Grassroots VC Firm “The Fund” Aims To Invest In NYC’s Next Startup Founders

Many VCs and angels first cut their teeth as founders or early employees in startups, and that’s how the founding members of The Fund broke into startup investing.

Today, The Fund formally announces itself to the world. According to a statement provided by the group, “The Fund is a first-of-its-kind early-stage venture fund created by founders for founders​ to support the next generation of NYC entrepreneurs.”

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Many venture firms tout their connections to a local startup community, but few have directly emerged out of a community in the way The Fund did. It has raised $2.8 million from its limited partners – which the firm refers to as its “Members” – all of whom are either “founders or founding members of teams who have built and operated successful companies throughout New York,” according to the group.

The Fund’s investment committee consists of four members:

• Matthew Brimer, a co-founder of General Assembly (which sold to The Adecco Group in April for $413 million).
• Jenny Fielding, who currently serves as the managing director of TechStars’s NYC branch.
• Adam Carver, the former director of business development for AngelList.
• Katie Hunt, the third employee at Warby Parker who later served as Hinge’s chief brand officer.

Crunchbase News spoke with Matthew Brimer by phone. He was quick to highlight some of the more unique aspects of The Fund and its structure. Although it’s set up like a traditional venture firm, The Fund takes no management fee (though it does take the industry-standard twenty percent cut of profits), and has no full-time employees. If starting and supporting startups is a bit like a sport, Brimer said “the best way to stay in the game is to stay in the game,” which is why the firm’s general partners are keeping their day jobs as operators and advisors.

The Fund started in the summer of 2017, and it originally sought to raise $2 million from forty members. One year later, with $2.8 million closed, The Fund is oversubscribed by forty percent and has raised from over seventy limited partners, including SoundCloud founder Alexander Ljung, Casper co-founder Neil Parikh, and Meetup co-founder Scott Heiferman, among others.

Although many investors in The Fund have made angel investments in the past, most of its members are first-time limited partners in venture capital firms. Brimer said LP checks ranged from $25,000 to “a couple hundred thousand [dollars].”

The Fund has made ten disclosed investments to date. Its portfolio companies include:

• Paloma, which makes marketing software for messaging platforms like Facebook Messenger
• API testing platform API Fortress
• Carbon, which is developing a price-stable cryptocurrency
• Radiation treatment planning platform Radformation
• Wethos, which helps connect socially-conscious freelancers to “more meaningful” work

The Fund makes pre-seed and seed investments, and typically writes its first checks in the $50,000-$250,000 range. The firm has capital in reserve for follow-on investments in later rounds.

Brimer said The Fund “[hasn’t] been turned down in a deal we wanted to do” yet. He relayed a few examples of companies extending already oversubscribed rounds, or re-opening closed rounds, just to squeeze in capital from The Fund. Brimer wagers that it’s because founders of its portfolio companies “get seventy successful entrepreneurs to work with, all while taking up one line on their company’s cap table.”

Brimer said that many of The Fund’s LPs are active in the due diligence process, and many will provide support through connections and mentorship to portfolio companies in their particular sector.

As a community-oriented firm, The Fund also focuses on diversity. Forty percent of its portfolio companies have female founders, and its investment committee is split fifty-fifty between women and men. The Fund has also designated an unspecified portion of its assets to invest in “companies driving social or environmental impact [which] might be taking non-traditional financing paths.”

To some extent, The Fund has already validated two of its three underlying hypotheses, according to Brimer. It overshot its initial goal of getting New York’s successful founders and operators to reinvest in the ecosystem. And although it offers something of a unique proposition to prospective portfolio companies, it’s an investment model entrepreneurs seem to be interested in.

The remaining test will be to see how The Fund is able to flex its network to invest its capital over the next twelve to eighteen months and support those companies into the future.

Illustration: Li-Anne Dias