Founder Friendly Capital
ff Venture Capital partners with startups that can be the low cost, disruptive player in their respective industry. With the right management team and adequate financing, our companies can grow to become tomorrow's leaders. Our goal is to build great companies and generate significant returns for our partners: management teams and investors alike.
We are generalists, not specialists, preferring to invest in growth where we find it and to not box ourselves into the theme du jour, where the rest of the crowd is flocking. This flexibility is part of our success at generating industry leading returns. However, we invest only in areas we understand and know.
Since 1999, our partners have made over 150 investments in over 55 companies, and from the beginning we have been highly focused on generating industry leading returns. Among our most successful seed investments that have reached maturity are Cornerstone OnDemand (which raised $137m in a March 2011 IPO, ticker CSOD) and Quigo Technologies (sold to AOL for a reported $340m in 2007). We have a large crop of exciting high growth companies in our portfolios, and we expect to have similar exits as these companies mature and grow.
Just The Right Size
By deliberately running relatively small funds, we are able to better align everyone's interests and be one of a handful of professional investors in smaller, angel-sized rounds. We work hard with our CEOs, as their testimonials show, to help them get to the next level. We also continue to invest in and support our companies in later rounds as they execute their long-term plans.
Our primary focus is helping early stage companies deploy lightweight disruptive business models to become the low cost player in their respective market. We bring traditional financial institution best practices to the angel investing space.
We provide acceleration services, not just advice.
We provide hands-on support through our in-house operating team, plus a proprietary network of outside executives who work with portfolio companies on an as-needed basis. This is common in growth equity investing, but much less common in early-stage investing. Our partners are experienced operators; we have founded a range of businesses both as stand-alone startups and on the Goldman Sachs platform. We've invested extensive time and effort in identifying best practices for many of the disciplines necessary to grow a startup; see some of our conference presentations for examples.
We reserve capital to make follow-on investments in our companies as they grow.
Most angel investors do not have the financial resources to provide support to their companies as they grow. As an institution, we do. We were amongst the first outside investors in Cornerstone OnDemand in 2002, and we then invested in all 8 subsequent rounds until it went public in March 2011.
We avoid investing in competitive businesses.
Our goal is to make each of our portfolio companies a winner. If one is struggling — and it’s inevitable that some will — we continue to devote significant time and attention to helping the company. We can’t do that with a whole heart if one company is directly competitive with another.
We are generalists.
The conventional view is that you add more value by specializing: investing in just one theme. We fundamentally disagree. Our view is that by being generalists we can offer best practice from one company to another, have companies that can positively help other portfolio companies, and have a better chance of seeing the wood for the trees. Our perspective would differ if were a late-stage investor, but we find that early-stage companies face many similar challenges regardless of their industry and business model. In addition, we think that saying we are specialists in "Industry X" is dangerously limiting. Our mission is to invest in sectors that will boom 3 years from now, and we need to listen constantly to entrepreneurs meeting with us, to identify those new sectors.
We invest through our fund or not at all.
We prohibit all personal investing by our partners and employees in early-stage companies. This maximizes returns for our investors, and avoids signaling problems and potential conflicts in our portfolio companies. Surprisingly, many traditional VC funds permit this behavior.
We are investors alongside both you and our limited partners.
Our general partners have personally invested more than 10% of our assets under management, which is a far higher percentage than most venture capitalists. We care deeply about our portfolio companies' success because it's our own money in them, not just "other peoples' money."
We are willing to say no to entrepreneurs (along with feedback).
Entrepreneurs are used to VCs saying, “I would invest but my partners didn't like your business.” “We'll invest as soon as you identify a lead.” “We'll invest once you show a little more traction.” These are almost always euphemisms for “no”, so that the VC has the flexibility of saying “yes” if they change their mind. We don’t think you or we have time for these games. A straight “no” saves everyone time. We hope that some of the feedback we give you will help you evolve the company in a direction that will make it more attractive to other investors as well as ff.
Our partners are experienced entrepreneurs who work closely with our portfolio. We have founded and built a range of businesses both as stand-alone startups and on the Goldman Sachs platform. We offer a wide array of services to support our portfolio companies:
Our dedicated finance and accounting team provides a range of financial services to portfolio companies at cost, including: accounts payable/expenses tracking; accounts receivable/revenue tracking; payroll; general ledger; management reporting; and annual tax and financial reporting. In addition to relieving our companies of a time-consuming burden, this also gives us deep insight into their status and an improved ability to help them plan for the future. We have yet to meet an entrepreneur who is excited to run the accounting for his or her business.
Our proprietary network of mentors and consultants work with portfolio companies on an as-needed basis, as unpaid mentors, consultants, board members, and interim executives.
Continuous process improvement
See our conference presentations and classes and blogs for practical advice on how to build your company. We have invested extensive time, effort and money in identifying best practices for the disciplines necessary to grow a startup, including market research, product development, branding, legal strategy, partner and supplier relationships, PR, hiring and firing, finance, sales and marketing, and fundraising. We periodically hold private workshops for portfolio companies on these topics, led by our team and sometimes outside experts. We also suggest review our curated links on entrepreneurship in general, building an internet startup, selecting a VC, and the New York innovation community.
We have strong relationships with later-stage venture capitalists who will be important financing partners for you in future funding rounds. We often assist in strategy, negotiation, and execution of future financing.
We have partnered with over 20 (and growing) service providers specializing in the startup community, including providers of legal advice, development services, testing, infrastructure, public relations, and recruiting. These companies have agreed to provide discounted services to ff portfolio companies. Portfolio companies can also use our 5,000 square foot "fitness office" as permanent or temporary office space.
Our entrepreneur community
Through our proprietary online community and our periodic idea dinners, our portfolio CEOs can tap one another for answers to difficult questions. The people who know the most about building great companies are our portfolio CEOs.
Access to leading universities
Our portfolio companies leverage our relationships with leading universities for interns, employees, research projects, and marketing.
- Founder of 3 startups, CEO of 4, raised capital for 3, sold 2.
- Lead first research study on best practices in how private equity and venture capital funds identify private companies for investment, published in Journal of Private Equity, Harvard Business Review, Institutional Investor. Wrote book on how investors and senior executives use social media.
- Three times rated #1 speaker at a conference. Professional (paid) keynote speaker: Franklin Templeton; Harvey & Co.; Vistage; ACG Intergrowth; Alliance of M&A Advisors; Thomson Reuters; various institutional investors and large investment banks.
- Bear Stearns investment banking. Mars & co strategy consulting. Harvard MBA, Yale BA, both with honors.
venture capital, social media, Web 2.0, investment banking, investment research, deal origination, due diligence, sales, investing, hedge funds, mutual funds, private equity
June 2011 – Present (1 year) New York, NY
Since 1999, ff Venture Capital has made over 100 investments in over 35 companies, and from the beginning we have been highly focused on generating industry leading returns. Among our most successful seed investments that have reached maturity are Cornerstone OnDemand (which raised $137m in a March 2011 IPO, ticker CSOD) and Quigo Technologies (sold to AOL for a reported $340m in 2007).
I'm also a mentor with Founder Institute (New York and Singapore), Entrepreneurs Roundtable Accelerator, Dreamit Ventures, and NYC Seed. I was a Faculty Fellow for the launch of the Levin Institute's JumpstartNYC.
David has 1 recommendation (1 report) including:
- 3rd Max S., Intern Analyst, ff Venture Capital
December 2010 – Present (1 year 6 months) New York, NY
If you'd like to request funding from Harvard Business School Angels, please apply via hbscny.org/angels ; please do not contact me directly.
We are the local affiliate of the HBS Angels Alumni Association (hbsangels.net), and a close partner of the HBS Club of Greater New York.
Privately Held; 1-10 employees; Financial Services industry
July 2010 – Present (1 year 11 months)
We are a data mining and research analytics company. We particularly help institutional investors to identify proprietary investments in illiquid assets. Our process is modeled on the algorithmic, data-driven process used by quantitative hedge funds.
Some of what we've done:
- Built proprietary data and analytics platform for investigating private companies.
- Lead author, first-ever study on private equity and venture capital funds' best practices in sourcing private company investments. Published in Journal of Private Equity, Harvard Business Review, and Institutional Investor.
- Consulted to private equity funds on methods to improve deal origination processes: Birch Hill Equity Partners, LLR Partners, Duane Street Capital, etc.
- Advised $60m aviation distribution company and $8m medical transcription company on sales to financial sponsor.
Privately Held; 1001-5000 employees; Research industry
February 2007 – September 2008 (1 year 8 months)
Evalueserve is an offshore research and analytics firm which has grown from 0 to 2,500+ employees since 2000. Over 1,100 clients, including 6 of the 10 largest investment banks and 10 of top 15 strategy consulting firms.
- Co-run Circle of Experts subsidiary, which I founded and sold to Evalueserve in February 2007.
- Lead Circle of Experts sales across 65+ salespeople firmwide. Developed and taught sales training unit. Ranked #1 in company in referring leads to colleagues: 400+ leads in 20 months, identified primarily using online networks.
- Launched and sold service to help private equity firms build close, proprietary networks of senior executives to serve as board representatives and interim executives.
- Lead technology function: relaunched website, extranets, intranet, and blog.
- Won "2008 Top Pick for Asia/Emerging Market Expert Network" from Integrity Research, one year after merger.
April 2003 – February 2007 (3 years 11 months)
Research firm providing hedge funds, private equity funds, venture capitalists, investment banks, and law firms with investment research leveraging a network of frontline industry experts. Led negotiation to sell to Evalueserve.
- Lead salesperson. Personally signed some of the top 10 investment banks, top 10 hedge funds, and top 20 private equity funds.
- Designed proprietary speed-recruiting process to recruit experts for clients typically in 1-3 days.
- Developed, taught proprietary elicitation training: how to motivate sources to share information with investors. Based on tools used by intelligence officers, psychiatrists, and journalists.
- Covered in Wall Street Journal (page 1), BusinessWeek, Investor's Business Daily, etc.
- As marketing and recruiting for Nitron, delivered speeches to IRC Alternative Investment Summit; World Hedge Funds Summit; MIT CIO Symposium; NYU; Wharton; Yale; etc.
David has 4 recommendations (3 reports, 1 co-worker) including:
January 2003 – December 2005 (3 years)
The Virtual Handshake: Opening Doors and Closing Deals Online is the first business book about how investors and senior executives can and should use Web 2.0 technologies to win clients, raise capital, close deals, and recruit employees. Published by American Management Association. Reviewed in Harvard Business School Working Knowledge, BusinessWeek, Kirkus Reviews, and mentioned in over 250 blog posts. Excerpted in CNN.com. More details at TheVirtualHandshake.com
David has 3 recommendations (1 co-worker, 2 clients) including:
September 2001 – June 2004 (2 years 10 months)
Focus on private equity, investment banking, strategy consulting.
- Personally sold leading clients, including senior executives at American Real Estate Partners (NYSE: ACP), Carl Icahn Associates, IDT Entertainment, Net2Phone, OfficeTiger, Zacks, etc.
- Signed outsourcing partnership with Accolo in 2004. Sold Teten Recruiting to Accolo in 2006, and joined Accolo's Advisory Board. (See above for more on Accolo.)
August 1999 – September 2001 (2 years 2 months)
First investment bank for the internet domain name asset class.
- Built 5 revenue streams: internet domain name sales, leasing, valuation/transaction advisory, domain name registrations, and internet advertising. Over 450 clients worldwide.
- Recruited team of 54 professionals (at peak), natives of 19 countries and alumni of 18 leading banks (Goldman Sachs, Credit Suisse, Salomon, Merrill Lynch, Deutsche Bank)
- Raised $2.25m from venture capitalists and angels. Signed $10m fundraising agreement with Credit Suisse in June 2000 at $25m pre-money valuation (unconsummated due to market).
- Candidate for Board of ICANN (Asia/Australia/Pacific seat). Endorsed by Afternic.
David has 2 recommendations (1 report, 1 co-worker) including:
Public Company; 10,001+ employees; BSC; Financial Services industry
August 1994 – July 1996 (2 years)
Financial Analyst. Investment banking for technology/defense/aerospace industry. This 14-person team ranked #1 in defense/aerospace M&A in 1994-1996. Sole Banking representative on team organizing annual Technology Conferences, with Equity Research. Selected transactions:
- Sybase: $943m acquisition of Powersoft Corporation (2nd-largest software acquisition ever).
- McAfee Associates: $41m acquisition of Saber Software Corporation.
- VLSI Technology: $99m secondary stock offering. $58m underwritten call of convertible subordinated debentures. Wrote book for credit rating agency arguing for ratings upgrade.
- Honeywell: $280m acquisition of Duracraft.
- UUNET Technologies: $76m IPO. ICon CMT: $10m equity private placement.
Privately Held; 10,001+ employees; Food Production industry
May 1993 – July 1994 (1 year 3 months)
Associate Consultant. French strategy consulting firm. Spin-off of Boston Consulting Group.
- For two major beverage firms, modeled financials, pricing, distribution, volume, and taxes.
December 1990 – May 1992 (1 year 6 months)
Won 35 clients for new computer consulting group.
- Managed 110 consultants. Co-developed and taught computer consulting workshops
1997 – 1998
2nd year Honors.
1988 – 1993
Distinction in Psychology. McLaughlin Essay Prize. State Farm Fellowship.