When a young startup is doing well, but wants to get to the next level, they usually turn first to the venture capitalists who have already invested in them. But, VC firms that invest in early-stage companies don't necessarily have the resources to make that happen. That's a problem that Reston-based New Atlantic Ventures co-founders John Backus and Thanasis Delistathis and True Ventures founder John Burke plan to fix, according to a report from the Washington Business Journal.
"We are the only ones to invest this way," Backus told DC Inno in an interview. "To invest at this institutional level. And we only want to invest in the ones companies that are already oversubscribed, which is a strong signal about the company and the industry. Then, our partners will know the good, the bad and the ugly about their portfolio and we'll do our own due diligence too to pick the investments."
The three VCs have started a new fund called PROOF,which stands for, 'pro-rata opportunity fund.' The fund will partner with venture capital companies that invest in early stage startups. Sometimes those VCs don't have enough money to invest in a later stage round for a successful portfolio company, but have a contractual guarantee to do so if they want. PROOF will provide the money and will get half the profits that the other VC firm garners from the new investment. Backus, Delistathis and Burke have raised $15 million total so far, according to Backus.
"Ithink investing using right to invest is going to be a new asset class, and not just a niche thing like it is right now." Backus said. "The goal is that 10 to 15 years from now, we will be the thought leaders."
