Tech

Entrepreneur First raises $158 million at a $560 million valuation, adding Stripe’s Collison brothers to backers TechCrunch


The first businessman made a name for itself a decade ago in its home town of London, and then furtherfor the novel approach technology investing takes: instead of looking for interesting startups that scale like typical VCs, it supports founders and great startup ideas. , very early on – the reality is so nascent that sometimes the startups themselves don’t really come to fruition when EF writes its first check.

Its methodology and results have led EF to a portfolio currently worth about $10 billion in over 500 companies, and now the company is announcing its latest round of funding – $158 million. la. As an atypical investor run in some ways like a startup, EF raises money like this: funds are coming in the form of Series C valuing EF itself at around $560 million .

Its investors are usually VCs and the angels themselves, two groups always looking for a better signal in the startup noise; and this round is no different. It brings in new backers Patrick and John Collison – Stripe’s co-founders – along with a number of others who have not been specifically named.

Those who have invested in it are an impressive list, including such individuals as Tom Blomfield, Taavet Hinrikus, Reid Hoffman, Matt Mullenweg, Nat Friedman, Claire Hughes Johnson, Sarah Leary, Sara Clemens, Matt Robinson, Elad Gil and Lachy Groom; as well as Sequoia, Andreessen Horowitz, Softbank and GV.

In an interview, EF co-founders Alice Bentinck and Matt Clifford said about $100 million would be used to continue investing in more entrepreneurs and their startups, and it will turn that investment effort into an evergreen fund. For some background, EF, unlike regular VC funds, doesn’t charge a 2% management fee on investments from the people it invests in. There are “no strings attached” to those who take EF’s money, says Clifford, “except if they form a company in EF, say if two individuals build a company after finding each other through our program, they will come to our investment committee in 12-14 weeks to give us a chance to invest in that startup. “

But while you might just think of EF as another service-delivery organization, its purpose and concept is much more than that: the remainder of the total amount, about a third of the funding. This, will be continue to build EF.

While EF has always used a portion of the funds raised to grow its own operations, EF is using this round to double down on that concept like never before.

It currently has 120 employees in offices in London, Toronto, Paris, Berlin, Bangalore and Singapore; and looking to hire more.

And plus, it’s currently focused on building its own actual product, software it calls Forms, which sounds like ERP, like CRM, a bit like predictive business intelligence, and a bit like Tinder for founders.

EF’s team already uses data science in its work, and it looks like the next iteration of Form will be the next step in the work the company has completed building tools to manage database of its own portfolio ($10 billion that includes funding for about 4,000 people, Clifford said), to help categorize and find the many applicants it receives (17,000 through now, added Bentinck), and important to help bring people together with potential cofounders.

“We got up to $10 billion in portfolio value with what was essentially a single product for a very specific type of founder,” said Clifford. “EF’s flagship product, Form, works extremely well for first-time founders in the first six to seven years of their careers who are ready to get started now. But we know it’s a tiny fraction of all the great potential founders in the world,” Clifford said. “So over time, we want to move towards where EF has a product where every aspiring entrepreneur can find their co-founder. We’re not ready to share details yet, but we think there’s huge growth potential here. “

Part of this will revolve around trying to take the recipe EF created, their secret sauce to say (my words, not theirs) and effectively bottle it.

“Intuition doesn’t scale, and Entrepreneur First is doing it at scale,” added Bentinck, referring to how she and Clifford recently worked with the data science team evaluating applications. previously from the 17,000 weird applicants they had. “We now have some good data points, and we can say which criteria are the best indications for future funding, for example. In general, we’re wary of pattern detection in VCs, but we believe in how you can use data to build better intuitions together. “

Focusing more on early-stage investing is always a tough deal, especially since companies and founders have yet to prove their ideas.

“VC should be tough,” said Clifford. “Innovation is not easy.”

That’s one reason why repeat founders and those with successful startup experiences generally get more attention: they have a little more track record. maybe means better success in the future.

But as the startup world boomed, and it became more difficult to get the most senior funding for startups. yes proven itself, it’s exciting to see the focus shift and more investors looking at ways to connect with earlier concepts and more green founders. (An interesting recent example: Sequoia and the Launch of Arcits own effort to connect with startups and early-stage founders, seems to have some EF inspiration… and interestingly, Clifford pointed out to me that it has at least one EF . alum working there.)

If there’s a lingering gameplay element in VC, EF is probably in the longest-running gaming category — whose over $10 billion valuation has so far only grossed $680 million. (That exit list includes Sonantic, the voice AI company Spotify recently acquired; Tractable, a computer vision insurance tech startup; employment platform Omnipresent; Aztec Protocol; Cleo; Permutive; and Magic Pony Technology acquired by Twitter; Passfort acquired by Moody; and Facebook- acquired Bloomsbury AI, Atlas ML and Scape.)

That world is bound to see more ups and downs before it fully settles down.

The recent period has been one of downward pressure from mass tech down to valuations of the largest privately held startups, then to those in growth mode, etc. I don’t know if that valuation tells EF itself is under pressure, but it’s worth noting that Clifford says they’ve only raised $100 million for this Series C (which would put it at a target more modest than the previous fundraiser , a round of 115 million dollars in 2019). While it’s always hard to know which startups will succeed in the longer term, those numbers speak for themselves as potentially among the ‘startups’ that can weather this storm. .

“We are entering a new era for venture funding, with a new generation of global founders needing support to build iconic companies from the ground up,” said Hoffman, also a member. First Entrepreneurs Council, said in a statement. “Entrepreneur First represents a new way for talented people to access that opportunity and a new way to build the startup ecosystem outside of Silicon Valley.”



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