The world has changed. There has been a democratization of entrepreneurship. All you need to start a company today is a laptop – everything else is easily available and / or a variable cost (and you can even borrow the laptop). There are a lot of great ideas for companies and this low barrier to entry has allowed many great entrepreneurs to embrace the risks, pursue their dreams and build their own great business.
Today, we are excited to announce our formal seed program, FirstSteps, and the milestone achievement of our tenth investment from the program in the last 15 months. FirstMark Capital has had a long, successful history of investing at the seed level (Riot Games, LiveGamer, Clickable and others) as well as starting companies from scratch (Dovetail, EagleEye, Outlooksoft).
It is clear there has been a fundamental, systemic change in the last few years. Companies can start at a fraction of the costs compared to 10 years ago and can accomplish more with less than ever before. As the entrepreneurial climate has changed, FirstMark wanted to ensure we were able to leverage our considerable resources to partner with the best entrepreneurs at the earliest stage.
What do we look for in seed companies?
• We partner with great people. While we back serial entrepreneurs, we have backed many first time entrepreneurs that have gone on to build great companies. A common trait across both groups is demonstrated excellence and achievement . This could mean being one of the best sales reps in a prior company; being a successful scholar athlete; generating outstanding customer traction with little to no resources. We fundamentally believe that people who overachieve tend to do so consistently.
• We love entrepreneurs with deep domain expertise. It is crucial to have initial products which make their customers ecstatic; therefore, deep experience in the sector (understanding the pain) on a formal or informal basis is vital. If you want to be a gaming entrepreneur, do you passionately game?
• We prefer our founding team to include a technical co-founder. This is the age of constant iteration. Having a technical (co-)founder who wakes up in the middle of the night to code and iterate on the product – optimizing every button, menu and screen is critical.
• We love large markets ripe to be disrupted. Increasingly we are seeing new companies that are technology-enabled and leverage the connectivity of the Internet to launch new business models. For example, Riot Games pioneered Games as a Service and micro-transactions to disrupt the gaming space.
• We want a shared view on capital usage and value creation. Because so much can be accomplished so quickly, we love when entrepreneurs have a very clear view on how much they need, why, and what milestones they will be able to accomplish. Many things will not move in a straight line, but we are now in an era where the cost of planning is significantly higher than the cost of failure.
• We start with capital efficient technology and technology-enabled businesses. The types of businesses we will look to back will mirror the technology or technology-related themes (http://www.firstmarkcap.com/portfolio/) we have successfully invested in over the years.
• Finally, we invest nationally, but prefer to invest in companies that can benefit from our strong NYC presence. We want to ensure we can add value every step of the way.
How do we partner with seed companies?
• We look to invest anywhere between $50K and $1MM in our seed companies. Our sweet spot is between $250K – $500K. Total round size is usually between $500K – $2MM. Our investments are typically a simple preferred equity structure.
• We lead transactions, write term sheets, and often help syndicate rounds. The seed round is an opportunity to set up an early and strong network around a company. In order to build a great network with many helping hands we usually syndicate with other seed firms and leading angels, often playing an active role introducing our entrepreneurs to other partners we think are a good fit. We partner with great, experienced co-investors who share the same values. Thus far, co-investors have included: First Round Capital, Metamorphic Ventures, Genacast, IA Capital, Accelerator Ventures, New York Angels, Ron Conway, and others great leaders.
Why partner with FirstMark Capital?
• We have invested for over a decade and made approximately 200 investments. We have partnered with world-class entrepreneurs and helped build many industry leaders. We have been through several economic cycles and helped hundreds of companies start, grow and succeed. We bring our institutional knowledge and those relationships to bear in every deal.
• One of the keys ingredients in building a great company is great people. We have deep relationships and broad networks to help our companies identify, recruit and land the best talent.
• We have created dedicated programs, networking, and infrastructure for our seed program. Our companies are actively engaging and learning from one another, sharing insights and helping avoid pitfalls. In addition, our seed companies benefit from the larger events we host for our entire portfolio. Such events including our Annual Marketing Summit as well as our more intimate targeted events with leaders in various industries. Our seed companies also learn from some of the best practices of a much broader portfolio of companies that have grown to achieve breakout scale.
• Our NYC base leads to deep and exceptional relationships across many of the industries that are now getting disrupted, from financial, retail, education, healthcare, gaming, publishing, advertising, media and others. NYC is the world’s business capital and we leverage that density for our companies’ benefit.
• We have a deep bench of venture partners who have decades of operating and entrepreneurial experience, and often can be mentors to our young companies.
• We support you through fundraising processes. We do not front run, we do not put our interests ahead of the Company’s. Instead, we work with you to identify the best possible partners and help you navigate the complexities of raising subsequent capital. (we encourage you to talk to our companies/ founders and hear for yourself…)
Our portfolio of seed companies has already enjoyed tremendous early success. We invite prospective entrepreneurs to reach out to any of our companies to get a sense for how actively we work with them to build value together. And if you think you’d make for a great investment, feel free to reach out to us through our network or apply here: http://www.firstmarkcap.com/firststeps.