new follow-on financing, the duo hope that they can guide founders toward making bigger bets on riskier projects. They want founders not to have five successes across their five checks, but one mega-success and four failures. “What we’re trying to infuse in them is: we are risk capital and conviction capital [and] we really want them to be taking risks,” Fagnan said.

Unsurprisingly though, Ravikant is a long-term believer. “I personally now invest my own capital into every single Spearhead fund,” he said. “I think it’s basically one of the best deals in venture.”

#accomplice, #angellist, #jeff-fagnan, #naval-ravikant, #spearhead, #venture-capital

Funded by Connect Ventures, Purple Dot plans to take on Klarna-style purchase debt

In recent times startups have appeared offering credit at an e-commerce basket checkout so that a customer can buy a product without needing to pay right away. Klarna or Clearpay are the two most notable in this field. But what if you flipped the model around so that consumers could buy the item at a lower price later on, and the retailer could reduce waste? This is the model of Purple Dot, which bills itself as a ‘worth-the-wait’ payment option for fashion brands.

It’s now raised a seed round of £1.35 million, led by Connect Ventures, with support from AI Seed, Moxxie Ventures, Andy Chung and Philipp Moehring from AngelList, Alex Roetter former SVP of Engineering at Twitter and the family office of Paul Forster, co-founder of Indeed.com.

Founded in August 2019 by senior Skyscanner employees Madeline Parra (CEO) and John Talbott (CTO), Purple Dot allows consumers to request a ‘worth-the-wait’ lower price. The advantage for retailers is that they can then decide whether or not to release a fashion product mid-season at a slightly reduced rate in order to secure the sale.

“Unlike Klarna, we don’t encourage consumers to buy stuff they can’t afford.”

The customers still pays upfront and then waits to have the item confirmed, receiving a full refund if not. The Purple Dot payment method sits alongside ‘buy now, pay later’ finance options.

This ‘worth-the-wait’ price does not usually fall below a 10-20% reduction from the recommended retail price, thus reducing losses from end-of-season discounting, where discounts are much deeper. The advantage for the consumer is that they don’t then rack up debt on their purchases.

The startup says it’s already in talks with a number of major UK and US high street brands but has already secured menswear retailer Spoke, which will also use the tech for ‘pre-ordering’. This means they can test out new styles, designs and fabrics in a limited manner, thus reducing waste (and therefore carbon emissions) when they commit to a new line of clothing.

Madeline Parra, CEO of Purple Dot, commented: “When shopping online today, customers can either pay the retail price or walk away. When they do walk away, the item goes through the discounting process, becomes unprofitable for the merchant and is resigned to landfill. This binary system isn’t working for anyone – the customer loses out on the item, because it may go out of stock in their size before they attempt to purchase it again, and the merchant loses the sale. Purple Dot tackles this problem head-on by providing a new way to shop, taking on unsustainable, unrelenting consumerism, poor pricing tactics and profit-crunching sales at the same time.”

Speaking to TechCrunch she also added that “Unlike Klarna, we don’t encourage consumers to buy stuff they can’t afford.”

Pietro Bezza, General Partner at Connect Ventures, commented:  “Purple Dot’s innovative proposition benefits retailers by creating a solution to their inventory problems. End of season ‘panic sales’ have long caused financial uncertainty for retailers and a negative impact on the environment in equal measure.”

#alex-roetter, #angellist, #articles, #business, #ceo, #co-founder, #connect-ventures, #cto, #economy, #europe, #general-partner, #klarna, #major, #moxxie-ventures, #online-shopping, #pietro-bezza, #spoke, #startup-company, #tc, #united-kingdom, #united-states

New program wants to be the Y Combinator for emerging fund managers

Rolling funds, the rise of solo capitalists, crowd syndicates, and team-based seed funds all scream one thing in unison: venture capital is growing and getting unbundled at the same time.

While the asset class remains largely exclusive and skewed white and male, innovation does have the potential to usher in a new, far more inclusive generation of investors. The question is how to ensure that these newer investors survive and thrive and are able to scale their operations in much the way that their predecessors in the industry have.

Oper8r hopes to fill in the gap between what it takes to be an occasional investor and become a full-time VC who is backed by institutional dollars. The program, which just completed its debut cohort, describes itself as Y Combinator for funds and emerging fund managers. The goal is to teach investors who want to build an institutional fund about the rules and oh-so-many regulations of the game.

Oper8r was started by Winter Mead, who worked as an institutional investor for years at Sapphire Ventures and Hall Capital Partners, and Welly Sculley, who operated at venture capital-backed fintech companies Ripple and Boku. The friends saw that there was no organization focused on next-gen fund managers. Instead of raising capital to create a program, the friends started a program, free of charge, to train investors.

“For VCs, barriers to entries were going down. Starting a VC fund was becoming easier. But it wasn’t easier to know various parts of building and scaling a VC firm,” Mead tells TechCrunch.

The program spans 10 weeks with 6 to 10 hours of instructional material per day. Oper8r’s curriculum covers the nuts and bolts of how to put together a scalable fund, but Mead says that they stay away from teaching investors how to invest since that information is already accessible. For example, VC University is a joint initiative between Berkeley Law, NVCA, and Venture Forward to teach venture finance.

“There’s a lot to firm building that isn’t just investing,” he said. “Having that knowledge can save you a lot of time, save you a lot of cost, save you a lot of headaches.”

Oper8r views its core benefit for aspiring fund managers as demystifying the world of limited partners.

“VCs come in here and think of the LP world as a monolith,” he said.” Oper8r helps VCs segment out the LP market, understand the difference between a family office and university, and understand “who will actually invest into a fund 1 or fund 2.”

To help navigate the LP world, Oper8r gives participants access to over 50 institutional investors, such as Hamilton College, Northern Trust, Legacy Ventures, and Investure, who will speak on their investment appetite and cadence. It doesn’t hurt that those same partners benefit from access to funds they find especially noble.

“[Limited partners] want to invest into these next generation of VCs, but they’re just having a hard time really understanding this market right now,” Mead said.

Unlike Y Combinator, Oper8r does not currently take a stake in the funds that participate in its program. However, Mead tells me that he and his co-founder are planning to capitalize the program and build an investment platform atop of Oper8r. In the future, they will function as LPs in graduated funds.

Oper8r’s first cohort was launched in June 2020. Out of 125 applications, only 18 VC fund teams were chosen. In terms of diversity, 11 of those teams were from underrepresented backgrounds including 6 women-led general partner teams and 5 black and person of color-led teams. Half of the teams also included immigrants.

Its first cohort included operator angels, investors who recently spun out of big firms, founders, and rolling fund managers, all looking to take a more institutional approach to investing.

Heather Harnett, the founder of NYC startup studio Human Ventures, was looking for a way to take advantage of the access she was getting from the platform she built. She turned to Oper8r to learn procedural and operational consistencies on how to create a fund, while also cross-referencing with other managers in the batch.

“What First Round Capital did to standardize the early financing rounds for startups and build community among founders, Oper8r is doing for emerging fund managers,” she said.

Oper8r isn’t entirely without competitors. Plexo Capital, which is both a venture firm and an outfit that backs other venture funds, is also spinning up a program to help educate young investors on the mechanics of back-office administration an other pieces of the venture fund puzzle.

Of course, an even bigger potential rival is AngelList, which takes care of the hassle, rules, and regulations that can up an up-and-coming fund manager and that charges a fee in return.

Mead doesn’t view Oper8r’s methodology as competitive with AngelList, saying that “there’s room for more than one organization that supports a merchant just because of the size of [venture capital] right now.” The firm is also focused on teaching new investors how to manage their businesses themselves. It’s a top-down versus ground-up approach.

Mead further adds that while AngelList’s rolling fund product has grown accessibility, some limited partners still only invest in venture capitalists who’ve raised capital from institutions previously. Thus, new fund managers might be comfortable raising a $10 million micro-fund via a rolling method, but when it comes time to get a $150 million early-stage investment vehicle with institutional LPs, it might not be as easy.

Ultimately, Oper8r and AngelList could co-exist as they both strive for similar goals: increase representation within venture capital, even if it’s through nontraditional routes.

“Most institutions see only one way to make money in VC, which is invest in the top brand-name VC firms,” Mead said. “We are trying to change that perception.”

#angellist, #oper8r, #rolling-fund, #social, #tc, #venture, #venture-capital, #winter-mead, #y-combinator

AngelList pioneers rolling VC funds in pivot to SaaS

When AngelList first launched rolling funds, an investment vehicle that raises money through a quarterly subscription from interested investors, the company looked at it as a bet. But early interest from emerging fund managers indicates that rolling funds might be more of the future of the company, according to AngelList CEO Avlok Kohli.

“Rolling funds are what venture fund structures would look like if they were built in the age of software,” Kohli told TechCrunch.

Since February, about 70 rolling funds have been created and managed using AngelList. The company estimates hundreds of new funds will be generated by the end of 2020. For comparison, one report says that 282 institutional funds were closed in 2019. AngelList’s data shows promising activity, although it remains unclear how much capital has been raised through the new investment vehicle.

What are rolling funds?

Before you understand rolling funds, you need a high-level understanding of traditional venture capital funds. Traditional funds are closed through a “months long process” fully behind closed doors. A fund manager will go to multiple LPs, such as family offices, high-net-worth individuals, colleges and universities, or other investment firms, to raise a minimum capital commitment.

Once the first tranche of the fund is raised, a fund manager can publicly announce it and start investing in startups. Because funds are usually invested with a 10-year return cycle, it keeps LPs and investors legally bound for a decade (and the money flowing until the capital commitment is closed).

Rolling funds were created as a potential path for emerging venture capitalists to start and close their first funds in a faster fashion. Fund managers raise new capital commitments on a quarterly basis and invest as they go, ergo “rolling” investment vehicles. Investors come on for a minimum one-year commitment, then invest at a quarterly cadence. The flexibility could allow LPs to bet on new fund managers, and new fund managers to bet on more diverse LPs.

All this flexibility could come with a cost. The rolling fund structure can be a bit volatile because limited partners have to “re-up” their investments on a quarterly basis. In a worst case scenario, an LP could drop out on a whim with no repercussions. With traditional funds, LPs are legally obliged to stay through the end of a fund or just write off their investment entirely.

Unlike traditional fund managers, rolling fund managers can be public about their fundraising activity due to an SEC regulation, 506(c). While legal, public solicitation by these new fund managers have rattled traditional VCs, who are used to a ban on marketing a new fund until after it is closed.

The way that AngelList is externally approaching rolling funds is similar to how it approaches angel investing and syndicates: it wraps things up in a pretty bow and gives people a place to talk about and access deals. The company recently created a page where it lists the names of all rolling funds on its platform to further transparency.

Because AngelList views transparency as a core tenet, it makes sense that the first rolling funds have been created by a generation of operators and founders who build in public. The cohort of rolling fund managers includes Gumroad founder Sahil Lavingia, seed investor Cindy Bi, Andela and Flutterwave co-founder Iyinoluwa Aboyeji and creator of Mcjpod, Jason Jacobs.

The four mentioned above did a seminar in early September (linked here) to talk about why they created their own rolling funds. A general consensus emerged that for the next generation of founders, it pays in terms of reputation, deal flow and access of capital to build in public.

Rolling funds allow public builders to share their ups, downs and LP openings in a way that traditional funds wouldn’t legally allow.

But another detail, also addressed during the seminar, is that the rolling fund managers all had blaringly strong networks, the kind that could easily be used to close a traditional fund. Lavingia closed his $7 million fund in less than two months.

That dynamic throws into question if rolling funds are somewhat limited to only helping an emerging generation of fund managers who are already well-networked and well-resourced. After all, the very idea of a quarterly subscription means that a fund manager has enough charisma, resources and returns to convince LPs to invest consistently.

“We see rolling fund managers whether they have an audience or not,” Kohli said. “And they are successful whether or not they have a pre-existing audience or not.”

But how do you raise without an audience? Kohli noted that AngelList’s platform product connects rising investors to rolling funds. He estimates that 50% of capital raised by rolling funds has come through AngelList’s LP network, but did not share the total capital raised by rolling funds. The company also did not disclose the diversity breakdown of rolling fund managers.

AngelList’s stake

Kohli sees AngelList’s progress over a short time span as a powerful enough signal to prioritize the new product as a flagship offering. In fact, it sees itself becoming a SaaS company.

Here’s why that comparison actually makes sense: All of the rolling funds on AngelList are essentially the company’s customers. It charges a fee per customer to handle logistics.

However, unlike a traditional SaaS company, AngelList is an LP in a number of rolling funds and makes money the same way a traditional venture fund does. To limit unfair advantage, the AngelList team that invests in funds is separate from the team that helps manage and create funds.

AngelList declined to share the number of rolling funds it has anchored through a direct investment.

Despite rolling funds getting momentum, the structure isn’t competing with traditional Series A or Series B firms just yet.

“We view that rolling funds are going to be a very big part of the venture, and will be side by side with traditional funds,” Kohli said. “In the early stages, pre-seed and seed, you’re going to see a lot of rolling funds.”

In addition, AngelList.com is rebranding to include solely AngelList Venture and rolling funds. Talent and Product Hunt, two of AngelList’s other offerings, will move to separate websites and continue operating as independent entities.

Photo Courtesy: AngelList website.

In April, AngelList confirmed that it laid off a number of staff. TechCrunch learned that the layoffs largely impacted the company’s talent arm. Kohli emphasizes that the two products will continue to live on, and says the rebranding has been in motion since January.

#angellist, #avlok-kohli, #fundings-exits, #rolling-fund, #saas, #tc, #venture-capital

Gumroad founder Sahil Lavingia launches new seed fund in collaboration with AngelList

Gumroad founder Sahil Lavingia has teamed up with AngelList to launch his debut $5 million rolling fund to invest in early-stage entrepreneurs.

He is cutting $100,000 to $250,000 checks for startups and has a particular interest in B2B, SaaS, future of work, video and developer tools. Limited partners include Arlan Hamilton, Josh Kopelman and AngelList founder Naval Ravikant.

But, here’s the twist: Lavingia raised $5 million using just a Notion memo, a few tweets and a Zoom call with more than 1,800 registrants.

“It’s the power of Zoom and Twitter in the COVID era,” Lavingia said.

Still, two months ago, Lavingia didn’t even know he wanted to be a VC. The entrepreneur has made some angel investments in Lambda School, Figma, Haus, Clubhouse and HelloSign (which was acquired by Dropbox). Eventually, though, he says angel investing got too expensive for him to do, so he stopped.

Then, following George Floyd’s murder, he followed the lead of other investors rushing to invest in Black founders and tweeted this:

As a result of the tweet, he invested in four startups founded by Black entrepreneurs. Because some were looking for follow-on capital, he tapped into his network, including AngelList founder Naval Ravikant. Ravikant, seeing the deals, floated the concept of a rolling fund.

Rolling funds via Zoom

In February, AngelList launched a so-called rolling venture fund product to help emerging venture capitalists close their first funds faster. The fund structure allows fund managers to raise new capital commitments on a regular basis and invest as they go, ergo the “rolling” aspect. Lavingia worked with AngelList to create his fund, and has capital commitments of $1.25 million per quarter in a $5 million per year fund.

The rolling fund structure can be a bit volatile because limited partners have to “re-up” their investments on a quarterly basis. It could put a fund’s investing ability in flux and thus impact portfolio construction, too.

One way to battle this volatility is that limited partners must commit to at least four consecutive quarters when investing in a rolling fund. After that, investors can choose on a quarter by quarter basis if they want to invest in the fund. Lavingia says that on this first close, he could have raised five to 10 times the capital, but chose to pick smaller checks from exceptional people. The smallest check is $55,000 a year split over four quarters, he said.

Lavingia also claims that the rotating nature of check acceptance will allow him to continually invite a more diverse limited partner base as time goes on. He declined to share specific numbers on the current diversity of his LP base, but said that 30% of his portfolio companies to date are founded by Black entrepreneurs.

One other note on rolling funds; an SEC regulation — 506(c) — allows investors to publicly fundraise. Traditional venture capital funds are usually raised in private, which disproportionately benefits those who already have their foot in the door. Lavingia says the 506(c) regulation allows him, as a first-time fund manager, to raise publicly on Zoom.

Lavingia hosted a Q&A about his new fund with a group of his buddies: Work Life Ventures’ Brianne Kimmel, AngelList’s Sunil Pai and Earnest Capital’s Tyler Tringas.

Lavingia says there were around 600 to 700 people live on the call, which is larger than most conferences he’s spoken at.

Lavingia was the second employee at Pinterest and left to start building Gumroad, a platform to help creators sell products to consumers. The company went through a gutting round of layoffs and restructuring in 2015, inspiring Lavingia to pen a viral blog post about his “failure to build a billion-dollar company.” Today, Gumroad is at $10 million ARR and is growing 100% year over year with a team of 10 people.

While Lavingia will continue to work on Gumroad, he says that his failure and transparency around it “is actually growing the company faster.”

“I think it gives me a little bit more bandwidth to do an experiment along these lines,” he said, of the fund.

First-time fund managers have had to turn to unique ways to de-risk themselves in this volatile time. Lavingia’s story is no different, and showcases that the power of remote deals isn’t just a phenomenon from which founders will benefit.

#angellist, #coronavirus, #covid-19, #gumroad, #naval-ravikant, #sahil-lavingia, #tc, #venture-capital, #zoom

Diaspora Ventures explains how AngelList’s rolling venture funds work

A few days ago, Ilan Abehassera and Carlos Diaz announced Diaspora Ventures, their new VC fund.

The duo plan to invest in French founders who have a global mindset: They might be based in France and willing to relocate to the U.S., in the U.S. already or they might be starting a remote company from day one.

According to Diaz and Abehassera, French engineers and product designers have the right mindset to tackle hard problems, but they don’t necessarily have access to funding or talent in the U.S. The partners came up with the idea for Diaspora Ventures at the end of April, but in just a couple of months, they went from zero to closing their first investment deal.

To move quickly, they took advantage of AngelList’s Rolling Venture Funds, a new type of fund completely managed by AngelList. Kima Ventures, Breega, Alexis Bonillo, Christophe Courtin, Salomon Aiach, Frédéric Laluyaux and others have already invested $3 million in Diaspora Ventures.

As the name suggests, the fund is always raising, so the list will become longer and the total amount of capital raised will grow over time. With this new format, venture funds could become a sort of subscription product.

I talked with Ilan Abehassera about AngelList Rolling Venture Funds to understand how it works. The interview was edited for clarity and brevity.


TechCrunch: What is Diaspora Ventures?

Ilan Abehassera: Over the past few years, we’ve talked with a lot of French VC funds and we realized that French funds don’t really know how to finance French entrepreneurs in the U.S.

Image Credits: Diaspora Ventures

As soon as we had this idea in April, we started raising right away. We put together a pitch deck with the investment thesis, we sent it to a few people. We didn’t know if we would be able to raise right in the middle of the COVID-19 crisis. Some of them told us that it wasn’t the right time. But enough people said yes that we decided to go forward and created the fund with AngelList.

Can you describe how AngelList Rolling Venture Funds work?

Those funds are evergreen funds. AngelList has already been creating funds — think about it as funds as a service. I had already been using AngelList’s Venture Funds for my previous fund that was called Avrhm Capital. I made around 15 investments through this small fund. But it was a traditional fund. You decide on the size of the fund, you raise and then you can start investing.

#analyst, #angellist, #angellist-rolling-venture-funds, #corporate-finance, #diaspora-ventures, #extra-crunch, #finance, #france, #fundraising, #ilan-abehassera, #kima-ventures, #private-equity, #venture-capital

With partnerships at major children’s hospitals, Manatee seeks clinical validation of its CBT-based app

When Manatee founder Damayanti Dipayana’s brother was diagnosed with autism spectrum disorder, the family took all the steps to ensure that he was properly cared for. All of the things that could have been an obstacle to getting treatment weren’t for Dipayana’s family.

A comfortably middle class background, a supportive family and ready access to care were all available, but still the therapy didn’t take. For Dipayana, it was witnessing the breakdown between the care provided at sessions and the differences in treatment at home, that led her to create Manatee.

“Therapy just sucks for kids,” Dipayana said. “My brother hated it.. It can’t be the best thing for children to put them in a room with an adult and have them talk about their problems for an hour.”

Now the graduate from Techstars Los Angeles has $1.5 million in funding from investors including the Michigan-based investment firm, Grand Ventures; Telosity