Unusual Ventures: Raising the Bar on Seed-Stage Investing

We’re thrilled to introduce Unusual Ventures, a new seed-stage venture capital firm created from first principles with one mission: to redefine seed investing and provide seed-stage entrepreneurs a distinct advantage as they go through that hardest leg of a startup journey — from the Idea to the First Million Dollars in Revenue.

We are also announcing the closing of our heavily oversubscribed first fund, which we deliberately capped at $160M.

The Idea to First Million Dollars in Revenue

In our experiences as entrepreneurs and as investors in many early-stage startups, we know that the hardest phase for any startup is the Idea to the First Million Dollars in revenue. This phase typically takes two to four years, and entrepreneurs have to go through many hard challenges during this journey — including building the founding teams, finding product market fit, early customer acquisition, competitive messaging & positioning, and pricing & packaging.

Founders typically go through a lot of personal learning and evolution during this time as they learn how to operate a business and how to be a leader. This is the time when they need the most help, support, and guidance from their investors, advisors, and mentors.

The Shifting Early-stage Venture Investing Landscape.

With the abundance of capital available, most of the traditional top-tier “first check” venture capital firms have raised billion dollar mega-funds. These firms have taken on a broad investment strategy of leading mega Series-A rounds of $15–20M to $100M+ pre-IPO rounds so that they can put those large funds to work.

As a result, they have left the “first check” rounds of $3–6M (what used to be called Series-A just a few years ago) to a plethora of “seed-stage” funds. Or in the case when these traditional Series-A firms do invest in seed-stage companies, they provide the capital but not the time, energy, and infrastructure the seed-stage entrepreneurs desperately need.

Spray and pray leads to swim or die. With megafunds focusing more on Series A and later rounds, we’ve witnessed an advent of seed stage focused funds and accelerator models. The vast majority of these are using volume based strategies, pouring money into a large volume of companies and hoping to catch the next big thing simply by playing a numbers game. The vast majority have not invested in a platform of services designed to help their portfolio companies succeed. Therefore, their portfolio companies are left to mostly fend for themselves and hope they figure out how to evolve from idea to a business with a product that can be sold repeatedly and has reached $1M of revenue.

This wasn’t true five years ago; the dysfunction brought about by the megafund model and the volume game is a relatively recent development. And we think it’s unacceptable. Going from the Idea to First Million of revenue is the hardest stage of company building; there’s so much that needs to go right and yet so much that can easily go wrong. Venture capital is a craft, not an industrial process. It makes terrible business sense to abandon entrepreneurs at the exact time when they need mentorship and guidance the most.

The Unusual Difference

With that in mind, we built Unusual Ventures by reconsidering everything about seed-stage investing, looking at it through our experiences as a long-time investor and as a serial entrepreneur. Unusual Ventures has created two fundamental innovations for seed stage Investing:

The Unusual Ventures Get Ahead Platform was designed specifically for seed-stage entrepreneurs to provide a new model of support for recruiting, customer development, and operational leverage. This is a product for entrepreneurs, developed by an entrepreneur.

– We provide founders with the operational resources they need to get their businesses up and running so that they can concentrate on what their core competencies are in terms of vision and building product. This includes technical hiring to help scale teams, sales development professionals to help spur customer interactions, and a package of business software to handle company infrastructure.

– The obstacles at the seed stage are the most difficult for any entrepreneur, but each company has unique requirements that require time and attention from an experienced investor partner. We built the Unusual Ventures Get Ahead Platform to provide real help to entrepreneurs to overcome the most difficult challenges at this phase.

The Unusual Ventures Academy is an innovation on the current accelerator model. Academy is a hands-on experiential learning program for our entrepreneurs where we leverage our experience and relationships with world class master practitioners to accelerate the learning curve for seed stage leaders.

– Initially the Unusual Ventures Academy will consist of two cohorts a year, each with eight companies.

– The leadership teams will have the opportunity to go through the innovative curriculum we designed specifically for seed stage entrepreneurs and the key challenges they face.

– Unusual Academy will provide access to accomplished practitioners, seminars that produce actionable items, and experiential leadership learning–all finely tuned for the needs of very early stage companies.

– The goal is to create a scalable model to accelerate the learning seed stage entrepreneurs need to succeed both tactically and to fulfill their potential as leaders.

– The academy includes access to world class entrepreneurs and executives.

Relationships Matter: An Unusual Opportunity

As founders, we are committed to building a firm that is uncompromising in its values — integrity, honesty, diversity, and humility — and to driving innovation in the traditional venture ecosystem.

As we started Unusual, we were in the fortunate position that we could reconsider the traditional Silicon Valley VC investor network. We thought about fundraising in a way where we could be consistent with our mission and in line with our values, and those of entrepreneurs, to make the impact we all want to make. We made a conscious choice to seek out the kinds of institutions who shared our values and who would benefit most from the financial returns that successful VC investing can provide.

Therefore, for our investors (our LPs), we enlisted mostly non-profits such as historically black colleges and universities, foundations, endowments, and health related institutions. Our investors are committed to us not just financially but also to work closely with Unusual to help us achieve our lofty diversity goals. We all believe a diverse team and a diverse LP set will produce better ideas and businesses.

Raising the Bar on Seed-stage Investing

Our mission is simple — we want to raise the bar on seed-stage investing and to serve the seed-stage entrepreneurs in the best possible way. We will strive to become the first choice for any seed-stage entrepreneur and the best seed-stage venture firm in the industry.

We are just beginning our journey today. And like any startup, we will learn and we will evolve as we go, but we will hold true to our mission above.

If you’re an “unusual” founder and would like a partner to work with you as you go through that Idea to First Million Dollar phase of your startup journey, reach us out here.

Tuesday 05.08.18