Venture

Former Twitter CEO And COO Are Starting A $200M VC Fund

As first reported by Axios, former Twitter CEO Dick Costolo and former Twitter COO Adam Bain have started an advisory and investment firm: 01 Advisors.

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According to a public SEC filing, the duo has already raised $134.7 million for their inaugural fund, which is aiming for a total of $200 million.

It appears that the two former Twitter executives have leveraged their old job titles to give advice and capital to entrepreneurs. In between both of Jack Dorsey’s stints as CEO of the San Francisco social media company, Costolo ran the shop at Twitter amidst user growth struggles. He stepped down in June 2015, consulted for HBO’s Silicon Valley program, started a fitness startup and shut it down, and now works as a partner at Index Ventures, according to LinkedIn.

Then there’s former COO Bain, who was credited with building and launching Twitter’s advertising business. In fact, as the New York Times then reported, Bain was even eyed to be CEO before Dorsey swept in for his second tenure. After Bain left in 2016, the former COO has been advising and investing in startups like OpenDoor, TripActions, Reddit, and sneaker marketplace GOAT.

Costolo and Twitter did not immediately respond for comment. Bain declined to comment citing quiet-period restrictions.

Monetizing upon your previous experience at a quickly growing startup, especially a startup with the global expanse of Twitter, is smart and somewhat common. For example, Wave Capital was launched by a trio, two of whom were ex-Airbnb employees. The fund even went as far to say that it would only invest in startups started by ex-Airbnb employees. Wave Capital has since pivoted to invest in marketplace startups more generally.

The ex-Twitter executive duo are moving their consulting efforts into a formalized effort with this new fund. The Axios story parallels 01 Advisors to Tusk Ventures, a venture capital firm led by Bradley Tusk that invests in startups in regulated industries. Tusk started off as a consulting shop for larger companies before it began to work with startups in return for equity. Then, Tusk launched a venture capital fund to invest in startups more directly.

Another example of executives going from consulting to investing is New York-based Bullish. Mike Duda and Brent Vartan started a venture capital firm after taking on clients who needed advertising help.

We’ve been tracking the transition of venture capital firms from ATMs to advice giving and service-providing machines. This news is an example of another venture firm coming into existence with more than just capital as their offer: the duo will likely bring their experience at Twitter to the startups that they bet on.

Illustration: Li-Anne Dias.

Editor’s note: This article has been updated with a comment from Adam Bain.