Founder Collective, Seed-Stage Fund, Betting on Surging NYC Tech Startup Scene

4/7/11

New York is famous in the business world for its large companies in a variety of industries. For the partners at the seed-stage venture fund Founder Collective, however, the focus is on the small tech startups in the city and beyond that have the potential to rapidly grow in value.

In fact, managing partners David Frankel and Eric Paley, among other partners of the fund, formed Founder Collective in 2009 as a continuation of their success in backing each others’ startups and other young companies for several years. And while the firm’s $50 million fund might seem small to the bigwigs on Wall Street, we’re living in a world where tech upstarts are launching products and gaining real customers on budgets of less than $1 million.

Founder Collective, with offices in Cambridge, MA, and New York City, has made more than 50 investments in tech startups around the country, and its partners have made bets on 20 or so firms in New York, according to Paley and Frankel. Though Frankel and Paley have been involved in firms outside of tech, their fund focuses on software and Web startups that make efficient use of capital and for which relatively small investments can carry the companies to major jumps in value. (So, obviously, this excludes capital-intensive businesses like drug developers.)

While Frankel and Paley both keep homes in the Boston area, they have partners in New York, like Hunch co-founder and CEO Chris Dixon, who spend most of their time in operational roles at startups. (Hunch, a New York City-based startup, says that it personalizes the Internet by helping people find recommendations on all sorts of topics.) Frankel and Paley, who are the only partners who are full-time dedicated to Founder Collective, each serve on multiple boards of directors in New York, giving them a close view of what is happening on the ground in the city’s startup scene.

“There’s been, and I think Chris (Dixon) has been very involved in this, a renaissance in … Next Page »

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