Every person should have the opportunity to make a positive impact on the world.
Today, we are excited to share the public launch of The Venture Collective (TVC) — a new model for funding and supporting early stage startups.
Our mission is to:
- Create a step-change in the number of founders who succeed from ideation to raising venture capital (aka traversing the “The Valley of Death”); and
- Provide far greater access and support to entrepreneurs who have the talent and ambition to succeed, but can never raise the capital they need because they aren’t in “the network”.
We believe this will expand the venture capital market and enable the creation of more category defining companies that change the world for the better.
How will we do this? We are innovating on the traditional venture model.
Incorporation through Series A is where the greatest number of high-potential companies fail to succeed. It is also the crucial period in a founder’s journey when they need the most strategic and operational support, but don’t have the necessary resources internally.
While most early stage venture firms aspire to provide critical resources beyond capital, they are typically constrained with the support they can provide across their entire portfolio, having to be very selective with which companies they choose to spend their time on. This challenge stems from fixed management fees on relatively modest fund sizes combined with an associated reliance on just a few success stories to “return the fund.”
TVC is different. We are not a fund. Instead, we’re a balance sheet investor, with no fund maturity date, and therefore less reliance on outliers. In parallel to making our own pre-seed investments directly from our management company, we are building a curated community of co-investors, from world-class entrepreneurs to high caliber operators to Family Offices. This community not only provides us with a valuable network for our portfolio, but also a revenue stream that allows us to sustain increased levels of active support across a growing list of investments, as well as access to strategic, long-term follow on capital as our companies grow.
Our model ensures that we never have to compromise on the level of support we give to a portfolio company.
“Value-add” is core to our DNA, not just a marketing pitch. As former founders and operators ourselves, we understand that success is rarely a straight line and that different founders have varying strengths and weaknesses that are specific to their journey. With each investment, we endeavor to make an impact far beyond the size of our initial check.
We commit, alongside our investment documentation, to a written set of personalized initiatives that we can solve together with our founders, leveraging the collective expertise of our team and community to remove the obstacles that traditionally inhibit their success. With our approach, at least two-thirds of the investment team’s time will be dedicated to working closely with the exceptional founders and early teams we are fortunate enough to back.
TVC has an unwavering belief that someone’s background or upbringing should not inhibit their chances of success.
Venture capital has traditionally been an opaque and network-driven industry, with less than 3% of investment going to female founders, and less than 23% of VC-backed founders ethnically diverse. This is despite clear evidence that diverse leadership teams boost innovation and financial performance.
“Investing in diverse teams is more than just morally and socially necessary — it makes financial sense. Our data show that diverse founding teams who reach an exit by acquisition or IPO return 30% more capital to their investors, compared to their all-White peers.” — Kauffman Fellows & MaC Venture Capital Research, February 2020
Many firms have made positive changes here, but much more needs to be done by all. Those born without access to capital and opportunity do not just appear on a venture capital firm’s radar solely as a result of the firm adding a diverse Partner. The hours need to be dedicated to expanding horizons, broadening networks and, equally as important, actively driving the chances of success post-investment.
If the purpose of venture capital is to create outsized returns by investing with conviction in areas and opportunities that others are overlooking, then equal representation of founders from all backgrounds may be the single greatest way to financially outperform in what is a highly competitive and homogenized venture market.
We will go far and wide in our mission to find and back anyone with the will and determination to succeed. This will help unlock the untapped innovation and change that this world needs.
There will be more to follow on the team, our community (The Collective), and the TVC approach in the coming months, but if you are itching to learn more, reach out to anyone on the team directly or drop us a line at email@example.com.