Although the adventures of Chris Dixon in the world of venture capitalism might make an interesting read by themselves, the newest feather in Dixon’s cap is what caught my attention.
Dixon has founded 2 successful Internet companies in New York over the last 4 years. Dissatisfied with the venture capital market, however, he has now teamed up with friends and fellow angel investors, Eric Paley and David Frankel, to create Founder Collective, which aims to fund startup tech firms.
Dixon says that he wants to do what he wished was available when he started out as an entrepreneur. The tech segment, he believes, is highly under-funded, an oversight that Dixon hopes to correct. Unlike firms filled with VCs with zero real-life operational experience, this new venture among capitalists is run by people who have themselves been entrepreneurs and know exactly what is needed by startups.
The problem, as Founder Collective sees it, is that there has been a trend towards bigger and bigger funds over the past decade. This has consequently led to multimillion dollar funds that need to make huge investments. This, in turn, means that VCs can focus only on the more well-established companies.
What Dixon and his friends decided to do, as a result, was to raise a small fund of US$40 million that would focus on technology startups. Based in Cambridge, Founder Collective has 2 full-time managing directors — Paley and Frankel. Dixon and his other partners, Mark Gerson, Zach Klein, Bill Trenchard and Micah Rosenbloom, will continue as the CEOs of their own firms and come in as sponsors on specific deals.
Founder Collective aims to specifically focus on seed-stage funding. This means that rigorous checks on the entrepreneur will be crucial, although Dixon acknowledges that one really cannot predict the future after all.
What holds all the partners together is their common interest in companies at the early stages. The phase of team building, product development, and financing can be the most exciting time in the life of a company. Oh well, some people bungee jump…whatever gets the adrenalin going.
“We get to work with energetic, passionate, thoughtful young entrepreneurs, who just need a little guidance,” Dixon says. “We all enjoy the process of building companies ourselves — or helping other people to do it.”
Founder Collective has so far made 9 investments between US$50,000 and US$700,000, including New York-based Hot Potato and art gallery and website 20×200.
* For series, references are published in the last installment of the series.
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