Community-Led Capital Deployment

I had a great chat today with someone with a new venture capital fund. In six months, its founders went from inception to raising a $30 million fund. I was curious how they accomplished this in such a short time. I’ve talked with a number of emerging funds managers, and it usually takes eighteen months or more to raise a fund. And first funds are often less than $30 million. I learned that their journey hadn’t started six months ago with the fund idea. Rather, it started a few years ago with a community.

The founders started by creating a nonprofit organization focused on highlighting the contributions of people in their community. They wanted to create a place where ambitious people could connect with others like them and highlight each other’s successes. Their grassroots efforts led to a network of highly successful people in various industries, corporate partners, early entrepreneurs, and a host of other supporters. After a few years, they realized there were high-potential early founders in their community whom they wanted to support.

They created initiatives to support these founders, but they knew funding was key. Instead of sending the early founders to traditional venture capital firms, they decided to raise their own fund. The idea was for capital to meet founders where they already were . . . in their community. Founders don’t have to learn to penetrate the traditional VC network because people in the community who understand the founders write the checks.

I like how these founders built a mission-focused community that also attracted talented founders. I think this is a great example of doing early-stage investing differently. Capital is finding its way to founders outside the purview of traditional venture capital networks. Interestingly, their work caught the attention of established VC firms, which ended up investing in their fund.