The Network Is the VC: CommonAngels Is Now Converge Venture Partners
Silicon Valley legend John Gage is said to have coined the phrase, “The network is the computer.” He was talking about combining connected systems into one computing resource, and the line would become Sun Microsystems’ slogan.
Fast forward 30 years and the idea still holds true—think cloud computing, the Internet, and social media. What’s more, the concept of a “network” as a product has spread to other industries such as venture capital and finance. Now, in the shifting sands of tech investing, VC firms are increasingly competing for deals and talent on the strength of their networks. So they’re formalizing and expanding their relationships—and unifying their messaging to make it more about the network.
A case in point: Boston-based CommonAngels Ventures is solidifying its brand with a name change today, to “Converge Venture Partners.” Maia Heymann, the firm’s senior managing director, calls it a “culmination of the transformation we’ve been making since I joined about two and a half years ago.” (Disclosure: CommonAngels, now Converge, is a lead investor in Xconomy.)
In recent years, the firm has morphed from an angel-investing network into an early-stage venture fund. Converge closed its most recent fund at $27 million about a year ago. In parallel, the seed- and early-stage VC market has gotten much noisier. “It’s become harder for the entrepreneur, in our opinion. Now there are incubators, accelerators, crowdfunding, venture firms that create seed programs, and syndicates,” Heymann says.
James Geshwiler, managing director at Converge, says that having more funding choices “creates better fits for entrepreneurs, though it’s confusing.” He adds that he’s seeing “firms shifting to a much more people-oriented structure” and “using networks” to bring the right skill sets to bear on evaluating deals and helping to build companies.
That implies bigger networks of people with expertise—and it’s different from the traditional venture model of having a few general partners who lean on their individual networks.
Converge’s deal-vetting and mentoring network includes about 60 active “venture partners”—they are no longer called angel investors, or members—and quieter limited partners, all with capital in the fund. The decision-making process on deals hasn’t changed recently; Heymann and Geshwiler call the shots, but they get input from experts in their network. “There’s no vote, but there is division of labor,” Geshwiler says.
The firm’s leaders say the new name reflects that they’ve “converged” their capital into a fund, and also that building a startup requires a convergence of forces—presumably things like talent, vision, hard work, partnerships, and market fit. (Also, the domain name was available—if there’s anything harder than naming a startup these days, it might be naming a venture firm.)
As Geshwiler says, Converge isn’t alone in recognizing the importance of early-stage investing networks. Nationally, Techstars and Y Combinator have done a remarkable job of harnessing relationships with their accelerator alumni and partners.
Locally, a few other recent efforts come to mind. G20 Ventures, led by Bob Hower and Bill Wiberg, has a limited-partner network of 20-some executives and founders, focused mainly on enterprise tech. Project 11 Ventures, led by Katie Rae, Reed Sturtevant, and Bob Mason, is harnessing its network to make investments in startups ranging from drone-delivery to digital payments. And Accomplice—with partners Jeff Fagnan, Jon Karlen, Chris Lynch, and Ryan Moore—has been aggressive with its seed-stage strategy, which includes Boston Syndicates, a partnership with many notable angel investors in town.
For Converge—whose recent deals include Harmonix, SocialRank, and two undisclosed artificial-intelligence companies—success will come down to picking winners, nothing new. That’s because some things in venture won’t change: the need to assess ideas, markets, and people quickly and correctly, all while forming long-term relationships with the right ones.