OATV and Indie.vc

Around this time last year, Chris Mims at the Wall Street Journal did a profile on the experiment we were running with Indie.vc. Buried in the piece was a mention of a new fund we’d closed to continue iterating on the experiment.

That’s the only mention of the new fund.

In the proceeding months since his piece, it has become clear to me that there’s still some confusion around the relationship between OATV and Indie.vc. Tho I’ve shared the relationship between the two in private emails and conversations, I think it’s worthwhile to unpack it a bit more publicly so we can remove any confusion about the current state of both.

OATV (O’Reilly AlphaTech Ventures) was founded in 2005 by myself, Mark Jacobsen and Tim O’Reilly. We were one of a handful of “institutional” super angel/micro VC/seed funds, which is to say that we raised a sizable ($50M) pool of capital from outside investors.

The category was young and new and exciting and, to many, counter-intuitive. It was not an easy time to raise a seed fund and we were not an obvious seed fund to back. We had a limited track record, very little experience as professional investors, shoot, we didn’t even live in the same state! After 2yrs of beating the street, we closed OATV Fund I in December of 2006.

From the get go, we structured our single fund to execute two distinct investment strategies.

The first was to lead or co-lead seed rounds. These rounds were typically first money in, the rounds were generally sub $2M total in size, and we would take an active role in these companies as board members. Believe it or not, this was a wildly new idea at the time!

The second strategy was to use a portion of each fund as a pool of capital to make Tim’s angel investments. These were typically angel size checks of a couple hundred thousand dollars written into rounds being led by larger funds into companies operating in thematic areas of interest to us run by founders we had relationships with. These hovered around less than 5% of the dollars in any given OATV fund.

Fast forward to this time last year.

In his article, Mims notes our new fund would have a focus on Indie.vc. It’s worth clarifying here that the new fund is, in fact, named OATV Fund IV.

Original, I know, but meaningful.

When it comes to OATV and Indie.vc they are the same thing. OATV is the Fund, Indie.vc is the strategy.

In Fund IV, we are still actively making Tim’s angel investments and allocating a larger percentage of committed capital to them.

However, we are not leading or co-leading traditional seed rounds as we’ve done it the past. That strategy has been replaced with our Indie.vc strategy.

This is a notable change. It is one that we did not take lightly. Nor is it one that was universally well received by our investors or our peers in the seed and VC community.

But…

When we ran our initial Indie.vc experiment we felt the same spidey sense that we were on to something as we did when we were connecting the dots on the emergent seed funding market back in 2005. We were misunderstood by those same constituents then and we are comfortable being misunderstood by them now.

In that same 2 year span another troubling development has begun unfolding. In recent months, weeks and days it has become clearer and clearer that there are larger scale systemic issues embedded in the current VC models for what and who gets funded and how those companies are nurtured and scaled.

We firmly believe ambitious founders deserve an alternative. So we bet our firm on it.

It hasn’t been easy but the response from founders and the early results we are seeing within our growing portfolio of companies reinforces daily our decision.

So…

In case there was any doubt, we are open for business! and actively investing Fund IV in Real Businesses (via our Indie.vc strategy) and Moon Shots (as angels alongside our friends at early stage funds)

If you’re interested in Indie.vc funding, you can tell us about your business here.

If you want to see the areas we’re tracking for our angel investments, you can get a sense for those here.