Foundation Capital, a Palo Alto-based venture capital firm, has brought on another partner this week. The Silicon Valley venture shop hired Angus Davis, a former founder who sold one company to Microsoft, who joins the company from his perch in Rhode Island, a small state that you can find on a map here.1
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Rhode Island is the nation’s smallest state. It’s also the state I’m in the process of adopting as my own. Davis’s founder track record makes his hire interesting. That track record combined with his new locational base makes it all the more curious. Let’s explore.
Foundation Capital, founded in 1995 according to Crunchbase, has raised nine main funds including a $350 million Fund IX in September of this year. So, the firm is newly-capitalized. (Foundation’s preceding fund, Fund VIII, was a $325 million capital pool announced in late 2015.)
According to investment data, Foundation invests mostly in companies that fall into the software, enterprise software, SaaS, and analytics buckets. Or, the venture group puts most of its capital into companies that are likely to generate the highest-tier of gross margins. It’s not a bad bet, as we’ve seen from record revenue multiples given to companies in those spaces.
Davis’s background fits the thesis. His first company, TellMe, became a “SaaS business with over $100 million in annual revenue” in his own words. The company sold to Microsoft for a little under $1 billion. The new venture capitalist’s second company, Upserve, wound up entering into a “strategic investment and partnership” with Vista Equity Partners, a big private equity shop famous for buying software companies, cutting costs, boosting revenues, and later exiting.
That deal, announced in 2017, freed up some of Davis’s time. But he didn’t want to move much. Upserve is based in Providence, Rhode Island, not far from where Davis lives. And now, as part of Foundation Capital, Davis will stay in the Ocean State and take part in the firm’s investment cadence from an East Coast base, sitting as he does in between Boston and New York.
To get a handle on what Davis is up to, becoming a somewhat uncommon venture capitalist based in Rhode Island, I got him on the phone last week to dig in.
Up top Davis expects to spend “a fair amount of time in” New York City. So while he’ll be based in the southern bit of Lil Rhody, he’ll wind up in the main East Coast startup hubs regularly.
But not every day. In our conversation Davis referred to himself as the first “Zoom-based” venture capitalist, which can’t be true but makes a good point; namely that in the remote era, why can’t some investing professionals lunch in places other than Mourad and the Rosewood?
With an eye on what’s going on around American’s right coast and his firm based on its left, Davis hopes to be “informed” by both the Bay Area’s happening and the East Coast’s perspective, he told Crunchbase News.
Regarding where he may invest, SaaS was an unsurprising theme. In our conversation, Davis discussed vertical SaaS as an attractive area of investment, along with SaaS companies that “enable commerce.” Regarding the latter, think about companies that have dual business models, fusing regular software incomes with other revenues, ala Shopify. (We also riffed on the market potential of low-ACV SaaS companies, especially those focused on selling to SMBs; there’s potential there if more folks wanted to take on the challenge. But we digress.)
Foundation Capital’s Fund IX is a return to form of sorts. As TechCrunch reported when it was raised, “the once-small firm closed its sixth fund with $750 million in capital commitments in 2008 before it was forced to scale back dramatically, closing its seventh fund with $282 million in 2013.” It’s a firm on the rebound, then.
Let’s see what Davis can get done in the next few months before we chase him down and make him tell us how it’s all going.
Illustration: Li-Anne Dias.
I’m not being rude, the first time I flew to Rhode Island as an adult a few years ago I didn’t know where it was either.↩