On Tuesday, District-based tech incubator 1776—recognized as the face of D.C.’s tech scene—announced, 16 months after originally filing for a $25 million raise with the SEC, the closing of a $12.5 million seed fund.
The fund will be managed by 1776 co-founders Donna Harris and Evan Burfield along with CFO Steve Graubart, formerly of Calvert Ventures, and Managing Director Rusty Greiff, who is also currently a senior advisor to New Markets Venture Partners.
The announcement follows just one month after Managing Director and former 500 Startups partner Paul Singh parted ways with the incubator and its venture arm. Singh’s 1776 service began when his Crystal City, Va.-based incubator, Disruption Corporation, was acquired in a deal that saw 1776 assume control of Disruption’s real estate, software products and venture fund, the Crystal Tech Fund (CTF), according to The Washington Post.
Singh, who had closed 10 venture funds ranging from $29 million to $85 million in the last 5 years, was brought on as a director to, among other things, manage and attract investment into 1776’s first venture fund.
News of the $12.5 million fund, announced in a 1776 blog post, was accompanied by an inaugural investment. Philadelphia-based ApprenNet, a startup that develops cloud-based software that helps teach technical skills in an apprenticeship format, raised a $1.8 million seed round led by Martellus Holdings, 1776 and University of Virginia's Jefferson Education Fund.
“The fund will focus on investments in pre-Series A startups with the potential to disrupt highly regulated industries such as health, education, energy, transportation, and smart cities,” 1776 announced.
The ApprenNet investment boosts 1776’s portfolio company total to 18. Other portfolio companies include Aquicore, Babyscripts, CancerIQ, RideScout and EverCharge.
An anonymous source with knowledge of the fund told DC Inno that the money has been and will continue to be used, among other things, to fund Challenge Cup competition winners. Though these “investments” have been defined as awards, the companies are viewed similarly as traditional portfolio companies—with their eventual development/progress being judged by the fund’s LPs.
The Challenge Cup is a yearly startup pitch competition organized by 1776 that encompasses a number of regional and international competitions. The final is held in Washington, D.C., in front of a panel of judges with meritorious industry experience. The goal is to discover innovative startups that are developing technology deemed beneficial to society within the scope of healthcare, energy, transportation and/or smart cities. Through the competition, 1776 awards semi-finalists with $50,000/each and the eventual winner receives a total of $150,000.
Surface tension
When 1776 acquired Disruption Corporation in May a number of questions still loomed after the news broke. One of the most prominent of those questions became how, and by whom, the CTF would be managed.
Vornado, the New York-based commercial real estate giant and a major player in Crystal City, was rumored to be a $10 million participant in Singh’s Crystal Tech Fund.
In an email interview with a Vornado spokeswoman, DC Inno confirmed that 1776 is currently managing the CTF and working with its portfolio companies—which includes local startups like Contactually, Aquicore, Power Supply, Bloompop and TalkLocal.
As previously noted by The Washington Post, “1776 will maintain the existing CTF portfolio, assisting the existing portfolio companies to drive scale, but moving forward will not make investments from the CTF. Instead, those investments will come from the separate 1776 Seed Fund.”
That being said, 1776 has had diminutive interaction with several of the CTF companies. Contactually co-founder and COO Tony Cappaert told DC Inno that “we're technically part of the 1776 fund now that CTF is done, but that's all I know. We have very little interaction with the 1776 guys.”
It’s unclear what the aforementioned “assistance” will translate into at this moment for CTF companies. But it is possible that the closing of 1776’s separate $12.5 seed fund, as The Washington Post reported, will inspire strategic investments into CTF portfolio companies.
Stay tuned.
