As readers of this blog know, I’m a huge fan of the startup and venture capital world but also a sometimes critic of how the venture capital industry works. For a long time I’ve wanted to do more than talk about this and actually start a new kind of venture firm, designed the right way from the ground up.
Last year two friends of mine who are both very successful, serial entrepreneurs — Eric Paley and Dave Frankel — were brainstorming ideas for what to do next when the thought occurred: why not make their next startup a new kind of venture firm, the kind we had wished existed back when we started our first companies?
So this is what we, along with a bunch of other serial entrepreneurs, decided to do. We call our new firm Founder Collective. Joining us are Mark Gerson (founder of Gerson Lehrman Group), Zach Klein (co-founder of Vimeo/Connected Ventures), Bill Trenchard (co-founder of LiveOps), and Micah Rosenbloom (co-founder of Brontes). We expect to add more founders over time.
We think of ourselves as part of a new wave venture firms led by Y Combinator, First Round, Maples, Ron Conway/Baseline, and Betaworks, among others, that have adapted to a world where venture capital is abundant but authentic seed capital and, more importantly, mentorship from experienced entrepreneurs, is scarce. We have many similarities to these firms and also some differences:
1) We have a small fund – approximately $40M – and intend to keep it that way. This means seed investments are our entire business — they are not options on future financings. Hence our interests and the founders’ interests are aligned. This also means we are happy with smaller exits if that’s what the entrepreneur wants to do.
2) Each person involved in Founder Collective is an entrepreneur, most of them currently running startups full time (my full-time job is CEO/co-founder of Hunch).
3) We believe the best people to predict the future — and create it — are fellow entrepreneurs, not former bankers drawing graphs and developing abstract theses.
4) We try to be respectful. We’ve all sat in countless meetings where VCs show up late, email while you are presenting, and generally act arrogant and dismissive. We try really hard not to be like that.
5) We’ll make investments anywhere in the world but tend to favor our home turf – New York City and Cambridge, MA. New York is a hotbed for online media and advertising startups. In Cambridge, there is a constant flow of ideas coming out of places like MIT that just need a little capital and guidance.
We realize the word “Collective” sounds a bit radical, even socialist. This is deliberate. While we have an actual fund — we are not just a group of angel investors — we also have a unique structure where active entrepreneurs lead investments, work hard to help their investments succeed, and share in the profits when they do.
Think of it as peer-to-peer venture capital.
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Congratulations on the announcement
Very cool. The embodiment of putting your money where your mouth is. Wish all of you all the success in the world. Congrats!
Congrats! Looking forward to see how you guys are able to execute the paradigm shift – best of luck.
Curious – is the $40mil coming from the founders, or somewhere else?
This looks fantastic! Well done on the launch.
This is awesome. A great addition to the NYC (and bean-town) early stage venture community. Congrats!
Knowing Eric and David, this is tremendous. CommonAngels is a firm believer in the mentorship and smaller fund model – its what we do everyday. Looking forward to working with you guys.
Great Concept: peer-to-peer venture capital. I wish you guys the best. You should think about a place online to have people apply to join you and people to submit thier businesses. Are you geographically limited? Thanks.
big chunk from founders but not all…
Excellent news!
Nice! I work closely with a similarly minded fund up here in Montreal – Montreal Startup. Wish you guys good luck!
Very cool, congrats!
Congrats. Looking forward to see what you guys do.
Chris, Congrats on the launch! This is a great idea whose time has come. Looking forward to the L.A./west coast opening.
I like it. New way of funding for new ways of doing business. I look forward to finding out more.
Congrats…a timely move.
This is tremendous. Really excited to see this take off. Congrats to you and the rest of the FC team.
Great news for the nyc venture community. Congrats on getting it launched Chris.
Congrats, Chris. Looking forward to hearing about your investments.
This is awesome. A firm that truly sounds like it's all about the entrepreneur. Very cool!
Mark Gerson is a great guy! I look forward to being in touch with you guys.
I love this line from #4: “We try really hard not to be like that.”
Not “We promise not to do that.” or “We have a zero tolerance for that.”
Chris' #4 is probably a lot more honest than either of those…because let's be honest…we've all had those days ; )
congrats! happy to see that happening!
Sounds fantastic Chris. If any of your collective finds some time free, I'd appreciate some sharp feed back on a “project” I'm working on with a few friends. We're in dire need of real feedback.
You can learn a little about at my blog.
Seriously groovy idea, wish you and the group the best of luck kicking some venture butt.
What do you expect your normal investment size to be?
Will you be doing follow-on rounds (if small)?
Chris, congrats on the announcement. Much needed in this space.
Congrats to you and Eric and David! Looking forward to collaborating!
Having raised substantial venture and angel capital separately for two different companies, I would love to see more operators running seed funds, operators who have the patience of guiding and mentoring the entrepreneurs. Basically help them not to make errors, which would be major mistakes looking back to the past in the future.
The other important thing is to broadcast clearly — whats the current fancy of the angel/venture managers and the investment policy. Kind of straight, and not all over the map.
I like collective – and your approach… can you tell us more about the types of start ups you are interested in currently?
I'm excited to see what the first investments are, and especially envious of whoever gets the invaluable mentoring that will come along with the capital. Congrats!
Congrats! Think this fits a real need. (I enjoyed talking with Eric this summer who turned me on to your blog & I'm glad he did!)
Great idea and a natural evolution of the normal “successful entrepreneur becomes investor/entrepreneur/mentor” reality.
Side note: This sounds more like an extraordinarily capitalist creation (with a rather normal partnership/shareholder agreement) than anything “collective” or “socialist”….unless the portfolio companies that fail will also benefit from the profits achieved by those that succeed….
I'm looking forward to seeing your team at NYC local events for entrepreneurs. I like what you're planning and the emphasis on “collective.” As a supporter and participant in co-working and Open Source, I firmly believe we must all develop better approaches than what we have seen business do in the past.
Congrats! Glad to see more participants in this type of model. What is the target investment range and how many deals do you plan to write per quarter/year?
Congratulations.
I'll be pitching you in 5 weeks.
would love to get in touch — your contact@foundercollective.com email is down…
Congratulations Chris. This is an awesome announcement. Hope you are able to nurture some good startups like the other new age venture firms have done.
>5) We’ll make investments anywhere in the world but tend to favor
Can I apply from India?
thx!
likewise!
We favor the East Coast of the US, but will invest anywhere.
Cool – will check them out. One of the nice thing about small funds is we can partner with each other.
Fantastic! How do I apply?
Yeah, it just depends on whether its the occasional bad day or your general attitude.
Sure, I'll check it out.
also that email address listed seems to bounce!
We'll do anything from $50K up toward $1M. Follow ons – not our business but probably will in rare cases, e.g. “defensively” (when VC's do a pay to play round etc).
Likewise, thanks, Jeff.
Likewise, thanks, Jeff.
Sounds like we think alike. Are we not broadcasting clearly enough what we are interested in?
Indeed. And I suppose the difference between those two options gets sorted out on TheFunded.
Anything with great people, early stage, and ideally involves info tech in some way.
Sounds interesting.
How are you going to make connections with startups? Using the YC model or a more traditional VC approach?
Yeah, the socialist mention is slightly tongue in cheek since we are all capitalists through and through. That said, we do think our p2p model is unusual and something we believe in.
In true capitalist style, people only get paid from profits.
We go to a lot of NYC events! Let me know if there is a good one we are missing.
deal size: $50k up toward $1M. No fixed number of deals per year.
thx, just fixed.
Sure, why not.
Looking forward to it!
Congratulations!
Would love more details. (How to apply. What information would you need. What would the average investment amount be…)
Congrats, Chris. The approach you're taking is one that I truly appreciate. Looking forward to following your investments.
Congrats. Is it possible to engage your entrepreneural services w/o investment. Funds have been raised-est. up to $10M; intellectual property in place. Start up leader, entrepreneur not yet identified. Assistance required to establish/ensure integrity and viability of model
Congrats. Is it possible to engage your entrepreneural services w/o investment. Funds have been raised-est. up to $10M; intellectual property in place. Start up leader, entrepreneur not yet identified. Assistance required to establish/ensure integrity and viability of model
Welcome to the party! Well done! Hope to work with you all on some stuff.
Chris,
Congrats on the announcement. Glad to have another seed stage fund in the game. Looking forward to co-investing on a number of deals with you guys in the future!
~ The LaunchCapital Team
I like it! I'll be in NYC next week and would love to buy you a bourbon….and discuss if this is a model you think could/should be replicated in other cities….Louisville for example. email me if you're up for it.
Chris, good Luck. I see allot of value and promise in co-investing with entrepreneurial driven smaller funds beyond the cash: network, knowledge, affinities with the targeted market, experience, relationships and that “x-factor” that we also seek in entrepreneurs. Looking forward to collaborate on a few deals with you and your partners.
Chris Arsenault
iNovia Capital
Score another one for New York! This is fantastic group of founders and a perfect match for the type of funding that is most needed. Congrats to all involved on the public launch.
Hi,
Sounds great. I hope that you will look at New Haven as well. As one of the co-founders of the Yale Entrepreneurial Institute (loosely modeled after Y Combinator), I've watched a number of great start-ups emerge in the area over the past couple of years. In addition to biotech, there are some pretty interesting web-based ventures that could benefit from this type of fund, including PaperG (http://www.paperg.com), YouRenew (http://www.yourenew.com), SeeClickFix (http://www.seeclickfix.com), and Dot Eco (http://doteco.info/).
There is a great start-up culture due to low costs, creative community, and access to world class talent at Yale. Worth a look.
Best,
Jennifer
[...] Dixon wrote: “We think of ourselves as part of a new wave venture firms … that have adapted to a world where venture capital is abundant but authentic seed capital and, more importantly, mentorship from experienced entrepreneurs, is scarce.” [...]
Congrats and good luck!
A welcome addition for budding entrepreneurs in New York!
Have you been to Hackers and Founders? Meeting number 6 just happened (http://anyvite.com/events/home/cmyqg0gwxx), so the next one will be next month. It's a great group, and apparently growing pretty steadily.
Congratulations!
It's a great initiative I hope to see one day in Europe!
Congratulations!
It's a great initiative I hope to see one day in Europe!
Congrats!
[...] This post was mentioned on Twitter by Om Malik and favit, Valentin. Valentin said: We believe the best people to predict the future and create it are fellow entrepreneurs, not former bankers – http://bit.ly/3BZsrm [...]
Go Andy! Shake things up and spread the entrepreneurial aligned investor mojo.
Mark I couldn't stop if I tried! Thanks.
A win for NYC. Love the experimentation.
the damn socialists are taking over the world
congrats and good luck!
Chris, can you expand a bit on this: “we also have a unique structure where active entrepreneurs lead investments, work hard to help their investments succeed, and share in the profits when they do.”
Sounds like the partner most in-line with the startup will take lead on the investment for FC and will receive a bigger piece of the pie then other fund partners for doing so. Do they take a board seat? Are there expectations around time? How will partners mitigate their busy life as founder interfering with their commitment to their partners and board?
It's an amazing group of people, I can't wait to follow you all more closely in the coming years.
[...] and Hunch co-founder, angel investor, and startup icon Chris Dixon announced the launch of seed-stage venture capital firm Founder Collective today, forming an entrepreneur-backed firm [...]
A partnership with Montreal Startup would be great.
It's especially sensible for companies that want to have an R&D arm in Montreal. (Quebecois tax credits for scientific research are very favorable.)
[...] 9 November 2009 PROfounders Capital Google acquires Admob Murdoch to block Google What EA Sees in Social Gamer Playfish Founder Collective [...]
Looking forward to seeing what companies come out of this
Chris, congratulations. The whole project sounds awesome, but the points that resonate with me the most are those you lay out at (1). Keeping smaller exits viable–that's where the ecosystem needs to go, at least in info tech. A decade ago, I co-founded a boutique firm whose mission was to do seed investments only, but I think the timing is even better now for such a concept (the firm I co-founded ended up going a different direction after the dot com implosion, but that's a longer story).
[...] really like Chris Dixon’s model of a VC as a consultancy with dollars. That’s pretty cool and his new firm looks like fun. [...]
awesome to see entrepreneurs backing other entrepreneurs.
Excellent stuff, Chris.
I just wish we had something like this in the UK. Out of interest, if FC made an investment in a UK startup, how would this work in practice?
Congratulations, sounds like a great addition to the NYC startup world.
Wow! Just got back from SF where I was in the audience listening to a panel of Angel funds talking about how they were doing B AND C rounds in their current investments AND requiring preferred shares if they do take a new company– HUH?! REALLY? Would love to talk to you guys!
[...] RT @cdixon Presenting a new seed fund, Founder Collective http://cdixon.org/?p=1794 [...]
We're in a state of “high flux” (read as dynamic pages). We're cleaning up the look, layout, and choices available to users (Tyler much more than me, as I'm ramping up my Ruby knowledge).
We're in a state of “high flux” (read as dynamic pages). We're cleaning up the look, layout, and choices available to users (Tyler much more than me, as I'm ramping up my Ruby knowledge).
Thanks Albert! Hope to work together!
We are totally open to New Haven and agree there have been some interesting startups coming out of there lately.
I haven't but it looks interesting. Thanks for the link.
> Sounds like the partner most in-line with the startup will take lead on the investment for FC and will receive a bigger piece of the pie then other fund partners for doing so.
Yeah.
Board seat: sometimes, but not necessary. We are very flexible.
Thanks!!
Pretty cool Chris…congrats!
Really good idea. Wish you all the best. We need more initiatives like this. The era of the investpreneur has come
Chris – this is fantastic for Boston and NYC. We need more of this. In particular, the model is very interesting (by entrepreneurs who are in the trenches) vs the normal VC model (by ex-entrepreneurs who were successful but see the everything from the 1-2 successes years ago, MBAs who never built a company, or worse, bankers).
–Coach Wei
[...] Chris Dixon: Presenting Founder Collective [...]
Love what you're doing. P2P is changing the world, 1 P2P at a time. Also love that you're having a dialogue right here! We're not located in NYC, but having great conversations with artists and arts orgs there about P2P fundraising for artists/arts projects. Cheers!
COngrdaultions.
Read the really Radical. Critical Art Ensemble…Tactical Media, Observations on Collective Cultural Action (You may plagiarize this document, you just have to tell them, they are, err, a step beyond creative commons)
http://www.critical-art.net/books/digital/tact4...
I am looking for mentors and investments for my new company (mobile market). What kind of information is needed for submition for application? Better yet, what I have to do to get 5 min of your time?
[...] Chris Dixon announced on his blog about a new venture capital fund known as "Founder Collective" (see the site) which will be funded with $40 million of seed capital and focused on regional investments in New York City and Cambridge, MA. "New York is a hotbed for online media and advertising startups," says Dixon. The fund is run by founders, but of course, including Eric Paley, Dave Frankel , Mark Gerson (founder of Gerson Lehrman Group), Zach Klein (co-founder of Vimeo/Connected Ventures), Bill Trenchard (co-founder of LiveOps), and Micah Rosenbloom (co-founder of Brontes). Read more. [...]
Brilliant. This is absolutely fantastic. I will anxiously await an opportunity to come to NYC to meet with you guys.
yet another capitalist wolf in sheep's disguise:)
we're pretty overtly capitalist actually.
no different than any other VC. they ignore entrepreneur's questions and request for information to their site's email. their site say “say hello, we're nice”. they forgot to say “at long as you not serious about actually looking for help”. Look at the post from Ankesh Kothari, his question still being ignore.
entrepreneurs don't bend over yet! they are just like any VC.
study the posted comments and you will realize this is just a PR spin for a wolf. not all VC are equal. many great company are started with the help of VC. At least they don't pretend to be a sheep.
Dude, I posted this on Monday. Today is Thursday. We got tons of
emails since then – far more than we could intelligently respond to.
The fact that we haven't responded to you in under 3 days makes us
“wolves”?
What's the best way to present an idea to you? I've heard the traditional business plan isn't relevant. Great blog!
What's the best way to present an idea to your team? I've read that the traditional business plan isn't relevant.
I am not Ankesh Kothari. I just use his post as example. Please don't take it personally. I am a straight shooter.
1. Your issue with overwhelming messages is a common problem with many companies. You can use auto response email to acknowledge receive of the message. Maybe you can add some feature (link) to allow sender to automatically track average time to response and their order in the queue. Better yet make it into a web service for other business to use as well. One example would be federal and local government agency which handles many requests in a given day. Anyone reading this, do run with the idea. I have a ton.
2. While it is easy to say you be different, proof it! suggestion, do an online youtube documentary for your vc with a entrepreneur. Start from reading the first executive summary to taking the company to success or failure. It will be like ABC shark tank but showing then how you do it different and how you can help with more than money.
3. I not an entrepreneur. I saw too many dreams destroy by investors. One investor trick me into signing my patent away. He was an angel investor. So I am now just give warning. I am here to kiss up, I here to share my view.
My apology if I insulted you in anyway.
one more note.
Add yourself to angelsoft.net, because if you don't they provide misleading information to discourage people from apply to you. For example, the firm True Ventures invest in early seed startup but they will list it as a very late stage funding VC outfit to discourage potential early stage startup from applying.
don't expect an answer. there are 5 similar questions on this blog that went unanswered.
It's a big question. I'm going to respond soon with a full blog post.
I am review some of your past successes, very impressive. I am very interested in the mentor but I do not need the money. Would Founder Collective take on startup for mentoring?
[...] Really interesting news for startups RT @cdixon: Presenting a new seed fund, Founder Collective http://cdixon.org/?p=1794 [...]
This is exactly what we need here in Silicon Valley.
Please let me know when you open an office in Palo Alto.
Chris,
When do you think you have an answer to this question?
Well, this blog post http://cdixon.org/?p=1893 was meant to address one of my main suggestions about pitching.
Well, this blog post http://cdixon.org/?p=1893 was meant to address one of my main suggestions about pitching.
[...] firm only invests at the seed stage. (Dixon wrote about the investment philosophy on his personal blog last week.) Focusing exclusively on the seed round means that Founder has an incentive to help [...]
[...] many reasons why angels or pure seed funds are preferable seed round investors (bias alert: I am one of them!). Share and [...]
[...] Really interesting news for startups RT @cdixon: Presenting a new seed fund, Founder Collective http://cdixon.org/?p=1794 davidcrow – Mon 09 Nov 17:20 All Things [...]
[...] mentorship programs, and a generally more active and connected entrepreneur community. For example, Founder Collective recently backed two Y-Combinator startups who decided to raise money exclusively from seed [...]