After working at North Bridge Venture Partners for 18 years, Jamie Goldstein is launching a new venture capital firm with 16 CEOs and founders at some of Boston’s hottest tech companies, including DraftKings, Wayfair, Acquia and TripAdvisor. And the firm aims to help grow the next pillar tech companies in a way that will likely be controversial with some in the VC world. But it’s also part of what Goldstein says will actually make his firm “founder friendly.”
"You're a top venture fund by getting into Twitter or Facebook. That's the only thing that matters."
The name of Goldstein’s new firm, Pillar, has been out in the open for a little while, with Goldstein writing a couple of posts about his philosophies on VC. The firm most recently disclosed that it’s raising its first fund, targeting $100 million.
“We want to build pillar companies that are around for decades and become the new sort of pieces that are the focal point of this tech economy and spin off lots of other companies,” Goldstein says of the firm’s mission.
Pillar aims to achieve that in part by bringing together the money and resources of 16 CEOs and founders of Boston-area tech companies. The list includes DraftKings co-founder and CEO Jason Robins, Clear Sky Data CEO Ellen Rubin, Wayfair co-founders Steve Conine and Niraj Shah, TripAdvisor CEO Steve Kaufer and Rapid7 CEO Corey Thomas. (Find the full list of CEOs and founders below.)
Goldstein says they are all co-owners and co-founders of the firm. All have put their own money into the first fund, which has raised from other limited partners and held a first close about two weeks ago. Goldstein wouldn’t disclose how much money was raised in the first close but said it was enough to start making investments “very actively.”
Pillar has been taking pitches from startups since January, and it’s currently closing its first deal with a startup right now. For anyone familiar with Goldstein’s previous portfolio companies, it shouldn’t come as a surprise that his focus is on companies working with data, whether it’s storage, security, machine learning, analytics or cloud. He’s also interested in robotics and the growing Internet-of-Things market.
Pillar will be focusing primarily on very early-stage ventures, Goldstein says, with the aim of being the “first capital in” for the seed round or Series A round. The first investment in a startup may be few hundred thousand dollars, he adds, but the firm will reserve up to $6 million or $8 million per company total for later rounds or if they’re going through a rough patch.
Goldstein says portfolio companies will have access to Pillar’s founding group of tech executives and entrepreneurs as advisors, board members or simply to make a connection.
Pillar’s term sheets will use only common stock, Goldstein said, eschewing preferred stock or any other kinds of investing instruments, such as anti-dilution clauses, that can misalign investors and founders. These kinds of instruments allow investors to succeed or at least recoup their investment even when the portfolio company isn’t doing well. As Benchmark Capital VC Bill Gurley wrote recently, “dirty term sheets” tend to become more common in times of VC contraction.
He's got it exactly right. On the Road to Recap: | Above the Crowd | By Bill Gurley https://t.co/1jS33qajw7
— jamiegoldstein (@jamieagoldstein) April 23, 2016
"So we said, 'we don't want that, we want to be totally aligned,' and the message is very clear: ‘we only win, we only make money if you founders make money, so on any issues, there's no room for distance between us,’” Goldstein says.
Goldstein says Pillar’s approach has already received positive feedback from top philanthropic groups, university endowments and other limited partners he has spoken to.
“They know that our business is driven by the big winners so having a preference that enables you to get a few extra bucks back on a deal that didn't work is not how you turn into a top five-percent venture fund,” Goldstein says. “You're a top venture fund by getting into Twitter or Facebook. That's the only thing that matters.”
With a “phenomenal team” and a focus on creating real alignment between founders and investors, Goldstein says Pillar aims to correct the lack of balance between the large number of startups and small number of investors in Boston’s ecosystem right now.
“The amount of energy right now coming out of MIT, out of Harvard [and other universities], there's never been more innovation in this city and that's sort of the interesting opportunity we have right now,” Goldstein says. “We have assets that no other city has. That's why we convince people they should tilt back toward Boston.”
Co-founders of Pillar: Ash Ashutosh, CEO, Actifio; Jeff Binder, CEO, Layer3TV; Steve Conine, Founder, Wayfair; Tom Ebling, CEO, Demandware, Tom Erickson, CEO Acquia; Jeremy Hitchcock, CEO, Dyn; Dave Husak, Founder and CTO, Plexxi; Steve Kaufer, CEO, TripAdvisor; Steve Kokinos, CEO, Fuze; Rich Napalitano, CEO, Plexxi, Jason Robins, CEO, DraftKings; Ellen Rubin, CEO, Clear Sky Data; Jit Saxena, Co-Founder, Netezza; Niraj Shah, CEO, Wayfair; Deepak Taneja, founding CEO and CTO, Aveksa; Corey Thomas, CEO Rapid7.
Editor's note: An earlier version of this story linked to the wrong "Pillar." Pillar's website is pillarcompanies.co and is not affiliated with Pillar Ventures.
