We are pleased to share that we have completed raising Pillar II, a new $100M fund, and we have begun to make new investments from this vehicle.
In short, we are really happy.
Happy that we get to do this for a living. Happy that we get to play a small role in building awesome companies, happy that those companies create jobs that people enjoy, and happy and hopeful that a bunch of wealth will be created for all involved.
We are enormously grateful to the many individuals who had enough faith in us to support what was, by all measures, an unconventional approach. Raising Fund II enables us to fund another 25 founding teams, and to keep trying to build great companies in Boston.
A very quick recap of where we’ve been––
We launched in May 2016. The “we” was a dream team of amazing Founding CEOs who co-founded the firm with us. The companies they created are worth something like $35B. They are major owners of our firm.
Together we thought the standard venture capital term sheet was full of terms and conditions that didn’t help build trust with the founders we were backing. We threw it out and wrote a one-page term sheet. It’s short and simple because we proposed to buy common stock — the same thing the founders own. We hoped this would increase trust through better alignment.
Founders respond really well to this message. We are pleased when they do.
Fund I was $57M and is now deployed in 26 companies. 22 were raw startups and 4 were later stage investments (such as PillPack). Of those 22, we were first capital-in in 17 (77%), 15 of them had roots at MIT or Harvard (68%) and they were evenly split 11/11 between experienced entrepreneurs and first timers. About 1/3rd of our early stage capital has gone into investments we led as common. The average investment since inception is $1.1M, over the last 18 months it has been $1.5M.
Our Founding CEOs have been great. They care, they are kind, they are helpful to us and to our companies. Seeing them spend time with our teams is gratifying.
Fund II is $100M. This was the high end of the range we considered. Why $100M? This new fund size enables us to lean in more heavily to our companies and support them more fully along the way. Why not more than $100M? Bigger funds have the potential to lead to strategy drift and misalignment with limited partners — neither of which we wanted. We have great respect for firms like Founder Collective and Union Square Ventures who can raise as much as they want but resist the temptation to do so.
We plan on deploying Fund II into 20–25 companies over 2 ½ years. Roughly 10 per year. We expect our initial investments to be $1.5–2.5M. This reflects what we are seeing in the market — initial seeds or pre-seeds growing in size. Fund I’s size limited us from owning more of companies we really liked. This doesn’t mean we can’t engage in smaller investments, it just gives us more room on the high end.
Our areas of technology interest remain AI/ML, blockchain, robotics and computation in bio, across market segments including consumer, enterprise, manufacturing/logistics, and health.
We’ll continue to aim to help form new connections across the Boston start-up ecosystem through workshops, summits and meetups (we hosted 50 such events last year). In our experience building companies, we know connecting with peers is incredibly valuable, but often tough to make room for. We’ll expand our dinner series for founders, sales, marketing, engineering and product leaders, and will grow the reach of our Women’s Leadership Dinners.
Most importantly, we are increasing support for our portfolio companies. We’ve created a program to provide every one of our founders with a $5,000 CEO Coach & Wellness benefit. We’re growing our team in two key areas — access to talent and access to customers — by adding a Head of Ecosystem and a Head of Business Development. We also plan to add a Principal to our investing team.
In sum, it’s nice to reflect on our first 3 years in business, but just like a startup that raised its next round, it’s time to get back to work on what people hired us to do — build a new generation of pillar companies in Boston.
So if you have a big, ambitious idea you simply can’t stop thinking about and want someone to help advance it, or if you have a company you want to take to the next level, or if you simply want to be part of something exciting and new, please reach out. We’d love to connect.