Floww – a data-driven marketplace designed to allow founders to pitch investors, with the whole investment relationship managed online – says it has raised $6.7M / £5M to date in Seed funding from angels and family offices. Investors include Ramon Mendes De Leon, Duncan Simpson Craib, Angus Davidson, Stephane Delacote and Pip Baker (Google’s Head of Fintech UK) and multiple Family Offices. The cash will be used to build out the platform designed to give startups access to over 500+ VCs, accelerators and angel networks.
The team consists of Martijn De Wever, founder and CEO of London based VC Force Over Mass; Lee …
Venture capital continues to get a founder makeover.
Two years ago, I profiled Spearhead, a new program and fund created by Jeff Fagnan at Accomplice and Naval Ravikant, the co-founder of AngelList, to mentor leading founders into becoming the next-generation of angel and seed investors. The premise is and remains simple: offer founders with great networks and hustle $1 million in capital to go out and start writing angel checks and build their own portfolio. Provide a bit of infrastructure and support to guide their decisions, but otherwise, empower founders to learn the craft of investing, and in the process, perhaps even improve their own fundraising prowess.
Well, a lot has changed in the early-stage world, both broadly and with Spearhead over the past nearly three years.
In the last few months (partly driven by AngelList’s push), rolling funds have erupted to completely transform the solo and first-time capitalist world. Rolling funds allow newly-minted VCs to raise smaller amounts of money over time rather than raising a whole fund first, which dramatically lowers the barriers to begin startup investing. How does Spearhead fit into such a world? That’s where the program’s new fund comes into play.
Spearhead announced today that it has raised $100 million for its fourth fund. The basic outline of the program remains the same, but what’s changed is what happens after the formal Spearhead program has finished. “Top-performing founders” will now get $5 million to stake a follow-on rolling fund, as determined by an LP committee. Half the fund is dedicated to follow-on investments, which means that $50 million will be invested in the pro-rata stakes of Spearhead investments. In an interview, Ravikant said “we’re scaling the dollars but we’re reducing the classes” and Fagnan chimed in saying “deeper, fewer bets.”
Applications for the fourth class of Spearhead founders are now open.
Jeff Fagnan and Naval Ravikant of Spearhead. Photo via Spearhead.
Spearhead isn’t built around formal lectures or material, but instead is designed to be an active community that helps train founders for two years and more to learn the art of investing. “We write down the guidelines on how to invest — the stuff that can be taught — on one sheet of paper,” Ravikant said. “And it’s pretty basic stuff … there’s no rocket science here. The work is in the actual day-to-day execution.” The real learning takes place around live deals where it’s all about the discussions between the partners and the other Spearhead participants and alumni.
“We’re an investor, we’re not running a scout program,” Ravikant said. “We are the first and most value-added limited partner in a new GPs career, and just like Y Combinator is sort of pulling these companies into existence, from school kids who otherwise would not have gotten the time of day, we are pulling these funds into existence by helping the founders who until now have been dabbling in angel investing and knew that down the road, they’d have to learn how to be a VC or an angel.”
As Spearhead has matured, the team has learned which founders have succeeded, and what their blind spots are. “The most successful founders in my mind that are Spearhead leads are people who did not consider themselves an angel investor before joining the program,” Fagnan said.
The challenge though has been, ironically for these people, ambition. “The main issue has just been investing too little,” Ravikant said. “They’ve been very timid starting out — as angels they’re used to writing 25 or 50K checks and the idea of writing a 100K or 200K or 500K check is very intimidating.” So, “the mistake so far has been just investing too little, but the quality of that is very very high.”
With Spearhead’s new follow-on financing, the duo hope that they can guide founders toward making bigger bets on riskier projects. They want founders not to have five successes across their five checks, but one mega-success and four failures. “What we’re trying to infuse in them is: we are risk capital and conviction capital [and] we really want them to be taking risks,” Fagnan said.
Unsurprisingly though, Ravikant is a long-term believer. “I personally now invest my own capital into every single Spearhead fund,” he said. “I think it’s basically one of the best deals in venture.”
In recent times startups have appeared offering credit at an e-commerce basket checkout so that a customer can buy a product without needing to pay right away. Klarna or Clearpay are the two most notable in this field. But what if you flipped the model around so that consumers could buy the item at a lower price later on, and the retailer could reduce waste? This is the model of Purple Dot, which bills itself as a ‘worth-the-wait’ payment option for fashion brands.
Founded in August 2019 by senior Skyscanner employees Madeline Parra (CEO) and John Talbott (CTO), Purple Dot allows consumers to request a ‘worth-the-wait’ lower price. The advantage for retailers is that they can then decide whether or not to release a fashion product mid-season at a slightly reduced rate in order to secure the sale.
“Unlike Klarna, we don’t encourage consumers to buy stuff they can’t afford.”
The customers still pays upfront and then waits to have the item confirmed, receiving a full refund if not. The Purple Dot payment method sits alongside ‘buy now, pay later’ finance options.
This ‘worth-the-wait’ price does not usually fall below a 10-20% reduction from the recommended retail price, thus reducing losses from end-of-season discounting, where discounts are much deeper. The advantage for the consumer is that they don’t then rack up debt on their purchases.
The startup says it’s already in talks with a number of major UK and US high street brands but has already secured menswear retailer Spoke, which will also use the tech for ‘pre-ordering’. This means they can test out new styles, designs and fabrics in a limited manner, thus reducing waste (and therefore carbon emissions) when they commit to a new line of clothing.
Madeline Parra, CEO of Purple Dot, commented: “When shopping online today, customers can either pay the retail price or walk away. When they do walk away, the item goes through the discounting process, becomes unprofitable for the merchant and is resigned to landfill. This binary system isn’t working for anyone – the customer loses out on the item, because it may go out of stock in their size before they attempt to purchase it again, and the merchant loses the sale. Purple Dot tackles this problem head-on by providing a new way to shop, taking on unsustainable, unrelenting consumerism, poor pricing tactics and profit-crunching sales at the same time.”
Speaking to TechCrunch she also added that “Unlike Klarna, we don’t encourage consumers to buy stuff they can’t afford.”
Pietro Bezza, General Partner at Connect Ventures, commented: “Purple Dot’s innovative proposition benefits retailers by creating a solution to their inventory problems. End of season ‘panic sales’ have long caused financial uncertainty for retailers and a negative impact on the environment in equal measure.”