Firat Ileri becomes Hummingbird VC’s new Managing Partner, as the firm looks to expand

Seed investment firm Hummingbird VC, which previously invested in Deliveroo, Peak Games, MarkaVIP, and Kraken has a new Managing Partner. Firat Ileri, previously a Partner – who at 28 became one of Europe’s youngest VCs when he joined in 2012 – takes over from Founding Partner Barend Van den Brande, who will now take on a more strategic role at the firm.

Ileri grew up in Cyprus and went on to study electrical engineering, computer science, and operations research at MIT. At Hummingbird he has lead the firm’s first investments in Latin America and in South East Asia.

Ileri initially introduced the cofounders of Gram Games, led their first investment, and helped exit the company to Zynga for half a billion. He also led the sale process of Peak Games in 2020, which exited at $1.8Bn, making history as Turkey’s largest tech exit to date.

Founded in 2010, Hummingbird is currently on its fourth fund of $200M, raised in Q4 2020, and says it invests from Europe to India, SEA, LATAM, Turkey and more recently in the US.
 
Firat most recently led Hummingbird’s first investments in engineering biology, investing in Billiontoone, the SF-based precision diagnostics company in the prenatal and liquid biopsy space, which has raised a $55M Series B round. It’s also invested in Kernal Biologics, an mRNA 2.0 therapeutics company focused on oncology.

Van den Brande said: “From the moment Firat joined us in the very early days of Hummingbird, he hit the ground running. His eye for unique and ambitious founding teams, and unparalleled expertise in Seed investing, persistence and really understanding what Early Stage companies need has made him an invaluable asset to Hummingbird and all of the founders we work with. I’m only pleased to have Firat take on the role and lead the Hummingbird family and portfolio for years to come.”

Ileri said the firm’s thesis was to invest in stand-out founders: “We’re spending much more time trying to understand who these people are and what makes them special. In a way, we’re looking for anomalies in people, and we believe that the best companies are created with nonlinear backgrounds. So, this is the thesis.”

He said the team has expanded to drive this vision: “We used to be a boutique fund, but we have the ambition to be more and especially to look for founders who have an independent mind and huge ambitions. To be able to find more companies we’ve gone more global, in order to have a better chance of finding these special stories.”

#corporate-finance, #cyprus, #deliveroo, #europe, #finance, #hummingbird, #india, #investment, #latin-america, #managing-partner, #mit, #money, #online-food-ordering, #seed-money, #south-east-asia, #tc, #turkey, #united-states, #van, #venture-capital, #zynga

Seed is not the new Series A

The incredible success of the cloud business applications space in recent years has driven up valuations and fundraising across all stages of venture investment. That has in turn increased VC fund sizes, led to massive cloud IPOs and brought a new cadre of investors to further fuel the fire.

The median Series A raised by cloud companies these days is about $8 million and can often go well above $10 million, according to PitchBook data from the first quarter of 2021. Series Cs now routinely include secondary capital for founders, and many Series Ds are above $100 million with valuations in the billions.

There is a widening gap in the funding continuum between angel/seed funding at inception and the new-age $10 million Series A at $2 million in ARR.

Such an influx of capital and interest has upended many structures and long-held norms about how startups are funded. Venture funds continue to grow and must write larger checks, but ever-higher valuations force many firms to hunt for opportunities earlier. The VC alphabet soup has been spilled, making A rounds look like Bs used to, and the Bs seem like the Cs of old.

Which begs an interesting question: Is the seed round the new Series A?

We don’t think so.

Seed rounds have certainly grown — averaging about $3 million nowadays from around $1 million to $2 million previously — but otherwise, seed investments are the same as before and remain very different from Series As.

#angel-investor, #cloud, #column, #corporate-finance, #ec-cloud-and-enterprise-infrastructure, #ec-column, #ec-news-and-analysis, #private-equity, #saas, #seed-money, #startup-company, #startups, #venture-capital

Commit raises $6M seed round to match senior engineers to startups they want to work for

Commit, a Vancouver, Canada-based startup that has a unique approach to matching up engineers looking for a new job to early-stage startups that want to hire them, today announced that it has raised a $6 million seed round. Accomplice led the round, with participation from Kensington Capital Partners, Inovia and Garage Capital. 

The company, which focuses on working with remote-first startups, launched in 2019, with co-founders Greg Gunn (CEO) and Beier Cai (CTO), who met as early employees at Hootsuite, bootstrapping the company while they worked out the details of how they wanted Commit to work.

“I was an EIR [at Inovia Capital] and I just saw all these amazing founders that were coming in with world-changing ideas. They raised money, but their biggest challenge was getting an engineer to join them,” Gunn explained.

Beier Cai, Co-founder & CTO, Greg Gunn, Co-founder & CEO, , Tiffany Jung, VP, Strategy & Ops Image Credits: Commit

In his experience, founders typically look for senior full-stack tech leads to join their company, but it’s exactly those senior engineers that are often already in very comfortable roles at larger companies and taking a bet on an early-stage startup — or even a succession of early-stage startups — is often not the most pragmatic choice for them.

After talking to dozens of engineers, the founders found that many didn’t want to lose the support network they had built inside their current company, both from fellow engineers but also the kind of institutional support you get through formal and informal mentorship and personal development opportunities that most large tech companies offer. In addition, as Gunn noted, “hiring at early-stage startups sucks.” Senior engineers don’t want to have to go through a bunch of technical interviews anymore that test their whiteboarding skills but say very little about their actual capabilities as an engineer.

So the team decided to figure out ways to remove these barriers. Like a VC firm, it vets the startups and startup founders it works with, so the engineers that come to Commit know that these are serious companies with at least some prospect of raising funding and allowing their engineers to shape their trajectory and grow into what is potentially an early leadership role.

Meanwhile, it vets the engineers by giving them a technical interview so they can get started without having to do another one for every interview with the companies that partner with Commit. As Gunn noted, so far, the average engineer Commit has worked with only met 1.6 vetted founders before they started a pilot project together.

To mitigate some of the fiscal risks of leaving a large tech company, Commit actually pays the engineers it works with a salary until they find a job. Currently, around 90% of the engineers that start pilot projects with their prospective employees end up in full-time employment.

Image Credits: Commit

In addition to matching up founders and engineers, it also offers its community members access to an active remote-first community of fellow engineers for peer support and career advice, as well as coaching and other transition services.

In the backend, Commit uses a lot of data to match founders and engineers, but Gunn noted that while the team is very selective and has a tight profile for the people it partners with, it is committed to building a diverse pool of founders and engineers. “The thing we’re combating is the fact that these opportunities have been unevenly distributed,” he said. “Even within the Valley […] you have to be from a socio-economic class to even have access to those opportunities. For us, our whole business model is live where you want to live, but then get access to whatever opportunities you have.” Later this year, Commit plans to launch a project that specifically focuses on hiring diversity.

Commit’s startup partners currently include Patch, Plastiq, Dapper Labs, Relay, Certn, Procurify, Scope Security, Praisidio, Planworth, Georgian Partners and Lo3 Energy. The team started out slowly, working with fewer than 100 engineers so far, but hopes to expand its community to 10,000 engineers within the next 12 months. Starting today, engineers who want to join the program can now get on Commit’s waitlist.

#bootstrapping, #canada, #ceo, #commit, #cto, #economy, #engineer, #finance, #garage-capital, #georgian-partners, #hootsuite, #inovia-capital, #kensington-capital-partners, #money, #seed-money, #startup-company, #tc, #vancouver

Sorbet raises $6M Seed led by Viola Ventures to tackle the thorny financials of Paid Time Off

A US/Israeli startup, Sorbet — which is tackling what companies do with the financial risks as employees accrue Paid Time Off (PTO) — has raised $6 million in a Seed funding round led by Viola Ventures, with participation by Global Founders Capital, Meron Capital.

The economics of Paid Time Off is relatively hidden in the business world, but essentially,
Sorbet takes on the burden of this PTO from employers and then allows employees to spend it. This gives the employers far more control over the whole process and the ability to forecast its impact on the business.

Sorbet says that in the US, employees use only 72% PTO balances, even though it’s the most sought-after benefit. But this, effectively, comes out at 768 million unused days off a year, worth around $224 billion. This creates a difficult problem for CFO’s and accountants because its creates balance sheet liabilities on the company’s books, says Sorbet. If the employee doesn’t use all of their PTO, the employer can end up owing them a lot of money which creates a cash flow liability on the company’s books. So Sorbet buys out these PTO liabilities from employees, then loads the cash value of the PTO on prepaid Credit Cards for the employees.

Speaking to me on a call, CEO and cofounder Veetahl Eilat-Raichel, said: “We researched this whole idea of paid time off and found this huge, massive market failure and inefficiency around the way that PTO is constructed. It’s kind of one of those things where, on the face of it, there’s this boring bureaucratic payroll item that turns into a boring balance sheet item. But under it is a $224 billion problem for US businesses… If you think about it, employers are borrowing money from their employees at the worst terms possible and employees aren’t benefitting either. So everyone’s hurting here.”

She said: “Sorbet assumes the liability on ourselves and so then we can allow the company to control their cash flow and decide when they want to pay us back. They gain a lot of financial value because we are able to be very, very attractive on our funding. So it saves costs, it provides them with complete control of their cash flow, and it allows them to give out amazing financial benefits to employees at a time where we can all use some extra cash right now.”

The platform Sorbet has built will, it says, sync with calendars, HR, and payroll systems, identifies habits, and then proactively suggests personalized, pre-approved 3-6 hour “Micro Breaks”, 1-4 day “Micro Vacations” and +1 week Vacations. This, says the startup, increases PTO used by as much as 15%.

Employers can constantly renegotiate the terms of the loan with Sorbet, thus matching future cash flow, insulating themselves against salary raises (wage inflation), and take advantage of other benefits.

The cofounders are Eilat-Raichel, who previously worked at L’Oreal and Lockheed Martin, and a Fintech entrepreneur; Eliaz Shapira, co-founder and CPO; and Rami Kasterstein co-founder and board Member.

#cfo, #co-founder, #corporate-finance, #economy, #entrepreneurship, #europe, #finance, #global-founders-capital, #lockheed-martin, #money, #private-equity, #seed-money, #startup-company, #tc, #united-states, #venture-capital, #viola-ventures

Should you give an anchor investor a stake in your fund’s management company?

Raising capital for a new fund is always hard. But should you give preferential economics or other benefits to a seed anchor investor who makes a material commitment to the fund?

These “VCs for investment management companies” are also known as GP stake investors or fund platforms. According to DocSend, “About half the VC firms in our survey had an anchor LP for their fund, and the average percentage that an anchor LP took in a first-time fund was 25%. The prevalence of anchor LPs among both early-stage and more established firms in our data suggests that securing an anchor investor can be crucial for signaling a firm’s credibility to other potential LPs.”

However, data about whether those anchors received preferential terms are very hard to obtain.

“In the hedge fund world, fund platforms are common and therefore more transparent,” Ha Duong, the investment principal at Ocean Investment, a single-family office based in Berlin, told me. “In venture, I haven’t seen many fund platforms.”

A number of firms provide infrastructure for emerging VCs, including Capria, Draper Venture Network, Oper8r and Recast Capital, and may provide capital or assistance in raising capital.

However, this ecosystem is much more built out in the private equity and hedge fund spaces. Examples include Archean Capital Partners, Gatewood Capital Partners, Lafayette Square, Nesvold Capital Partners and Reservoir Capital Group. Certain family offices also make these investments on an ad-hoc basis. As do some VCs: LuneX.com notes it is a dedicated blockchain and cryptocurrency fund that partners with a Southeast Asia-based VC, Golden Gate Ventures.

A GP stake investor brings some significant advantages:

  • Meaningful upfront initial capital, usually greatly shortening the lengthy fundraising process. This can be particularly helpful for founders who do not come from a wealthy background and may not be able to forgo an income for an 18-month fundraising period.
  • Credibility. This is proportionate to the stake investor’s credibility. Everyone else will assume the GP stake investor did extensive due diligence.
  • Assistance in business development, marketing, risk management and governance.
  • Ability to access LPs who require meaningful assets under management (AUM) before they’ll consider you.
  • Back office, in some cases.

There can also be meaningful disadvantages to working with a GP stake investor:

#column, #ec-column, #ec-how-to, #finance, #investment, #private-equity, #seed-money, #startups, #venture-capital

12 ‘flexible VCs’ who operate where equity meets revenue share

Previously, we introduced the concept of flexible VC: structures that allow founders to access immediate risk capital while preserving exit and ownership optionality. We list here all the active flexible VCs we have identified, broken into these categories:

  • Revenue-based
  • Compensation-based
  • Blended-return streams

Revenue-based flexible VCs

These investors are paid back primarily based on a percentage of revenues.

Capacity Capital

Chattanooga, TN-based Capacity Capital was launched in 2020 with a primary focus on the southeastern U.S. Jonathan Bragdon, its CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50,000-$300,000 in post-startup, post-revenue businesses planning to 2x revenues in 12-24 months. Investments are typically in exchange for a capped, single-digit revenue share and a right to equity under certain circumstances.

If the company sells or raises enough capital, the investment converts into an agreed-upon percentage of equity. If the company grows without raising additional equity funding, founders redeem most of the equity right, based on a pre-agreed return amount. With a portfolio that includes food, tech and services, the fund is industry-agnostic and focused on the overlooked and underrepresented with high-margin business models.”

Jonathan sometimes refers to their investments as “micro-mezzanine” because “mezz is typically structured as a contractual periodic payment, with some equity-like upside, but subordinate to other debt … so most lenders look at it like equity. But, it is typically shorter term with fewer control mechanisms than equity (i.e., not VC). I wanted [a term for] something similar (between debt and equity) but on an extremely small scale.”

In addition to a fund, the overall Capacity organization provides direct mentorship, consulting and connects founders to a broad network of talent, diverse forms of capital and existing resources focused on the post-startup stage of growth. The founders, LPs and venture partners have a long history in local startup ecosystems in the Southeast including LaunchTN, The Company Lab, CO.STARTERS and several other regional funds and resources.

Greater Colorado Venture Fund

Greater Colorado Venture Fund (GCVF) is a $17 million seed fund that invests in high-growth startups in rural Colorado using equity and flexible VC structuring.

A typical GCVF flexible VC investment is $100,000-$250,000 for up to 10% ownership, of which 9% is redeemable, with a sub-10% revenue share and 12-month-plus holiday period. GCVF specializes in providing critical support to founders based in small communities, while connecting them to an unfair network well-beyond their small-town headquarters.

GCVF is pioneering the future of venture capital and high-growth startups for all small communities. With Colorado as an ideal pilot community, the GCVF team (which includes Jamie Finney, a co-author of this article) has helped grow multiple staple initiatives in the rural Colorado startup ecosystem, including West Slope Startup Week, Telluride Venture Accelerator, Startup Colorado, Energize Colorado Gap Fund and the Greater Colorado Pitch Series.

Recognizing the need for creative investment structures in their Colorado market, they co-founded the Alternative Capital Summit, creating the first community of flexible VCs and alternative startup investors.

They share their learnings on flexible VC and pioneering rural startup ecosystems on the GCVF blog.

#collab-capital, #colorado, #column, #entrepreneurship, #india, #private-equity, #santa-monica, #seed-money, #startups, #tennessee, #venture-capital

OpsLevel raises $5M to fix DevOps

The term ‘DevOps’ has been rendered meaningless and developers still don’t have access to the right tools to put the overall idea into practice, the team behind DevOps startup OpsLevel argues. The company, which was co-founded by John Laban and Kenneth Rose, two of PagerDuty’s earliest employees, today announced that it has raised a $5 million seed funding round, led by Vertex Ventures. S28 Capital, Webb Investment Network and Union Capital also participated in this round, as well as a number of angels, including the three co-founders of PagerDuty .

“[PagerDuty] was an important part of the DevOps movement. Getting engineers on call was really important for DevOps, but on-call and getting paged about incidents and things, it’s very reactive in nature. It’s all about fixing incidents as quickly as possible. Ken [Rose] and I saw an opportunity to help companies take a more proactive stance. Nobody really wants to have any downtime or any security breaches in the first place. They want to prevent them before they happen.”

Image Credits: OpsLevel

With that mission in mind, the team set out to bring engineering organizations back to the roots of DevOps by giving those teams ownership over their services and creating what Rose called a “you build it, you own it” culture. Service ownership, he noted, is something the team regularly sees companies struggle with. When teams move to microservices or even serverless architectures for their systems, it quickly becomes unclear who owns what and as a result, you end up with orphaned services that nobody is maintaining. The natural result of that is security and reliability issues. And at the same time, because nobody knows which systems already exist, other teams reinvent the wheel and rebuild the same service to solve their own problems.

“We’ve underinvested in tools to make DevOps actually work,” the team says in today’s announcement. “There’s a lot we still need to build to help engineering teams adopt service ownership and unlock the full power of DevOps.”

So at the core of OpsLevel is what the team calls a “service ownership platform,” starting with a catalog of the services that an engineering organization is currently running.

Image Credits: OpsLevel

“What we’re trying to do is take back the meaning of DevOps,” said Laban. “We believe it’s been rendered meaningless and we wanted to refocus it on service ownership. We’re going to be investing heavily on building out our product, and then working with our customers to get them to really own their services and get really down to solving that problem.”

Among the companies OpsLevel is already working with are Segment, Zapier, Convoy and Under Armour. As the team noted, its service becomes most useful once a company runs somewhere around 20 or 30 different services. Before that, a wiki or spreadsheet is often enough to manage them, but at that point, those systems tend to break.

OpsLevel gives them different onramps to start cataloging their services. If they prefer to use a ‘config-as-code’ approach, they can use those YAML files as part of their existing Git workflows. But OpsLevel offers APIs that teams can plug into their various systems if they already have existing service creating workflows.

The company’s funding round closed in late September. The pandemic, the team said, didn’t really hinder its fundraising efforts, something I’ve lately heard from a lot of companies (though the ones I talk obviously to tend to be the ones that recently raised money).

“The reason why [we raised] is because we wanted to really invest in building out our product,” Laban said. “We’ve been getting this traction with our customers and we really wanted to double down and build out a lot of product and invest into our go-to-market team as well and really wanted to accelerate things.”

#angel-investors, #devops, #finance, #investment, #pagerduty, #s28-capital, #seed-money, #software-development, #startup-company, #tc, #vertex-ventures, #webb-investment-network