Founder Collective: When Entrepreneurs Form Their Own Seed-Stage Venture Firm
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software startups. The firm’s sweet spot in terms of investment sizes is between $50,000 and $1 million, Paley said, but they can invest in companies that need up to $2 million. Perhaps most distinctive is that the 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 entrepreneurs increase the value of their companies before they seek later rounds of venture financing.
Founder isn’t the only firm focusing on seed investments, of course. The growing number of funds scattered across the country that aim to back companies at this nascent stage include Baseline Ventures, Betaworks, First Round Capital, and Y Combinator, according to Paley. But there is much more collaboration among these firms than competition, he said, because of the large need for seed-stage capital from high-quality firms. Founder’s investment thesis drew support from backers that include venture funds that specialize in investing in other funds (AKA a fund of funds), professionally managed family offices, and angel investors who are experienced entrepreneurs.
The firm already has a portfolio of about 10 companies, Paley said, though the total number of firms that the members of the firm has invested in as angel backers or on behalf of the firm is around 30. Here are the firm’s portfolio companies listed on its website:
—-20 X 200, A Jen Bekman Project, operates a website that enables consumers to purchase prints of works of fine art at affordable prices.
—AdSafe Media, a New York-based firm that provides software that enables marketers to ensure that their online advertisements reach the appropriate audiences.
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