(Gerd Altmann, Pixabay)
1 July 2020. A new venture investment company is funding start-ups at their earliest stages, with a goal of increasing support for entrepreneurs from all backgrounds. The Venture Collective began operating yesterday in New York and London to provide both financing and business assistance to brand-new enterprises.
The Venture Collective or TVC plans to support start-ups during what it calls the “valley of death,” the period between incorporation and the new company’s first venture funding round, known as series A. During this period, says TVC, is when most start-ups fail, and most venture investors are also less interested in providing funds. Likewise, this early-stage period is when start-ups need the best advice to navigate the inevitable obstacles, often unique to each new enterprise.
TVC says it provides early pre-seed stage financing from its partners, as well as a group of co-investors including other entrepreneurs, high net-worth individuals, and wealth management advisers serving investor families, called family offices. For these co-investors, TVC says it serves as advisers, identifying the most promising early-stage investment opportunities. The co-investors can also provide further financing in later venture rounds as companies succeed and grow.
According to TechCrunch, TVC allocates an initial amount of funds per start-up. The company says it will invest $100,000 per month in start-ups from that allocation, with later rounds ranging from $1 million to $5 million as warranted.
To supplement its funding, TVC says it also provides personalized advice to start-ups beyond the level offered by most early-stage investor funds. In fact, TVC publicly commits to offer two-thirds of its partners’ time to helping portfolio companies. In addition, TVC says it works out individualized assistance plans for each supported start-up, spelling out the help portfolio companies can expect to receive.
A key goal of TVC is to support more start-ups founded by women and ethnic minorities. The company cites data showing less than three percent of venture capital funds are invested in start-ups found by women, and less than a quarter (23%) of venture-funded start-up founders are ethnically non-White. In many cases, says TVC, venture investments are made through existing networks — people they already know — supporting start-ups founded by people that look and speak like the investors.
TVC plans to break that syndrome by forming an advisory community it calls The Collective, made up of other entrepreneurs and investors with many women and ethnic groups represented, which TVC says will actively seek out start-ups founded by people without ready access to capital.
In a blog post on Medium, the company notes, “If the purpose of venture capital is to create outsized returns by investing with conviction in areas and opportunities that others are overlooking, then equal representation of founders from all backgrounds may be the single greatest way to financially outperform in what is a highly competitive and homogenized venture market.”
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