Announcing Wonder Ventures Fund II: $15M Pre-Seed Fund focused on LA

TL;DR (1) We raised a new $15M Wonder Ventures Fund II, (2) We are exclusively focused on leading pre-seed rounds for tech companies in the greater LA area, (3) We aim to invest in the best LA startups earlier than anyone else and to operate by our motto: “We work for our founders, not the other way around.”

Dustin Rosen (Managing Partner) and Abha Nath (Investment Analyst) of Wonder Ventures. Los Angeles, CA

Wonder Ventures Fund I

When I launched Wonder Ventures four years ago, two things were abundantly clear to me. One, the LA tech ecosystem was becoming a force to be reckoned with. Two, startups in LA had way too much trouble raising early capital. As such, I raised a small venture capital fund, Wonder Ventures Fund I, in early 2015 looking to fill this early stage capital gap with angel-sized checks of $50k-$100k. This led to the experience of getting to work with many talented founders. We are honored to be investors from the earliest stage (often the first check) in 30+ LA companies. This includes companies like Tala and Clutter, that have each gone on to raise more than $100M since our investment and employ hundreds of people.

How Wonder Ventures Fund II Came to Be

In the last four years, I’ve seen two subsequent trends. First, LA isn’t just becoming a force to be reckoned with — LA HAS ARRIVED. Second, while my angel-sized checks were helpful to these companies, I knew I could do more to put founders in business. When every other VC says “you are TOO EARLY,” I wanted to be able to write a term sheet, make a round happen and help the best LA founders hit the ground running.

So, it is with great excitement that I’m announcing Wonder Ventures Fund II, a $15M Pre-Seed fund focused on greater Los Angeles.

We realized that in order to have the impact we wanted to have in LA, we need to be able to write bigger checks. With Fund II, we’re now investing $250k-$500k per company — 5–10x larger checks than Fund I — but we’re continuing to invest at the same stage. We want to be the first institutional investor to say “YES” to founders, and write large enough checks to make pre-seed rounds happen.

Wonder Ventures Fund II was born with the backing of more than 30 new Limited Partners as investors in the fund, including institutional fund of funds and large family offices. Additionally, we have more than 20 LA Founders as LPs. These founders are an important part of the broader LA tech community, and now, the Wonder Ventures community, which already includes more than 50 LA Portfolio founders. They provide current and future Wonder Ventures founders with a helpful network of people who have “been there and done that” when it comes to the earliest, and often hardest, days of getting a company off the ground.

Pre-Seed in LA

There are plenty of successful funds in LA, like Upfront Ventures, which raised a new $400M fund last year and will invest more than half of it in LA. Other great funds in LA like Crosscut, Fika, Mucker, Bonfire and more continue to do impressive work and have been rewarded by raising new, larger funds here in LA. Even with all these great investors leading Seed & Series A rounds in LA, we believe LA companies are still underserved at their earliest stages. As a result, Wonder Ventures II will deploy more than 90% of our capital right here in LA. And all at the earliest stage, whether you call it Pre-Seed, True Seed, Early-Stage, Angel, or anything else.

We just want to back the best founders in LA earlier than anyone else.

Wonder Ventures “Works For Founders, Not the Other Way Around”

When I started Wonder Ventures, I had just come off of running a venture-backed company for six years. Though I had many helpful angel investors and three great VCs, in the six years of running the company, I also pitched more than 150 other VCs. Through that experience, I saw the bad behavior that has earned some venture capitalists a poor name amongst founders. So, when I built Wonder Ventures, I set out to systematically do things differently and always ask, “what will create the best experience for founders?” Obviously, I can’t fund everyone’s company. We will see close to 1,000 companies in LA this year and invest in only 7. But Wonder Ventures aims to give founders the best possible experience in every interaction (even when we pass). It is our core guiding principle and we instill it in everything we do.

For example, our “No Ghosting Rule.” We always get back to founders with concrete next steps, within one week of taking a call or meeting. We never say, “Great, nice talking to you. We will get back to you soon.” And then never follow up. These founders have given us an hour of their precious time, so the least we can do is honor that with a timely response. Always.

Why LA?

LA is not an echo chamber of like-minded thinkers. It’s a city filled with diversity. Diversity that’s not just about demographics, but a diversity of ideas, culture, food (RIP Jonathan Gold, come visit and try his 101 Best LA Restaurants) and professions. At Wonder Ventures, we pride ourselves on investing in businesses that bring diverse ideas to life. Like Joymode, led by Joe Fernandez, who is changing the way people think about ownership, offering a subscription service for everything from popcorn machines to carpet steamers. Or Shippabo, whose founder Nina Luu used her 10+ years of experience importing goods (via LA’s two ports that represent almost half of all US imports) to build software for companies to manage their ocean freight and global supply chain. Or WeRecover, whose founders Stephen & Max were inspired by a family member’s experience to build a marketplace that brings transparency and access to addiction recovery centers in the face of America’s worsening Opioid Epidemic.

Wonder Ventures Going Forward

While our mission is clear, we know we can always do better. Please reach out with ideas for how to reinvent venture capital and how to better discover and fund more talented and diverse founders and companies.

Lastly, I am pleased to announce that I have added Abha Nath to the Wonder Ventures team. We doubled in size! Abha has brought an insightful perspective on discovering new founders and is doing great work growing the Wonder Ventures platform here in LA. Please give her a follow on twitter.

Come visit LA, come work in LA, come build your company here and come be a part of an ever-growing and unique ecosystem. We aspire for Wonder Ventures to be a long-lasting part of this community and to support the very best founders as they take on the daunting challenge of building a company from day one. We created Wonder Ventures to support the founders of LA.

- Dustin Rosen (Founder & Managing Partner, Wonder Ventures)