The Flippening: Founders vs Funds as Lead Investors
AUTHOR: Patrick Zailckas
Is the age of institutional venture capital dwindling away? There might be a case to make as access to private capital expands across the fat tail of the private investment market among family offices and angels. Take a recent deal, B2B payment startup Routable’s $30MM Series B was easily filled without the support of VC firms . Instead, co-founders Tom Harel and Omri Mor raised from a handful of high-profile angels, featuring brothers Sam Altman (CEO OpenAI, former president Y Combinator) and JackAltman (CEO of Lattice) as leads of the round. Other participants included Instacart co-founder Max Mullen, Airbnb co-founder Joe Gebbia, Box co-founder and CEO Aaron Leevie, Salesforce founder and CEO Marc Benioff, DoorDash’s Gokul Rajaram, etc.
When asked about the rationale to partner with founders, Mor said the decision was intentional for Routable to benefit from their “deep enterprise and high-growth experience” leveraged from their leadership experience with prominent tech companies. If the networks, experience, and capital opportunities gained from partnering with VC funds continue to become more readily accessible elsewhere through a growing pool of successful founder investors, it is possible that Routable’s path will soon no longer stand among a minority.
Deals such as Routable’s amplify trends we’ve seen emerging over the past few years with the rise of solo capitalist investors representing a new investor class. The venture capital blog Next Big Thing published an article last July highlighting the competitive allure of financings led by individuals , presenting new threats to traditional venture capital firms. A solo capitalist is the sole general partner of their funds, is the only member of the investment team, represents the brand of the fund through their brand as a prominent individual, and is competing to lead Seed, Series A, and later stage rounds with larger checks than angels or super angels. Arguments in favor of solo capitalists highlight their ability to make faster decisions than traditional venture funds, ease of founder-investor interfacing with a single individual, flexibility on ownership and board seat structures, and, perhaps most importantly, founders are more often now picking individual partners that they want to work with in a financing round, as opposed to a firm. Routable’s recent deal suggests the trend continues to show strength today.
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If you are a founder looking to improve your investor reporting for free, or an investor eager to gain a better handle on your managing and monitoring your private investments, reach out to us and let us show you how Clockwork Universe is helping to redesign founder-investor dynamics to the benefit of the entire entrepreneurial ecosystem.
