Founder Collective Closes Third Fund: $75M to Back Early-Stage Startups
Founder Collective has reloaded its stock of dry powder to fuel young startups. The venture firm today announced it has raised $75 million for its third fund, roughly the same aggregate size as its second.
The firm was founded by a group of entrepreneurs in 2009, and launched with a $40 million seed-stage fund.
Founder Collective is worth highlighting for a few reasons. While many venture funds in recent years have chosen to focus on specific sectors—healthcare, fintech, cloud software, and so on—Founder Collective will invest in just about any industry. It has backed the likes of Uber, BuzzFeed, PillPack, Cruise Automation, Venmo, and Formlabs.
Founder Collective sticks to investments at the seed and Series A stages, and says it aims to back companies that build their businesses efficiently and don’t take on more capital than they need to reach their goals. (Not sure Uber got the memo on that one.)
And unlike most venture capital funds, Founder Collective’s three managing partners—David Frankel, Eric Paley (pictured above), and Micah Rosenbloom—are the biggest investors in its newest fund. Founder Collective says that means it’s “structurally positioned to behave differently from the typical VC.”
“A classic complaint of investors in venture funds comes from VCs acting more as agents than as principals,” Founder Collective wrote in a Medium post announcing the third fund. “In most venture funds the VCs themselves represent a tiny amount of the capital in the fund and are at risk of acting like money managers. We are principals.”
It’s hard to quantify how well Founder Collective’s approach is working. The firm declined to share specific numbers on how its funds have performed. But its portfolio companies have had some notable exits. Among them: Cruise Automation was acquired by GM; Periscope was bought by Twitter; MakerBot was acquired by Stratasys; and The Trade Desk recently went public.
Frankel and Paley are based in Founder Collective’s office in Cambridge, MA. Rosenbloom previously ran its New York office, but recently moved to San Francisco to open an office there.
Founder Collective is one of several Boston-area venture firms that have recently closed new funds or announced fundraising plans. Some others focused on tech investments include Spark Capital, Pillar, Underscore.VC, Glasswing Ventures, and Romulus Capital.