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Avid Ventures raises $68 million for female-run VC fund targeting fintech and consumer startups

Addie Lerner and Tali Vogelstein have began Avid Ventures, a brand new enterprise capital fund for fintech, software program, and consumer web startups. The pair raised an preliminary $68 million with the goal of being high-touch traders who put cash into various early-stage firms and speed up their progress. It took about 10 months to lift the fund — all in the course of the pandemic.

Lerner based Avid after spending a decade as an investor at bigger companies, together with General Catalyst, General Atlantic, and Goldman Sachs. Vogelstein is a former investor at Bessemer Venture Partners who beforehand sourced early-stage investments in Avid’s core geographies and sectors.

Lerner instructed me she desires to be one thing like an exterior chief monetary officer, obtainable to assist firms at an early stage and kind a deeper relationship with founders than is sensible on the bigger enterprise funds.

Limited companions embrace Schusterman Family Investments and the George Kaiser Family Foundation, First Close Ventures, Foundry Group, General Catalyst, 14W, Slow Ventures, and LocalGlobe/Latitude by way of their Basecamp initiative.

Avid additionally counts 50 strategic founders, entrepreneurs, and traders as restricted companions, 40% of whom are feminine, together with Mirror founder Brynn Putnam, Getty Images cofounder Jonathan Klein, Acrew Capital founding companion Theresia Gouw, General Atlantic’s Anton Levy, and The Wing cofounder and COO Lauren Kassan.

New York-based Avid Ventures focuses on every little thing from pre-series A to collection B rounds and has already put cash into Staircase, Nava, Nova Credit, The Wing, and Alloy. Three out of 5 of those firms have feminine founders. Those firms are within the credit score, id verification, coworking, well being care brokerage, and mortgage industries.

Lerner beforehand helped make investments greater than $450 million throughout 18 investments in software program, fintech, and consumer web firms spanning North America, Europe, and Israel.

Here’s an edited transcript of our interview.

Above: Addie Lerner previously invested at General Catalyst, General Atlantic, and Goldman Sachs.

Image Credit: Avid Ventures

VentureBeat: You have the brand new fund going. Can you inform me about that, and a bit of extra about your self and your background?

Addie Lerner: I’ve been investing in enterprise and growth-stage firms for the final decade, based mostly right here in New York City. I began my profession at Goldman Sachs of their particular conditions group. I spent a while at General Atlantic, working on the web expertise workforce for Anton Levy, one of many co-presidents of the agency, who’s now on Avid’s advisory board. I additionally spent 9 months within the London workplace at GA and helped cowl and develop deep relationships in Europe and Israel.

From GA, I made my solution to General Catalyst to concentrate on earlier stage investing. I made every little thing from seed by way of late stage enterprise investments at GC, however targeted on my candy spot of collection A and B investing. I made quite a few fintech investments throughout my time at GC, together with firms like Rapyd out of Tel Aviv, Monzo in London, and Shift Technology in Paris. Then some software program investments as nicely, firms like Remesh in New York. It was an awesome expertise. I left GC in the summertime of 2019 to begin and construct Avid.

VentureBeat: What’s the mission with Avid? How is it a distinct alternative than what you have been doing at General Catalyst?

Lerner: I used to be fortunate to have a wonderful expertise at General Catalyst, making investments, working with quite a few further firms, and discovered that my differentiation as an investor was the flexibility to use the growth-stage skillset and lens to earlier-stage firms. To actually take a metrics-driven method to an funding thesis, but in addition serving to my firms develop extra effectively and quicker. I noticed a number of the constraints, although, that come into place at bigger companies. The possession they want in collection A and past to make the maths work, and merely how unfold skinny a number of the companions can get after they’re sitting on 10 boards.

I wished to create an funding technique, and I assumed there was an actual alternative out there for it, for a really collaborative, versatile funding mannequin, the place being disproportionately useful relative to examine dimension was a core a part of the thesis. I imagine that investing in a founder’s startup is a privilege to be earned. I wished to return to that thesis in how we work for our founders as an extension of their workforce, even earlier than we make investments and thereafter, to proceed to earn the precise and the flexibility to place more cash into their firms and again them. That was an enormous mission and driver for me in why I wished to depart an incredible platform however do it to go begin a smaller, extra targeted agency.

VentureBeat: $68 million is the quantity of the fund. Is {that a} good quantity of funding for a selected goal right here?

Lerner: We’re pleased with it, and we’re one of many few companies beginning as a fund that focuses on collection A and B. We’ve executed that, once more, fairly intentionally, and our funding technique can assist that with a $68 million fund dimension. Our funding technique is to put in writing small checks, follow-on checks, into the collection A, or across the A, alongside a top-tier lead investor — $500,000 to $1 million right into a collection A spherical. We then keep shut and attempt to be, once more, disproportionately useful as this strategic finance, metrics-driven investor. Then we’ve very deep pockets to put in writing greater checks into and across the collection B.

That’s each out of our fund — a majority of the capital within the fund will likely be deployed on the collection B stage once we’ve stayed tremendous near the founders — and we are able to syndicate a bigger examine to our LPs, lots of whom, together with our anchor traders, have a really robust curiosity in doing direct co-investments into firms. We additionally like that this technique creates a number of alignment across the co-invest as a result of our LPs are getting to speculate alongside the fund, versus simply in our pro-rata and marking us up.

Above: Avid Ventures will concentrate on software program, fintech and different classes.

Image Credit: Avid Ventures

VentureBeat: How early do you imply by early stage? How would you describe the sort of firm that you just’re speaking to extra, that you just’re extra more likely to spend money on?

Lerner: It’s humorous as a result of the levels of rounds nowadays are a bit meaningless. It’s proper to grasp the attributes of an organization that make it match. We’re making an attempt to come back in for an preliminary examine after a seed spherical. If we outline seed as backing largely a founder, a workforce, and an thought, perhaps an preliminary product, we’re making an attempt to come back in on the subsequent stage. That may very well be a seed extension, a collection A, an A extension. We’re trying for some form of preliminary traction that we are able to underwrite.

We name it non-obvious product-market match. Can we see one thing in customers, their engagement, preliminary prospects, the growth of what they’re spending with the corporate, a pipeline the place we are able to perceive the likelihood of a number of the extra thrilling prospects within the close to time period? What are these information factors that we are able to put into our “What do you have to believe?” mannequin to construct out that progress case and what’s going to occur over the following 5 years?

For us, it’s then with the ability to zoom in on the important thing drivers and assumptions within the mannequin that we’ve to imagine for this enterprise to turn into tremendous thrilling. Then we triangulate that with what we predict is probably the most a part of our funding thesis, which is the founder and workforce. Believing that that is the founder and workforce that may execute on the “What do you have to believe?” assumptions to construct an enormous firm. We don’t have onerous and quick thresholds round income, round workforce, round product, across the P&L. It’s extra about “What is that initial traction, whatever it might be, where we can see momentum and underwrite it?”

VentureBeat: How have you ever rounded out the investor workforce and selected what it takes to get an funding accepted?

Lerner: Another huge motivator and mission for beginning Avid was how I might method team-building and how our workforce would evolve to be an actual partnership — the sort of tradition we might have. By having and hopefully sustaining a reasonably lean workforce, whilst Avid grows, that’s going to be the important thing to our success. This summer time I introduced on an extremely proficient investor to the workforce named Tali Vogelstein. She joined Avid from Bessemer Venture Partners, the place she spent the final two and a half years.

Tali is what I’d name a jack of all trades investor. She’s a sourcing machine. She sourced quite a few offers that went by way of. She is extremely charismatic, has a brilliant excessive EQ, is whip-smart, and can consider founders from a social perspective, but in addition companies and underlying fundamentals. She also can take a step again and have the angle on how an funding would match into our portfolio.

We work very carefully as a workforce on each alternative that we pursue, and it’s good having that partnership the place we each exit and supply from our networks and funding theses we’re individually engaged on, however we come collectively as a workforce to work on each alternative. Most vital, we make it clear to our founders and potential founders that after they get Avid as an investor, they’re getting each of us. That underlines that not solely is Avid a real partnership, however an funding with our firms turns into an actual partnership between them and Avid, as nicely.

VentureBeat: How did you get to the concentrate on fintech, consumer web, and software program, and the areas you’re targeted on?

Lerner: For two folks it’s not a lot of a spotlight, however we prefer to hold it broad from a sector perspective as a result of our thesis on investing is kind of founder-led. We need to meet the very best folks and founders by way of our community and provide you with a particular thesis on the business or downside that they’re fixing inside these broader classes of fintech, software program, and consumer web. These areas are the place I’ve targeted on my offers and my background in my investments at General Atlantic and General Catalyst.

I additionally suppose that there are fascinating modifications occurring inside every of those industries which might be creating the alternatives for early-stage investments that may turn into multi-billion-dollar firms. We’ve already seen that with considered one of my investments from GC, which now Avid invested in by way of an SPV — Rapyd — which is an alternate funds community. I invested in collection B once I was at General Catalyst, and this spherical was the D. Already in that time-frame, lower than two years, Rapyd has exploded equally to Stripe on the again of their underlying service provider and ecommerce prospects, rising exponentially.

Some of that’s simply the overall pattern of digital penetration and success with a few of these tech firms, however the COVID tailwinds prior to now 12 months have additionally been an enormous driver, as we’ve seen with quite a few huge progress rounds on the again of big progress from fintech firms.

VentureBeat: Has it been robust beginning one thing up in the course of the pandemic?

Lerner: Yes and no. From a schedule perspective, it may be much more environment friendly, packing these Zoom conferences in. But considered one of my favourite components of this enterprise is the flexibility to attach deeply with folks, and you lose a lot of that over a display. I very a lot miss the in-person connection of this enterprise. But with that stated, I’m lucky to have unbelievable restricted companions and traders within the fund, who’ve been tremendous supportive even by way of the craziness of this 12 months. It’s fairly superb how the VC and tech world has adjusted to doing enterprise solely over screens. We’ve been fairly energetic this 12 months, along with the Rapyd funding. We’ve made 5 investments thus far, and we’ve one other three that we’re dwell on proper now.

Above: Nova Credit is considered one of Avid Ventures’ first investments.

Image Credit: Nova Credit

VentureBeat: I had a convention in April. The traders on the panel we had stated, “Yeah, we don’t invest in people unless we’ve visited them.” I’m positive they needed to recover from that.

Lerner: A whole lot of of us did. That was a part of the post-COVID freeze, the excuse for why we have been all frozen. Then folks realized that — considered one of my mom’s favourite quotes, which I repeat usually, is “You can get used to anything.” In this case, we needed to.

VentureBeat: It looks like fintech entrepreneurs is perhaps extra conscious of issues like metrics that you just’re eager about, the metrics-focused method. Is {that a} useful facet of discovering good fintech entrepreneurs?

Lerner: It depends upon their background. Those who’ve gone by way of banking backgrounds and are growing merchandise and providers associated to capital markets, instruments to promote to hedge funds, they may already naturally be extra monetary metrics-oriented. On the opposite hand, a number of the most disruptive merchandise and firms being in-built fintech are by founders who come extra from the product facet of the world.

Two of our fintech investments, Nova Credit and Alloy, are firms which have superb visionary and various founding groups, however their founders actually appreciated our strategic finance method as a result of modeling and KPI evaluation could be very new to them, even inside the final couple of years, as their companies have grown rapidly and now they’ve nice information to investigate and dig in on. Within each sector, you may have of us who’ve extra of that monetary modeling background and expertise, however a few of our favourite founders, actual visionaries, are so good as a result of they’re coming at fixing issues from a really deep product or go-to-market background.

VentureBeat: So far, I haven’t heard about Bitcoin or cryptocurrency, and usually I do hear that in relation to fintech. It doesn’t sound such as you’re a Bitcoin miner.

Lerner: Not personally, no. I can’t say I’m an awesome Bitcoin investor both. I purchased on the excessive a few years in the past. But it’s trying good now.

VentureBeat: Is that an space that you just suppose may very well be fascinating, or is it one thing you would possibly keep away from?

Lerner: We method cryptocurrencies equally to how we might method biotech or deep infrastructure expertise. We will spend money on firms which might be taking a productized method to enabling that business. We’ll make investments on the software program layer. But we’re not going to spend money on something that’s so technical that we don’t perceive it.

For instance, for crypto, we’re really platforms which might be extra enabling platforms, whether or not it’s buying and selling marketplaces or instruments and software program for Bitcoin miners or merchants. Those are enterprise fashions that we are able to analyze and perceive. We can perceive gross sales and advertising effectivity. We can perceive how a enterprise like that scales with out having to grasp the underlying expertise. The manner I phrase it’s, if the differentiation of the corporate comes right down to differentiation within the traces of code, we’re not the precise traders for that enterprise. But we are going to contact the house, equally for biotech, if we’re trying on the software program that may allow that technological growth.

VentureBeat: It looks like crypto must go mainstream extra. I don’t know if meaning creating good wallets is the chance, or if that’s already been executed and folks simply aren’t . Do you get a good quantity of those wallet-oriented pitches, the place folks imagine that if we solely get this proper, there will likely be a mainstream alternative?

Lerner: I agree that one of many vital items of crypto changing into extra mainstream is — for instance, organizations like JP Morgan and a number of the bigger banks normalizing crypto, or advisors beginning to incorporate a few of that into a few of their extra conservative consumer portfolios. What’s nonetheless a bit alienating about crypto is once you see Bitcoin having these huge run-ups and huge swings in valuation. It’s nonetheless one thing of us don’t fairly perceive sufficient that they’ll really feel comfy with that taking place, in the best way a inventory like Tesla would possibly commerce. But I do suppose extra establishments shopping for and buying and selling and legitimizing crypto will likely be optimistic. That will result in extra traders investing in wallets and the infrastructure layer.

VentureBeat: That’s rather a lot about what you’re not investing in that a lot. If we go deeper into the sorts of issues which might be fascinating to you, what are some extra of these alternatives?

Lerner: Within fintech, we’re enthusiastic about a number of the acceleration of progress that’s occurred on account of COVID. Banks digitizing, being compelled to digitize, which is a core a part of our thesis about Alloy, which helps banks and fintechs do digital KYC and compliance after they onboard new prospects. We’re enthusiastic about these API-driven companies like Rapyd, Alloy, and Nova Credit, in addition to considered one of our new investments, Staircase, which is a set of mortgage APIs. They’re all constructing platforms leveraging API connectivity, which is now fairly ubiquitous.

One space we predict is now fascinating is that now that we’ve these APIs to attach into information platforms, information firms, and floor up all of this wealthy information, we’re seeing a number of companies growing methods to drive insights from that information, which might be onerous, particularly for an SMB firm, that doesn’t have a workforce of knowledge scientists to crunch by way of it. Those kinds of BI instruments can get much more fascinating due to the info that APIs allow them to gather.

Above: Tali Vogelstein previously invested at Bessemer.

Image Credit: Avid Ventures

VentureBeat: Have you heard some fascinating information tales on that entrance?

Lerner: We’ve talked to quite a few consumer credit score companies, consumer bank card firms, neobanks, which might be in a position to — past simply merely having their prospects join on to their banks or their different checking accounts for money circulate information that they’ll use to underwrite credit score, they’ll now begin to use these APIs to attach into different techniques or platforms, like payroll, for instance, that may get different kinds of private monetary data. Now they’ve all this information, however they nonetheless want to determine the best way to flip it into helpful insights to tell how they may construct out their credit score algorithms.

Another instance of SMB-focused credit score or funds companies that may now use API connectivity by way of platforms like Codat to attach into the ERPs and accounting techniques that these SMBs are utilizing — they’ll collect all this wealthy information in regards to the firm to then compete with firms like Brex and work out the best way to underwrite credit score or monetary merchandise for these SMBs. I believe we’ve solved the issue of the best way to get all that information. Now we have to resolve the issue of the best way to derive insights from it.

VentureBeat: I can’t say I’ve talked to that many woman-led enterprise capital funds with an all-women solid. It’s nonetheless fairly uncommon. How do you are feeling about that a part of your alternative?

Lerner: We completely see it as a possibility. One factor that we love about being two ladies who’re earlier in our investing careers with a $68 million fund is that we don’t have any form of variety thesis about ourselves, about our firms, about our LPs. But variety has naturally come to all of these parts of Avid due to my thesis on variety, which is that if you happen to put capital within the fingers of various managers, that’ll naturally result in completely different views, completely different choices that may allow that variety to trickle down.

So far with Avid, 60% of our founding groups have at the very least one lady cofounder, and one other 60% have at the very least one cofounder who’s an immigrant. Of our LP base, a few of our largest LPs are households which have ladies, matriarchs form of, working the household, and then others — of the 50 particular person strategic traders we’ve as LPs in Avid — these are operators, entrepreneurs, GPs — 40% of them are ladies. Just below 16% of them are folks of shade. It’s extremely vital for us to have that variety across the desk within the cash that we’re managing in order that we’ve a variety of views on each side of the aisle. Again, it’s all come about organically, which is thrilling to us.

VentureBeat: It feels prefer it fills a gap out there, and you surprise why that gap is there, why it’s so huge. Why haven’t extra folks executed this earlier than?

Lerner: I’m inspired, particularly coming from Goldman Sachs and extra conventional non-public fairness or progress backgrounds, the place I used to be virtually all the time the one lady within the room, and a younger lady at that. Certainly within the enterprise world, extra and extra, I’m universally not the one lady within the room or on the Zoom desk. I’m having extra and extra Zooms the place it’s 4 or 5 – 6 ladies on the display from two or three completely different organizations.

We have a number of room to go, particularly if you happen to have a look at the stats. Only 5% of U.S.-based VC companions are ladies, and fewer than half of these are founding companions. We have to hold getting ladies as much as greater ranges, and we want extra ladies beginning their very own companies. Retention is likely one of the largest points VC companies most likely face round variety. But it’s been encouraging to me, at the very least locally material, to see extra unbelievable ladies leaders and traders within the room.

Above: Avid Ventures has $68 million to speculate.

Image Credit: Avid Ventures

VentureBeat: What change do you suppose your online business could make for the business and the world?

Lerner: On the purpose of what we have been simply speaking about, I do suppose that being ladies leaders, ladies traders who’re decision-makers deploying capital — that in and of itself is hopefully contributing to creating the VC business extra various, to getting extra capital within the fingers of ladies founders. That’s one thing I hope we’re taking part in only a small half in. Both Tali and I are very concerned with All Raise, and I believe that group is doing unbelievable work to assist contribute to a number of the traits I simply talked about.

Both Tali and I even have a much bigger imaginative and prescient for Avid and the businesses we’re backing, the founders we’re partnering with. Again, we don’t have this in our mandate, however we really feel fairly honored that the issues that a number of firms are fixing are non-trivial issues that may enhance the world. For instance, Nova Credit began out by constructing a worldwide credit score bureau for immigrants, serving to immigrants port their residence nation credit score scores to the U.S. This continues to be a core piece of what Nova Credit does, however they’ve accelerated their product choices within the final 12 months to assist serve many different kinds of underserved prospects, together with those that have dangerous or no credit score, past simply immigrants.

Companies like Nava, which is constructing an SMB advantages brokerage — they’re making an attempt to mixture demand on the SMB employer stage to have the ability to present cheaper and higher, extra progressive well being care options to SMBs by giving them as a lot buying energy as a big group. When we discover these firms the place not solely do we predict they’ll be superb companies, however they’re altering industries and altering the world — which might be why they’re going to turn into huge companies — it makes our job as traders that rather more satisfying.

VentureBeat: It’s encouraging that the restricted companions additionally discovered that the time has come for your sort of firm as nicely.

Lerner: Absolutely. That’s most likely the third piece of the mission or imaginative and prescient for Avid, which is, we’re extremely lucky that almost all of the capital that we’re managing is the capital of philanthropic foundations and organizations. They have missions very aligned with our values and causes that we imagine in. Knowing that the cash we’re making, hopefully in lots of multiples, goes straight to those causes can also be fairly satisfying and fairly an honor.

As I take into consideration trying ahead for this 12 months, one factor I’m enthusiastic about for Avid, and one factor I hope for us, is that in a cycle that appears all too probably frothy — which is total good for the tech sector and good for exits — we see a lot exercise. I believe what’s going to win in the long run is staying disciplined, staying targeted, and honing in on considered one of our core values, which is constructing long-term relationships.

There is usually a tendency to hurry, an inclination for FOMO to take over, to do fast offers at any worth. That’s fairly antithetical to how we take into consideration relationships with our founders, with our LPs, and with one another. I think that many within the business in the end really feel that, and my hope for 2021 is that we are able to let that calmness prevail, concentrate on realizing it is a long-term sport, and orient towards that long run success collectively.


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