Software has not Eaten Venture...why is SignalFire different?

Our CEO Chris wrote a great Medium post explaining the SignalFire model.  I thought I'd offer a similar take with a bit more detail on competitive differentiation.  I've organized thoughts along roughly the same lines I'd expect another VC to probe us as a startup venture in our own right.

The Opportunity

Our vision is to provide the world's best ecosystem for supporting entrepreneurs at the critical moments that define their startups, along their entire lifecycle from seed to IPO.  At the seed stage, micro VCs don't have the economics to support more than a small partnership.  Their 1-2 partner model is challenged after amassing a large portfolio.  At later stages, major venture funds also dabble in seed, but when they participate, these deals don't typically move the needle enough to command valuable firm resources.  Venture is broken in this sense because all firms have a sweet spot, and you can't get access to "big league" resources until you've become a breakout hit.  Unlike other funds,  our value add platform scales without additional labor overhead and is always differentiated.

Why Now: Venture is Still Broken

It’s ironic that VCs make their living backing entrepreneurs disrupting archaic, analog industries.  At first blush, it appears a number of business model innovations are finally making waves in the venture capital industry, including the focus on value add agency-type services, syndicate investing, and the professionalization of seed.  Yet these forces are actually just enablers of a much broader innovation that has only become possible recently.  The precedents can be seen in companies that have leveraged a distributed architecture and technology to massively upend service-based sectors similar to venture.  Uber and AirBnB automating the coordination of market participants.  Kaggle and Gerson Lehrman Group organizing a diversity of expertise available on-demand.  LinkedIn and Facebook providing transparency into social networks.  Amazon Web Services and Akamai in distributed computing offering agility and scale.  This is a scope of innovation that has not been unleashed on venture.  Even the newest business models still depend on humans as irreplaceable and lossy nodes, while data services oriented at the venture ecosystem typically focus on sourcing deals.  At the same time, new models have impacted the decision making of entrepreneurs to better prioritize the platforms and investors that can add the most value, rather than choosing an established brand name.  While venture is broken, now is the right time to build on the efforts of others to reinvent venture.

The Solution Part #1: AI Platform of the Future

We often joke we are the first VC with a demo.  Our tangible tech product is a mini search engine that uses 2 million data sources, and is built by a team from top engineering programs such as Google, Yahoo, and Stanford PhDs with deep domain expertise in processing and analyzing unstructured data sources.  As a recruiting service to our portfolio companies, we track the entire talent ecosystem by dozens of quality dimensions with real-time hireability indices. This is by far the most comprehensive, searchable, and actionable index of talent in the valley, informed by our many years of experience firsthand solving recruiting pain points.

The Solution Part #2: World’s Best Seed Stage Network

No matter how long we’ve been in the game, as venture capitalists we can only provide you with B+ advice.  The ideal solution is to speak with a canonical expert, and SignalFire has hand-selected more than 50 of the top domain experts across all major industry verticals and functions.  This includes current or former VP-level and above engineering and product leads from most of the major tech firms in the valley, including Facebook, Google, Yelp, VMWare, Salesforce, Netflix, Pinterest, Slack, Amazon, Apple, YouTube, and many others.  Our portfolio companies see deep engagement with our advisors, whom are all both major LPs and equity shareholders in the firm’s operating company.  In addition, our network has been curated for a mentorship orientation: many of them are full time angels, and all are available on demand.  Our distributed network is in stark opposition to the traditional closed network venture firm, and means we can provide you access to A+ advice no matter the industry or nature of your question.

Founder-Market Fit: A World-Class Hybrid Team from Leading VCs and Tech Firms

If you walk into our office, you'll see a vastly different kind of firm.  You’ll feel the energy from a full-time, seven person technology team of veteran engineers and PhDs trained at Google, Yahoo, top venture-backed startups, and Stanford's AI department.  They are a world-class startup technical team, hyperspecialized for building a cutting edge AI platform and solely dedicated to helping other startups succeed.  Our investment team is trained by the top firms General Catalyst, Bessemer, KPCB, Andreesen Horowitz, but we don’t operate in silos like traditional funds.  The entire team sits and works in the same space: we find cross-collaboration and training between the team is completely is a wonderful way to stay relevant on cutting edge tech, as well as provide direction on our products and services for entrepreneurs.

You may be wondering how we finance such a large team on a $50M fund.  SignalFire maintains a number of strategic corporate relationships, which in addition to providing potential strong customer introductions and thought partners for our internal research efforts, also supports the size and flavor of team required.  On a final note, our office probably resembles your own startup offices (assuming you are deploying your capital efficiently!)  We don't burn cash on a slick facilities, we deploy all of our capital and earned income back into developing technology and services to better serve the entrepreneur.  The entire model is configured to support our companies at a massive scale not previously possible at the seed stage.