Where Do Deals Come From, 2021
Here we go, Chapter 7 (Prior years can be found here). This is getting a little harder as we are investing earlier than ever (pre-seed), and companies are staying in ‘stealth’ for longer periods of time. But will still do my best to share the behind-the-scenes stories of each deal, alongside some higher level insights.
The first key insight is that we have really evolved as a firm in terms of process and dealflow. In our early years, we were reliant on being reactive, getting mostly inbound or referred dealflow from other founders and investors, with little intention. Over the last couple of years, we have doubled down on our thematic, research-driven approach, via our Field Study program. As a reminder, this is where we identify a catalyst or rapidly accelerating trend that aligns with our interest, and form an internal pod to 1) go deep into the space, 2) gather expertise, 3) form opinions and frameworks, and 4) publish/share with the market. This creates recurring inbound dealflow in the sectors we are ready to move aggressively on.
Some of the 2021 Field Studies included:
Metaverse and Virtual Real Estate
While the below will be categorized by the actual source of the deal, an * indicates it related to a Field Study.
Stealth Creator Tools Co (VC Intro)
The founder of this stealth co was introduced to Alpaca’s Senior Associate, Eric Schoenbach, by another VC, while he was working on a previous idea. While this wasn’t the right fit for us at the time, Eric stayed in touch with the founder, who ultimately pivoted into its current iteration, which we were excited to back. Moral of the story: stay in touch, and continue to help the best founders.
Acelab (Personal Network*)
Alpaca had previously executed a Field Study in Construction Material Marketplaces, and as part of the research/marketing, our team’s Daniel Fetner spoke at the Harvard Real Estate Conference. It was there that he was introduced to the Acelab founders, both architects themselves.
MoneyMade (VC Intro)
We were introduced to Richard McBeath, CEO of MoneyMade, by Pascal Unger, Partner at Darling Ventures. Pascal had just moved to Miami and reached out to get more familiar with the ecosystem. Thankfully, we shared some dealflow with one another, and MoneyMade’s Alternative Investment Discovery Platform was on-thesis for us.
Rare Circles (VC Intro*)
Just a few days after publishing our Web3/NFT Field Study, Matt Scott of AVG shared info, and ultimately an intro, to Ethan Song at Rare Circles, knowing we were looking at B2B crypto onramps.
Inveterate (Personal Relationship)
Our General Partner Aubrie Pagano knew Dylan Whitman, CEO of Inveterate, from both of their prior lives in Brand/Ecomm/Agency life, when Aubrie was building Bow & Drape, and Dylan ran BVA.
Stealth Sustainability Co (LP Referral*)
Alpaca’s PropTech team previously executed a Field Study on the Intersection of FinTech and ConstructionTech. When discussing our takeaways with a family office, we were introduced to an experienced operator who was thinking about building his next thing in this space. We worked with the founder on a couple of iterations, before ultimately landing on something excited that we can’t yet share.
Metaball (Incubation*)
David’s previously mentioned Web3/NFT Field Study led us to build a great interest in the gaming space. We didn’t think current offerings in the market were the right combination of team, product, timing, etc, so ultimately found an entrepreneur to build something more aligned with our vision. More to be announced here soon…
Sandbox (Direct Outreach*)
As a follow up to the Web3/NFT Field Study, we then went even deeper on Metaverses and Virtual Real Estate. It became clear to us that Sandbox was the leader, so our team reached out directly to Sebastien Borget, shared our views (and value-add) in the space, and won an allocation to this Metaverse rocket-ship.
Fetch (VC Referral*)
This deal, done out of our Built World Fund, sat at the intersection of two different themes/Field Studies. Our team’s Ryan Freedman and Daniel Fetner had done one on Residential Property Management, while Aubrie Pagano had separately gone deep into Ecomm Logistics, and specifically returns. Because of that focus, we were sent Fetch by GreenPoint Partners.
Takeaways:
- Deals are happening early and earlier in their lifecycles. Most of the deals above would be considered pre-seed, and none had any meaningful revenue at investment (other than the later stage deals). People and Markets over Traction.
- Thesis-Driven investing is a differentiator, as evidenced by 6 of our 9 2021 deals emanating from a Field Study. Being clear to the market (founders, other VCs) is a key part to keeping the dealflow flywheel running.
- Incubating companies is really hard, but a valuable weapon in a VC’s arsenal if they can do it right.
Want to appear on this list next year? Reach out to me at David@alpaca.vc
