First Round - Six Years, Our Third Fund, and Looking Ahead
Six years ago this month, First Round Capital was started.
It started with a simple thought – that while the world had changed tremendously over the last 30 years, the venture capital industry had not . So we asked ourselves a simple question - what would a venture fund look like if the model was invented in 2005 rather than 1975? And over the last six years, we’ve learned several things:
- That a small fund size is good and brings alignment. Alignment between investors and entrepreneurs. Alignment between GPs and LPs. Alignment with the market’s current exit realities.
- That the advent of email, IM, skype and air travel has made the country (if not the world) flat. And while there are massive benefits to scaling/growing companies in a handful of ecosystems, there are amazingly talented entrepreneurs founding companies all over the country (like Eric and Susan Koger who founded Modcloth in Pittsburgh, like Garrett Camp who co-founded StumbleUpon in Calgary, and like Jimmy Wales who founded Wikia in Florida).
- That with the right level of investment, nurturing and tools, you can transform a portfolio of companies into a community of entrepreneurs.
- That the entrepreneur is the customer – that successful investors exist to serve entrepreneurs, and not vice versa.
- That you can’t take yourselves too seriously
Over the years, First Round Capital has evolved. We’ve become one of the most active seed-stage investors with the most visited VC website in the country. However, we have not changed our investment style or strategy. We still fund Powerpoints (though more Keynotes these days). We still fund pre-launch, pre-revenue ideas. And, despite our growth, we have not really increased our average initial investment size. We still make investments as low as $50K. Our average initial investment size is still under $500K -- and we have never made an initial investment larger than $1M. This week we successfully closed our third fund – First Round Capital III. And we decided to keep it at the same size as our prior fund. While it might be small by market standards, we think our fund size is ideally suited for our strategy.
Over the last several years, First Round Capital has also grown our geographic footprint. Our investment team has grown from Howard and myself working in Philadelphia to an 8 person investment team working out of three cities. Our San Francisco office, led by my partner Rob Hayes, continues to be our most active office – with over half of our portfolio based in California. Rob is joined by Kent Goldman and with Christine’s recent departure for Intel we are seeking to grow our west-coast presence by adding a SF-based Associate. (If you’re interested in the position, please reach out to Rob Hayes with why you think you might be a good fit).
Just last year we opened our New York City office. We did so because we continued to meet more and more amazing entrepreneurs from New York. Over the last three years around a third of our new investments have been based out of New York – and we currently have an amazing portfolio over 25 NY-based companies. Our New York office is led by my partners Howard Morgan and Chris Fralic. And today I’m excited to announce that Phin Barnes (who previously has worked out of our Philadelphia office) is swapping Amtrak for the L-train and is moving his family to New York. And that that Charlie O’Donnell is being promoted from an EIR role to Principal.
I continue to be based out of Philadelphia (along with my colleague, Scooter -- aka Brett Berson) but will continue the lifestyle of a redeye VC – dividing my time between Philadelphia (where my home is), San Francisco (where my true inner-geek lives), and New York (where the Shake Shack is). As we approach Thanksgiving, I realize that I have so much to be thankful for. I have the best job in the world. I get to work with an amazing group of people – and get to spend my time with an amazing group of entrepreneurs. I work with people who are trying to change the world.
And I can’t wait to see what the world looks like in another six years…