greylock
Auto Added by WPeMatico
Figma CEO Dylan Field discusses fundraising, hiring and marketing in stealth mode
You’d be hard pressed to hang out with a designer and not hear the name Figma .
The company behind the largely browser-based design tool has made a huge splash in the past few years, building a massive war chest with more than $130 million from investors like A16Z, Sequoia, Greylock, Kleiner Perkins and Index.
The company was founded in 2012 and spent several years in stealth, raising both its seed and Series A without having any public product or user metrics.
At Early Stage, we spoke with co-founder and CEO Dylan Field about the process of hiring and fundraising while in stealth and how life at the company changed following its launch in 2016. Field, who was 20 when he founded the company, also touched on the lessons he’s learned from his team about leadership. Chief among them: the importance of empowering the people you hire.
You can check out the full conversation in the video embedded below, as well as a lightly edited transcript.
Raising a Series A a year behind schedule while still in stealth
I actually had approached John Lilly from Greylock in our seed round. For those who don’t know, John Lilly was the CEO of Mozilla and an amazing guy. He’s on a lot of really cool boards and has a bunch of interesting experience for Figma, with very deep roots in design. I had approached him for the seed round, and he basically said to us, “You know, I don’t think you guys know what you’re doing, but I’m very intrigued, so let’s keep in touch.” This is the famous line that you hear from every investor ever. It’s like “Yeah, let’s keep in touch, let me know if I can be helpful.” Sometimes, they actually mean it. In John’s case, he actually would follow up every few months or I would follow up with him. We’d grab coffee, and he helped me develop the strategy to a point that got us to what we are today. And that was a collaboration. I could really learn a lot from him on that one.
When we started off the idea was: Let’s have this global community around design, and you’ll be able to use the tool to post to the community and someday we’ll think about how people can pay us. Talking with John got me to the point where I realized we need to start with a business tool. We’ll build the community later. Now, we’re starting to work toward that.
At some point, John told me, “Hey, if you ever think about raising again, let me know.” A few weeks later, I told him maybe we would raise because I just wanted to work with him. We talked to a few other investors. I think it’s pretty important that there’s always a competitive dynamic in the round. But really, it was just him that we were really considering for that round. He really did us a solid. He really believed in us. At the time, it wasn’t like there were metrics to look at. He had conviction in the space, a conviction in the attack, and he had conviction in me and Evan, which I feel very, very honored by. He’s a dear mentor to this day, and he’s on our board. And it’s been a really deep relationship.
How to recruit while in stealth mode
Powered by WPeMatico
AI startup Cresta launches from stealth with millions from Greylock and a16z
As Silicon Valley’s entrepreneurs cluster around the worldview that artificial intelligence is poised to change how we work, investors are deciding which use cases make the most sense to pump money into right now. One focus has been the relentless communication between companies and customers that takes place at call centers.
Call center tech has spawned dozens if not hundreds of AI startups, many of which have focused on automating services and using robotic voices to point customers somewhere they can spend money. There has been a lot of progress, but not all of those products have delivered. Cresta is more focused on using AI suggestions to help human contact center workers make the most of an individual call or chat session and lean on what’s worked well for past interactions that were deemed successful.
“I think that there will always be very basic boring stuff that can be automated like frequently asked questions and ‘Oh, what’s the status of my order?,’ ” CEO Zayd Enam says. “But there’s always the role of the person that’s building the relationship between the company and the customer, and that’s a really strategic role for companies in the modern age.”
Udacity co-founder Sebastian Thrun is the startup’s board chairman and is listed as a co-founder. Enam met Thrun during his PhD research at Stanford focused on workplace productivity. Cresta is launching from stealth and announcing that they’ve raised $21 million in funding from investors including Greylock Partners and Andreessen Horowitz. The company recently closed a $15 million Series A round.
Cresta wants to use AI to school customer service workers and salespeople on how to close the deal.
There’s quite a lot of turnover in contact center jobs and that can leave companies reticent to spend a ton of time investing in each employee’s training. Naturally, there are some inherent issues where the workers interacting with an individual customer might not have the experience necessary to suggest a solution that they might if they had more experience. In terms of live feedback, for many, fumbling through paper scripts at their desk can be about as good as it gets. Cresta is hoping that by tapping improvements in natural language processing, their software can help alleviate some stress for contact center workers and help them move conversations in the direction of selling something else for their company.
Cresta is entering a field where there’s already quite a bit of interest from established software giants. Salesforce, Google and Twilio all operate AI-driven products for contact centers. Even with substantial competition, Enam believes Cresta’s team of 30 can offer its customers a lot more individual attention.
“We’re one of the few technical teams where we’re just obsessed with the customer, to the point where it’s normal for people on our team to fly to the customer and live by a call center in an Airbnb for a week,” Enam said. “When Greylock led the Series A, they had heard that and said that’s what gave them so much conviction that we were the team to solve the problem.”
Sun Microsystems co-founder Andy Bechtolsheim, Mark Leslie and Vivi Nevo are also investors in Cresta.
Powered by WPeMatico
Chronosphere launches with $11M Series A to build scalable, cloud-native monitoring tool
Chronosphere, a startup from two ex-Uber engineers who helped create the open-source M3 monitoring project to handle Uber-level scale, officially launched today with the goal of building a commercial company on top of the open-source project.
It also announced an $11 million investment led by Greylock, with participation from venture capitalist Lee Fixel.
While the founders, CEO Martin Mao and CTO Rob Skillington, were working at Uber, they recognized a gap in the monitoring industry, particularly around cloud-native technologies like containers and microservices. There weren’t any tools available on the market that could handle Uber’s scaling requirements — so like any good engineers, they went out and built their own.
“We looked around at the market at the time and couldn’t find anything in open source or commercially available that could really scale to our needs. So we ended up building and open sourcing our solution, which is M3. Over the last three to four years we’ve scaled M3 to one of the largest production monitoring systems in the world today,” Mao explained.
The essential difference between M3 and other open-source, cloud-native monitoring solutions like Prometheus is that ability to scale, he says.
One of the main reasons they left to start a company, with the blessing of Uber, was that the community began asking for features that didn’t really make sense for Uber. By launching Chronosphere, Mao and Skillington would be taking on the management of the project moving forward (although sharing governance for the time being with Uber), while building those enterprise features the community has been requesting.
The new company’s first product will be a cloud version of M3 to help reduce some of the complexity associated with managing an M3 project. “M3 itself is a fairly complex piece of technology to run. It is solving a fairly complex problem at large scale, and running it actually requires a decent amount of investment to run at large scale, so the first thing we’re doing is taking care of that management,” Mao said.
Jerry Chen, who led the investment at Greylock, saw a company solving a big problem. “They were providing such a high-resolution view of what’s going on in your cloud infrastructure and doing that at scale at a cost that actually makes sense. They solved that problem at Uber, and I saw them, and I was like wow, the rest of the market needs what guys built and I wrote the Series A check. It was as simple as that,” Chen told TechCrunch.
The cloud product is currently in private beta; they expect to open to public beta early next year.
Powered by WPeMatico
Higher Ground Labs is betting tech can help sway the 2020 elections for Democrats
When Shomik Dutta and Betsy Hoover first met in 2007, he was coordinating fundraising and get-out-the-vote efforts for Barack Obama’s first presidential campaign and she was a deputy field director for the campaign.
Over the next two election cycles the two would become part of an organizing and fundraising team that transformed the business of politics through its use of technology — supposedly laying the groundwork for years of Democratic dominance in organizing, fundraising, polling and grassroots advocacy.
Then came Donald J. Trump and the 2016 election.
For both Dutta and Hoover, the 2016 outcome was a wake-up call against complacency. What had worked for the Democratic party in 2008 and 2012 wasn’t going to be effective in future election cycles, so they created the investment firm Higher Ground Labs to provide financing and a launching pad for new companies serving Democratic campaigns and progressive organizations.
“As the political world shifts from analog to digital, we need a lot more tools to capture that spend,” says Dutta. “Democrats are spending on average 70 cents of every dollar raised on television ads. We are addicted to old ways of campaigning. If we want to activate and engage an enduring majority of voters we have to go where they are (and that’s increasingly online) and we have to adapt to be able to have these conversations wherever they are.”
Social media and the rise of “direct to consumer” politics
While the Obama campaign effectively used the internet as a mobilization tool in its two campaigns, the lessons of social media and mobile technologies that offer a “direct-to-consumer” politics circumventing traditional norms have, in the ensuing years, been harnessed most effectively by conservative organizations, according to some scholars and activists.
“The internet is a tool and in that sense it’s neutral, but just like other communication tools from the past, people with more power, with more resources, with more organization, have been able to take advantage of it,” Jen Schradie, an assistant professor at the Observatoire sociologique du changement at Sciences Po in Paris, told Vox in an interview earlier this month.
Schradie is a scholar whose recent book, “The Revolution That Wasn’t,” contends that the internet’s early application as a progressive organizing tool has been overtaken by more conservative elements. “The idea of neutrality seems more true of the internet because the costs of distributing information are dramatically lower than with something like television or radio or other communication tools,” she said. “However, to make full use of the internet, you still need substantial resources and time and motivation. The people who can afford to do this, who can fund the right digital strategy, create a major imbalance in their favor.”
Schradie contends that a web of privately funded think tanks, media organizations, talk radio and — increasingly — mobile applications have woven a conservative stitch into the fabric of social media. The medium’s own tendency to promote polarizing and fringe viewpoints also served to amplify the views of pundits who were previously believed to be political outliers.
Essentially, these sites have enabled commentators and personalities to create a patchwork of “grassroots” organizations and media operations dedicated to reaching an audience receptive to their particular political message that’s funded by billionaire donors and apolitical corporate ad dollars.
Then there’s the technology companies, like Cambridge Analytica, which improperly used access to Facebook data for targeting purposes — also financed by these same billionaires.
“The last six years have witnessed millions and millions of dollars of private Koch money and Mercer money that have gone to pretty sophisticated data and media efforts to advance the Republican agenda,” says Dutta. “I want to even the scale.”
Dutta is referring to Charles and David Koch and Robert Mercer, the scions and founder (respectively) of two family dynasties worth billions. The Koch brothers support a web of political advocacy groups, while Mercer and his daughter were large backers of Breitbart News and Cambridge Analytica, two organizations that arguably provided much of the policy underpinnings and online political machinery for the Trump presidential campaign.
But there’s also the simple fact that Donald Trump’s digital strategy director, Brad Parscale, was able to effectively and inexpensively leverage the social media tools and data troves amassed by the Republican National Committee that were already available to the candidate who won the Republican primary. In fact, in the wake of Romney’s loss, Republicans spent years building up profiles of 200 million Americans for targeted messaging in the 2016 election.
“Who controls Facebook controls the 2016 election,” Parscale said during a speaking engagement at the Romanian Academy of Sciences, according to a report in Forbes.
Parscale, now the campaign manager for the president’s 2020 reelection campaign recalled, “These guys from Facebook walked into my office and said: ‘we have a beta … it’s a new onboarding tool … you can onboard audiences straight into Facebook and we will match them to their Facebook accounts,’ ” according to Forbes .
During the 2016 campaign, Hillary Clinton’s team made 66,000 visual ads, according to Parscale, while the Trump campaign made 5.9 million ads by leveraging social media networks and the language of memes. And in the run-up to the 2020 election, Parscale intends to go back to the same well. The Trump campaign has already spent more than $5 million on Facebook ads in the current election cycle, according to The New York Times — outspending every single Democratic candidate in the field and roughly all of the Democrats combined.
Reaching higher ground
Dutta and Hoover are working to offset this movement with investments of their own. Back in 2017, the two launched Higher Ground Labs, an early-stage company accelerator and investment firm dedicated to financing technology companies that could support progressive causes.
The firm has $15 million committed from investors, including Reid Hoffman, the co-founder of LinkedIn and a partner at Greylock; Ron Conway, the founder of SV Angel and an early backer of Google, Facebook and Twitter; Chris Sacca, an early investor in Uber; and Elizabeth Cutler, the founder of SoulCycle. Already, Higher Ground has invested in more than 30 companies focused on services like advocacy outreach, polling and campaign organizing — among others.
The latest cohort of companies to receive backing Higher Ground Labs
“It is vitally important that Democrats learn to do their campaigns online,” says Dutta. “The way you recruit volunteers; the way you poll sentiment; the way you target and mobilize voters has to be done with online tools and has to improve in the progressive movement and that’s the job of Higher Ground Labs to fix.”
For-profit companies have a critical role to play in election organizing and mobilization, Dutta says. Thanks to government regulation, only private companies are allowed to trade data across organizations and causes (provided they do it at fair market value). That means advocacy groups, unions and others can tap the information these companies collect — for a fee.
The Democratic Party already has one highly valued private company that it uses for its technology services. Formed from the merger of NGP Software and Voter Activation Network, two companies that got their start in the late 1990s and early 2000s, NGP VAN is the largest software and technology services provider for Democratic campaigns. It’s also a highly valued company, which received roughly $100 million in financing last year from the private equity firm Insight Venture Partners, according to people familiar with the investment. Terms of the deal were not disclosed.
“Our vision has been to build a platform that would break down the painful data silos that exist in the campaigns and nonprofit space, and to offer truly best-in-class digital, fundraising and organizing features that could serve both the largest and the smallest nonprofits and campaigns, all with one unified CRM,” wrote Stu Trevelyan, the chief executive of NGP VAN + EveryAction, in an August blogpost announcing the investment. “We’re so excited that others, like our new partners at Insight, share that vision, and we can’t wait to continue innovating and growing together in the coming years.”
Can startups lead the way?
Even as private equity dollars boost the firepower of organizations like NGP VAN, venture capitalists are financing several companies from the Higher Ground Labs portfolio.
Civis Analytics, a startup founded by the former chief analytics officer of Barack Obama’s 2012 reelection campaign, raised $22 million from outside investors, and counts Higher Ground Labs among its backers. Qriously, another Higher Ground Labs portfolio company, was acquired by Brandwatch, as was GroundBase, a messaging platform acquired by the nonprofit progressive advocacy organization ACRONYM.
Other companies in the portfolio are also attracting serious attention from investors. Standouts like Civis Analytics and Hustle, which raised $30 million last May, show that investors are buying into the proposition that these companies can build lasting businesses serving Democratic and progressive political campaigns and corporate businesses that would also like to rally employees or personalize a marketing pitch to customers.
These are companies like Change Research, an earlier-stage company that just launched from Higher Ground Labs accelerator last year. That company, founded by Mike Greenfield, a serial Silicon Valley entrepreneur who was the first data scientist working on the problem of fraud detection at PayPal, and Pat Reilly, a communications professional who worked with state and local Democratic politicians, is slashing the cost of political polling.
“I wanted to do something for American democracy to try and improve the state of things,” Greenfield said in an interview last year.
For Greenfield, that meant increasing access to polling information. He cited the test case of a Kansas special election in a district that Donald Trump had won by 27 points. Using his own proprietary polling data, Greenfield predicted that the Democratic challenger, James Thompson, would pose a significant threat to his Republican opponent, Mike Estes.
Estes went on to a 7% victory at the ballot, but Thompson’s campaign did not have access to polling data that could have helped inform his messaging and — potentially — sway the election, said Greenfield.
“Public opinion is used to ween out who can be most successful based on how much money they’re able to raise for a poll,” says Reilly. It’s another way that electoral politics is skewed in favor of the people with disposable income to spend what is a not-insignificant amount of money on campaigns.
Polls alone can cost between $20,000 to $30,000 — and Change Research has been able to cut that by 80% to 90%, according to the company’s founders.
“It’s safe to say that most of the world was stunned by the outcome [of the presidential election] because most polls predicted the opposite,” says Greenfield. “Being a good American and as a parent of a 10-year-old and a 12-year-old, providing forward-thinking candidates and causes with the kind of insight they needed to win up and down the ballot could not only be a good business, but really help us save our democracy.”
Change Research isn’t just polling for politicians. Last year, the company conducted roughly 500 polls for political candidates and advocacy groups.
“The way that I’ve described Change Research to investors is that we want to simultaneously move the world in a better direction and having a positive impact while building a substantial business,” says Greenfield. “We’re only going to work with candidates and causes that we’re aligned with.”
Being exclusively focused on progressive causes isn’t the liability that many in the broader business community would think, says Dutta. Many Democratic organizations won’t work with companies that sell services to both sides of the aisle.
For Higher Ground Labs, a stipulation for receiving their money is a commitment not to work with any Republican candidate. Corporations are okay, but conservative causes and organizations are forbidden.
“We’re in a moment of existential crisis in America and this Republican party is deeply toxic to the health and future of our country,” says Dutta. “The only path out of this mess is to vote Republicans out of office and to do that we need to make it easier for good candidates to run for office and to engage a broader electorate into voting regularly.”
Powered by WPeMatico
Clockwise nabs $11M Series A to make your calendar smarter
Almost every organization, regardless of size, is inundated with meetings, so much so it’s often hard to find dedicated time to do actual work. Clockwise wants to change that by bringing machine learning to the calendar to help employees free up time. Today, it announced an $11 million Series A investment, and made the product, which had been in beta, generally available.
The round was co-led led by Greylock and Accel . Other investors included Slack Fund, Michael Ovitz, Ellen Levy, George Hu, Soraya Darabi, SV Angel and Jay Simons. The company has raised a total of $13 million.
Matt Martin, CEO and co-founder at Clockwise, says the company’s mission is to help employees make time for what matters, and they are doing that by applying machine learning to the calendar to free up blocks of time to concentrate on work. Calendars have tended to be pretty static, and this provides a way to bring a level of intelligence to automatically shift meetings to a better time when it makes sense.
After you download Clockwise you can set parameters for which meetings can be moved and which are set in stone, and other preferences. As Martin wrote in a blog post announcing the new tool, this gives employees “uninterrupted blocks of time to focus, think and innovate.” For now, it’s available for G Suite users.
Gif: Clockwise
You may think this is a one-trick pony that will be hard to scale, but Martin says in the past few months, Clockwise has recovered thousands of hours, and as they gain more data, the tool will get even more intelligent about meeting shifting.
Certainly his investors see the potential. John Lilly, who is leading the investment at Greylock, believes Clockwise is filling a huge unfilled need inside organizations. “Clockwise is focused on helping individuals and teams retake ownership of their time. This is not an easy feat — building the Clockwise product requires a sophisticated understanding of machine learning, user interaction and systems design breakthrough,” Lilly said.
Clockwise founders were part of the team at RelateIQ, a company Salesforce bought for $390 million in 2014. Since leaving RelateIQ they decided to put that experience to work on making the calendar more efficient.
Powered by WPeMatico
How students are founding, funding and joining startups
Shawn Xu is a managing partner at The Dorm Room Fund.
There has never been a better time to start, join or fund a startup as a student.
Young founders who want to start companies while still in school have an increasing number of resources to tap into that exist just for them. Students that want to learn how to build companies can apply to an increasing number of fast-track programs that allow them to gain valuable early stage operating experience. The energy around student entrepreneurship today is incredible. I’ve been immersed in this community as an investor and adviser for some time now, and to say the least, I’m continually blown away by what the next generation of innovators are dreaming up (from Analytical Space’s global data relay service for satellites to Brooklinen’s reinvention of the luxury bed).
Bill Gates in 1973
First, let’s look at student founders and why they’re important. Student entrepreneurs have long been an important foundation of the startup ecosystem. Many students wrestle with how best to learn while in school —some students learn best through lectures, while more entrepreneurial students like author Julian Docks find it best to leave the classroom altogether and build a business instead.
Indeed, some of our most iconic founders are Microsoft’s Bill Gates and Facebook’s Mark Zuckerberg, both student entrepreneurs who launched their startups at Harvard and then dropped out to build their companies into major tech giants. A sample of the current generation of marquee companies founded on college campuses include Snap at Stanford ($29B valuation at IPO), Warby Parker at Wharton (~$2B valuation), Rent The Runway at HBS (~$1B valuation), and Brex at Stanford (~$1B valuation).
Some of today’s most celebrated tech leaders built their first ventures while in school — even if some student startups fail, the critical first-time founder experience is an invaluable education in how to build great companies. Perhaps the best example of this that I could find is Drew Houston at Dropbox (~$9B valuation at IPO), who previously founded an edtech startup at MIT that, in his words, provided a: “great introduction to the wild world of starting companies.”
Student founders are everywhere, but the highest concentration of venture-backed student founders can be found at just 5 universities. Based on venture fund portfolio data from the last six years, Harvard, Stanford, MIT, UPenn, and UC Berkeley have produced the highest number of student-founded companies that went on to raise $1 million or more in seed capital. Some prospective students will even enroll in a university specifically for its reputation of churning out great entrepreneurs. This is not to say that great companies are not being built out of other universities, nor does it mean students can’t find resources outside a select number of schools. As you can see later in this essay, there are a number of new ways students all around the country can tap into the startup ecosystem. For further reading, PitchBook produces an excellent report each year that tracks where all entrepreneurs earned their undergraduate degrees.
Student founders have a number of new media resources to turn to. New email newsletters focused on student entrepreneurship like Justine and Olivia Moore’s Accelerated and Kyle Robertson’s StartU offer new channels for young founders to reach large audiences. Justine and Olivia, the minds behind Accelerated, have a lot of street cred— they launched Stanford’s on-campus incubator Cardinal Ventures before landing as investors at CRV.
StartU goes above and beyond to be a resource to founders they profile by helping to connect them with investors (they’re active at 12 universities), and run a podcast hosted by their Editor-in-Chief Johnny Hammond that is top notch. My bet is that traditional media will point a larger spotlight at student entrepreneurship going forward.
New pools of capital are also available that are specifically for student founders. There are four categories that I call special attention to:
- University-affiliated accelerator programs
- University-affiliated angel networks
- Professional venture funds investing at specific universities
- Professional venture funds investing through student scouts
While it is difficult to estimate exactly how much capital has been deployed by each, there is no denying that there has been an explosion in the number of programs that address the pre-seed phase. A sample of the programs available at the Top 5 universities listed above are in the graphic below — listing every resource at every university would be difficult as there are so many.
One alumni-centric fund to highlight is the Alumni Ventures Group, which pools LP capital from alumni at specific universities, then launches individual venture funds that invest in founders connected to those universities (e.g. students, alumni, professors, etc.). Through this model, they’ve deployed more than $200M per year! Another highlight has been student scout programs — which vary in the degree of autonomy and capital invested — but essentially empower students to identify and fund high-potential student-founded companies for their parent venture funds. On campuses with a large concentration of student founders, it is not uncommon to find student scouts from as many as 12 different venture funds actively sourcing deals (as is made clear from David Tao’s analysis at UC Berkeley).
Investment Team at Rough Draft Ventures
In my opinion, the two institutions that have the most expansive line of sight into the student entrepreneurship landscape are First Round’s Dorm Room Fund and General Catalyst’s Rough Draft Ventures. Since 2012, these two funds have operated a nationwide network of student scouts that have invested $20K — $25K checks into companies founded by student entrepreneurs at 40+ universities. “Scout” is a loose term and doesn’t do it justice — the student investors at these two funds are almost entirely autonomous, have built their own platform services to support portfolio companies, and have launched programs to incubate companies built by female founders and founders of color. Another student-run fund worth noting that has reach beyond a single region is Contrary Capital, which raised $2.2M last year. They do a particularly great job of reaching founders at a diverse set of schools — their network of student scouts are active at 45 universities and have spoken with 3,000 founders per year since getting started. Contrary is also testing out what they describe as a “YC for university-based founders”. In their first cohort, 100% of their companies raised a pre-seed round after Contrary’s demo day. Another even more recently launched organization is The MBA Fund, which caters to founders from the business schools at Harvard, Wharton, and Stanford. While super exciting, these two funds only launched very recently and manage portfolios that are not large enough for analysis just yet.
Over the last few months, I’ve collected and cross-referenced publicly available data from both Dorm Room Fund and Rough Draft Ventures to assess the state of student entrepreneurship in the United States. Companies were pulled from each fund’s portfolio page, then checked against Crunchbase for amount raised, accelerator participation, and other metrics. If you’d like to sift through the data yourself, feel free to ping me — my email can be found at the end of this article. To be clear, this does not represent the full scope of investment activity at either fund — many companies in the portfolios of both funds remain confidential and unlisted for good reasons (e.g. startups working in stealth). In fact, the In addition, data for early stage companies is notoriously variable in quality, even with Crunchbase. You should read these insights as directional only, given the debatable confidence interval. Still, the data is still interesting and give good indicators for the health of student entrepreneurship today.
Dorm Room Fund and Rough Draft Ventures have invested in 230+ student-founded companies that have gone on to raise nearly $1 billion in follow on capital. These funds have invested in a diverse range of companies, from govtech (e.g. mark43, raised $77M+ and FiscalNote, raised $50M+) to space tech (e.g. Capella Space, raised ~$34M). Several portfolio companies have had successful exits, such as crypto startup Distributed Systems (acquired by Coinbase) and social networking startup tbh (acquired by Facebook). While it is too early to evaluate the success of these funds on a returns basis (both were launched just 6 years ago), we can get a sense of success by evaluating the rates by which portfolio companies raise additional capital. Taken together, 34% of DRF and RDV companies in our data set have raised $1 million or more in seed capital. For a rough comparison, CB Insights cites that 40% of YC companies and 48% of Techstars companies successfully raise follow on capital (defined as anything above $750K). Certainly within the ballpark!
Dorm Room Fund and Rough Draft Ventures companies in our data set have an 11–12% rate of survivorship to Series A. As a benchmark, a previous partner at Y Combinator shared that 20% of their accelerator companies raise Series A capital (YC declined to share the official figure, but it’s likely a stat that is increasing given their new Series A support programs. For further reading, check out YC’s reflection on what they’ve learned about helping their companies raise Series A funding). In any case, DRF and RDV’s numbers should be taken with a grain of salt, as the average age of their portfolio companies is very low and raising Series A rounds generally takes time. Ultimately, it is clear that DRF and RDV are active in the earlier (and riskier) phases of the startup journey.
Dorm Room Fund and Rough Draft Ventures send 18–25% of their portfolio companies to Y Combinator or Techstars. Given YC’s 1.5% acceptance rate as reported in Fortune, this is quite significant! Internally, these two funds offer founders an opportunity to participate in mock interviews with YC and Techstars alumni, as well as tap into their communities for peer support (e.g. advice on pitch decks and application content). As a result, Dorm Room Fund and Rough Draft Ventures regularly send cohorts of founders to these prestigious accelerator programs. Based on our data set, 17–20% of DRF and RDV companies that attend one of these accelerators end up raising Series A venture financing.
Dorm Room Fund and Rough Draft Ventures don’t invest in the same companies. When we take a deeper look at one specific ecosystem where these two funds have been equally active over the last several years — Boston — we actually see that the degree of investment overlap for companies that have raised $1M+ seed rounds sits at 26%. This suggests that these funds are either a) seeing different dealflow or b) have widely different investment decision-making.
Dorm Room Fund and Rough Draft Ventures should not just be measured by a returns-basis today, as it’s too early. I hypothesize that DRF and RDV are actually encouraging more entrepreneurial activity in the ecosystem (more students decide to start companies while in school) as well as improving long-term founder outcomes amongst students they touch (portfolio founders build bigger and more successful companies later in their careers). As more students start companies, there’s likely a positive feedback loop where there’s increasing peer pressure to start a company or lean on friends for founder support (e.g. feedback, advice, etc).Both of these subjects warrant additional study, but it’s likely too early to conduct these analyses today.
Dorm Room Fund and Rough Draft Ventures have impressive alumni that you will want to track. 1 in 4 alumni partners are founders, and 29% of these founder alumni have raised $1M+ seed rounds for their companies. These include Anjney Midha’s augmented reality startup Ubiquity6 (raised $37M+), Shubham Goel’s investor-focused CRM startup Affinity (raised $13M+), Bruno Faviero’s AI security software startup Synapse (raised $6M+), Amanda Bradford’s dating app The League (raised $2M+), and Dillon Chen’s blockchain startup Commonwealth Labs (raised $1.7M). It makes sense to me that alumni from these communities that decide to start companies have an advantage over their peers — they know what good companies look like and they can tap into powerful networks of young talent / experienced investors.
Beyond Dorm Room Fund and Rough Draft Ventures, some venture capital firms focus on incubation for student-founded startups. Credit should first be given to Lightspeed for producing the amazing Summer Fellows bootcamp experience for promising student founders — after all, Pinterest was built there! Jeremy Liew gives a good overview of the program through his sit-down interview with Afterbox’s Zack Banack. Based on a study they conducted last year, 40% of Lightspeed Summer Fellows alumni are currently active founders. Pear Ventures also has an impressive summer incubator program where 85% of its companies successfully complete a fundraise. Index Ventures is the latest to build an incubator program for student founders, and even accepts founders who want to work on an idea part-time while completing a summer internship.
Let’s now look at students who want to join a startup before founding one. Venture funds have historically looked to tap students for talent, and are expanding the engagement lifecycle. The longest running programs include Kleiner Perkins’ class=”m_1196721721246259147gmail-markup–strong m_1196721721246259147gmail-markup–p-strong”> KP Fellows and True Ventures’ TEC Fellows, which focus on placing the next generation’s most promising product managers, engineers, and designers into the portfolio companies of their parent venture funds.
There’s also the secretive Greylock X, a referral-based hand-picked group of the best student engineers in Silicon Valley (among their impressive alumni are founders like Yasyf Mohamedali and Joe Kahn, the folks behind First Round-backed Karuna Health). As these programs have matured, these firms have recognized the long-run value of engaging the alumni of their programs.
More and more alumni are “coming back” to the parent funds as entrepreneurs, like KP Fellow Dylan Field of Figma (and is also hosting a KP Fellow, closing a full circle loop!). Based on their latest data, 10% of KP Fellows alumni are founders — that’s a lot given the fact that their community has grown to 500! This helps explain why Kleiner Perkins has created a structured path to receive $100K in seed funding to companies founded by KP Fellow alumni. It looks like venture funds are beginning to invest in student programs as part of their larger platform strategy, which can have a real impact over the long term (for further reading, see this analysis of platform strategy outcomes by USV’s Bethany Crystal).
KP Fellows in San Francisco
Venture funds are doubling down on student talent engagement — in just the last 18 months, 4 funds have launched student programs. It’s encouraging to see new funds follow in the footsteps of First Round, General Catalyst, Kleiner Perkins, Greylock, and Lightspeed. In 2017, Accel launched their Accel Scholars program to engage top talent at UC Berkeley and Stanford. In 2018, we saw 8VC Fellows, NEA Next, and Floodgate Insiders all launch, targeting elite universities outside of Silicon Valley. Y Combinator implemented Early Decision, which allows student founders to apply one batch early to help with academic scheduling. Most recently, at the start of 2019, First Round launched the Graduate Fund (staffed by Dorm Room Fund alumni) to invest in founders who are recent graduates or young alumni.
Given more time, I’d love to study the rates by which student founders start another company following investments from student scout funds, as well as whether or not they’re more successful in those ventures. In any case, this is an escalation in the number of venture funds that have started to get serious about engaging students — both for talent and dealflow.
Student entrepreneurship 2.0 is here. There are more structured paths to success for students interested in starting or joining a startup. Founders have more opportunities to garner press, seek advice, raise capital, and more. Venture funds are increasingly leveraging students to help improve the three F’s — finding, funding, and fixing. In my personal view, I believe it is becoming more and more important for venture funds to gain mindshare amongst the next generation of founders and operators early, while still in school.
I can’t wait to see what’s next for student entrepreneurship in 2019. If you’re interested in digging in deeper (I’m human — I’m sure I haven’t covered everything related to student entrepreneurship here) or learning more about how you can start or join a startup while still in school, shoot me a note at sxu@dormroomfund.com. A massive thanks to Phin Barnes, Rei Wang, Chauncey Hamilton, Peter Boyce, Natalie Bartlett, Denali Tietjen, Eric Tarczynski, Will Robbins, Jasmine Kriston, Alicia Lau, Johnny Hammond, Bruno Faviero, Athena Kan, Shohini Gupta, Alex Immerman, Albert Dong, Phillip Hua-Bon-Hoa, and Trevor Sookraj for your incredible encouragement, support, and insight during the writing of this essay.
Powered by WPeMatico
Sweatcoin lets you earn crypto for working out
Want a way to workout and earn some coin? Sweatcoin has risen to the top of the App Store for helping folks get something more than just a glow for taking those daily steps. The startup says it has accumulated more than 5 million users in the past year and increased revenue by 266 percent in the last quarter. There are more than 2 million weekly active users on the app, and growing, making it… Read More
Powered by WPeMatico
Quip Gets $30M From Greylock And Benchmark To Grow Its Mobile-First Word Processing App
Some big news today for Quip, the mobile-first word processing and collaboration app that competes with the likes of Google Docs. The eponymous startup behind the service has raised $30 million in funding — a Series B round led by Greylock with participation from Benchmark. Along with the funding, Quip is announcing some key people joining its team. Patrick Moran — who had been… Read More
Powered by WPeMatico
GoFundMe Confirms Its Funding Round, Which Valued It At $500M
GoFundMe confirmed that it has raised venture capital financing in a blog post today, infusing the previously bootstrapped company with cash that will give it room to grow. TechCrunch previously reported that the round valued GoFundMe at around $500 million, though one of our sources said the valuation could have ended up higher than that. Our sources also told us the reason why it attracted… Read More
Powered by WPeMatico