We are pleased to formally announce Refactor Capital — a $50M venture capital firm, focused on investing in founders solving fundamental human problems. These problems generally involve basic needs and large complex industries that have been resistant to change: agriculture, health, and finance to name a few. Until recently, it’s been virtually impossible to apply a lean startup method to these areas. We believe times have changed.
We started Refactor Capital because we noticed that more and more exceptional founders were starting companies in these hard industries and needing smaller amounts of capital to make meaningful progress. They’re solving the same basic problems as their predecessors — healing the world, feeding the world, connecting the world, and so forth — but using software to make ecosystems run more efficiently. In a sense, they are using software to refactor these massive industries. For those unaware, refactoring is the process of making systems more efficient, reliable, and transparent. And that is precisely the approach these founders are taking.
We think founders have different needs in these times. Luckily, we don’t have to reinvent the wheel; though it doesn’t seem like it today, people used to navigate the risk and uncertainty of the disruption of a large complex of industries. Growth hacks, virality, and app store placement may not be the coin of the realm for these startups. These companies need to have acumen for partnerships, familiarity with their regulatory and business environments, and a plan to generate progress quickly. We believe that these needs match very well with our backgrounds and experiences.
Zal spent 10+ years as a product manager at Google, Netflix, and LinkedIn. So he knows how to work with founders on pricing models and go-to-market approaches. Zal also spent a few years at Andreessen Horowitz on the investing team, understanding and working with companies in our areas such as Omada Health, Branch.co, and AltSchool. He quickly became a partner for many founders trying to navigate the key issues and challenges they faced. David, in his most recent role at SV Angel, worked with many founders in these hard but not impossible areas such as Flatiron Health, Climate Corporation, Benchling, and Clever (among others), providing general business advice around financings, partnerships, team building, and other matters.
In these areas, “zero-to-one” approaches will ultimately prove the most radical predictions to be conservative in hindsight. The companies we back will not be fighting over scraps with other innovators but will instead be among the first companies challenging the way things are done in these traditionally innovation-resistant areas. The way to get there might be different, but these areas are unexceptional in one important sense: we believe they will yield to progress just like all other industries before them.
Originally posted on the Refactor blog.