Several prominent Austin founders are joining forces to launch a Texas branch of a New York City-based venture capital fund focused on backing gritty, diverse startup founders.
The new microfund being launched in Texas is the latest geographic focus of a firm called The Fund, which was founded by Techstars Managing Director Jenny Fielding.
The Fund's new Texas branch was born out of a meeting in 2015 during the SXSW Pitch competition when Andy Ambrose's startup Liveoak Technologies caught Fielding's attention. She encouraged Liveoak to join Techstars, stayed in touch and now, years later, reached out to Ambrose about launching a microfund for Texas startups based on years of successful investing.
"It really is about the same premise of Techstars, which is that a community of founders creates all sorts of positive things that are beyond what you're doing yourself," Ambrose said. "There's just tons of relationships and introductions that can be made."
The Fund, which will invest in Texas-based startups, is a pre-seed fund that is looking for gritty founders. It will write checks of $50,000 to $100,000, which it plans to deploy mostly over the next 18 to 24 months. While The Fund isn't limiting the types of startups it will back, Ambrose said it will focus first on driven founders. But he noted the fund's managers have a lot of interest in SaaS, CPG, future of work and aging and health technologies.
"It all comes back to the founder," he emphasized.
Ambrose said The Fund's Texas branch will raise $2 million to $3 million, and it already has some well-known names in the Austin startup community participating as partners.
The Fund's Texas partners and investment committee include Ambrose, whose startup Liveoak Technologies was acquired by DocuSign last year; Janice Omadeke, founder and CEO of The Mentor Method; Cara McCarty, co-founder of Code Pilot, which was acquired by AngelList last year; and Albert Swantner, co-founder of Mobile Tech RX, which was acquired this year by Repairify.
The Fund hasn't set a designated percentage of deals that will go to underserved founders, but it's focused on diversity, said Omadeke, who is one of fewer than 100 Black women founders who have raised more than $1 million for a startup.
"We will be intentionally inclusive about the founders that we're meeting and bringing into the fund," she said. "For us, it's important to make sure that non-traditional founders have visibility, and that we're able to review a diverse set of founders, even if they don't fit within that criteria, to make sure that we're really capturing the best that will benefit from us being one of the first checks that they get into their business."
The Fund has its roots in New York, and it is active in several other cities, including Los Angeles and London. The Texas portion has attracted key names from the Austin startup community, and it plans to explore investment opportunities in San Antonio, Dallas, Houston and beyond.
Among limited partners investing in the Texas branch of The Fund are Dan Graham, founder and partner at Notley; Holly Tachovsky, chief innovation officer at ISO and co-founder of BuildFax; Eric Starkloff, president and CEO of NI, which has developed several diversity initiatives; Adelle Archer, founder and CEO of Eterneva; and Jane Ko, author of popular food blog A Taste of Koko.
Omadeke said The Fund will look for the best founders, but it doesn't see itself in a competition with other Texas-focused funds.
"The intention for us is to make sure that we're collaborating with these accelerator programs, and making sure that we're deploying capital to the founders that have those proof points of success and have early-stage metrics that we can count on," she said. "And we'll be partnering very closely with these programs, as a way to continue supporting."
Ambrose said The Fund will likely write its initial checks later this year. He said that in addition to funding, the network effect of The Fund will have significant impact for startups that are new to Texas.
"As much as Austin is an open place, it's hard to just to crack in. So I think our network of founders, and being a founders-led fund, is a fast track into that," he said. "So we're getting referrals all the time from our adjacent funds' geographical partners, where they're saying 'Hey listen, I've got this amazing deal, you need to talk to this founder and they're relocating to Austin, or they're relocating to Houston,' for example. So I think we're seeing that effect also just having other more mature geographical areas covered. And there's just this Austin thing that's happening, so we're excited about that, too."
