We are pleased to announce that Foundry Group has made a Series A investment in Tidelift. Tidelift gives software development teams dependable—professionally maintained, secured, and licensed—open source software from a single source, while introducing a new way for open source creators to get paid for doing the work they love.
Their vision is to build a new win-win model for open source. The professional development teams trying to avoid things like Heartbleed and the Equifax breach get software they can depend on while helping fund the next wave of innovation. Meanwhile, the open source maintainers who have been building all of this amazing software we all rely on get paid—ideally a lot—from their work, which encourages even more investment in open source.
We were originally introduced to Tidelift because our partner Chris Moody had previously worked with Donald and his co-founder Havoc. All four Tidelift founders have demonstrated a long obsession with this problem space, having lived and breathed this open source air for two decades. They deeply understand the perspectives of both open source maintainers and the professionals using their code. And they have been a part of the creation of the enterprise subscription model that has now turned Red Hat into a $30B market cap company, so they understand how to make professional open source work.
Tidelift’s approach—an innovative B2B take on the marketplace business model that has fueled the rapid growth of some of the most successful consumer startups of the past ten years—is what makes this company really stand apart. Tidelift nicely straddles our marketplace and distribution themes, while also serving software developers, which a number of our portfolio companies do, including SendGrid, Mapbox, mLab, Pantheon, and VictorOps.
Tidelift has the opportunity to do what companies like Red Hat, Cloudera, and Docker have done to professionalize individual open source projects, but for the hundreds of thousands of open source projects that don’t yet have a professional model.
We see Tidelift as a way to invest in the innovative potential of the entire open source community at once.
As the Tidelift team gets this flywheel going, and open source maintainers gain a new direct financial incentive to focus on the software they create, it will encourage even more people to start new open source projects or step up the innovation and dependability in the projects we already have. And the more smart people that start investing their time and energy open source, the more amazing and innovative startups that can be built on the software they create. That’s a great thing for investors like us, it’s a great thing for software as a whole, and it’s a great thing for the world that depends on the things they create.
Today, Golden Ventures is announcing the closing of their third fund, a CAD$72M vehicle. We are excited to have them join our group of Partner Funds and welcome our northern neighbors to the family.
While the vast majority of our investments are in the United States, we’ve had long connections to the Canada startup community, with a particular connection to Toronto and Waterloo. Many of our companies have engineering offices in the area, going back to our investment in Zynga in 2007. Blackberry (then RIM) acquired Gist, another early Foundry Group investment. Techstars currently has two programs in Toronto. Brad’s co-author of Startup Opportunities is a professor at Ryerson College. And, we aren’t limited to Toronto, as we currently have an investment in Data Nerds based in Kelowna, BC.
The Toronto / Waterloo region, which we like to call a binary star startup community (like Denver / Boulder), is strongly supported by universities, local and regional government programs and accelerators, and specific R&D subsidies that supplement startup activities. Favorable Canadian immigration policies attract international talent. Toronto is a city that can compete for that talent globally, with a widely diverse population and a cosmopolitan feel that appeals to people worldwide. We think Canada Is Going To Be The Next, Great, Entrepreneurial Tech Country for many reasons, including our own country’s current stance on immigration. We believe Toronto / Waterloo and Golden Ventures are particularly well-positioned to benefit.
One of the goals of our Partner Fund investments is to solidify and activate a dynamic network of positive contributors to the venture industry. We like to back firms where we have existing relationships that allow us to take a longitudinal view of the people and partners that make up a team. In the case of Golden, we saw the founder, Matt Golden, as a friend and fellow investor via our shared Yesware investment. We also have experience with Matt’s partner, Ameet Shah, from his time at Zynga. With this history, we knew the Golden team shared our #Givefirst mentality. On our reference calls, founders repeatedly emphasized Matt’s operating experience and highlighted Ameet’s product expertise as differentiators. Golden positions themselves as lead investors at the seed stage. While they are a key local early-stage lead VC in Toronto, they may also invest as much as 40% of the fund in other Canadian and U.S. markets including Montreal, Boston, New York City, and Los Angeles.
We’ve enjoyed getting to know the entire Golden team as friends, investors, and now partners. We were happy to see them pull together a strong group of LPs in this new fund. Congratulations to the Golden team – thanks for giving us a reason to spend more time in Toronto!
Our investment in PSL Ventures
Today, Pioneer Square Labs announced the launch of PSL Ventures, a Seattle-based venture capital fund that invests in early-stage technology companies. The $80 million venture fund will invest in companies all over the Pacific Northwest region of the United States. The fund will also participate in financings in spinouts of PSL’s affiliated startup studio. We are excited to back the team and have them as one of our Partner Funds.
One of the key reasons we included a Partner Fund investment strategy in Foundry Group Next was to bring our friends closer while also supporting the next generation of outstanding VCs. We think of each partner fund, as well as each individual GP, as a partner in our extended network. Our investment in PSL Ventures serves as a great example of our Partner Fund strategy at work.
Seattle has become an important market for Foundry Group. We have been investing directly in Seattle-based companies going back to the mid-1990s and we’ve built up a strong network of entrepreneurs in the city. In 2010, a former entrepreneur from our portfolio. Andy Sack, and our friend, Greg Gottesman, helped bring Techstars to Seattle. It was the second market expansion for Techstars (after Boston) and our relationships there helped prioritize the market. Since then, Techstars Seattle (led by Chris Devore) and more recently, the Alexa Accelerator powered by Techstars, have served as important nodes for our Seattle activities.
We also worked with Greg at his prior firm, where we invested in a number of companies together and learned how to work through good and bad moments. When Greg and Ben created an in-house studio program at their prior firm, we tracked it closely and invested in two of the companies that launched from the studio. Then, our Seattle dream team decided to come together and launch PSL in 2015. We were excited to back them in their initial round and we helped lead their second round earlier this year. We think the studio platform is powerful for Seattle and we are excited to be a part of the PSL activities there.
While we’ve worked with Greg for a long time, we’ve come to love the whole gang at PSL Ventures. We think PSL and the combination of Julie, Mike, Geoff, and Greg already represent the natural collection point for entrepreneurial activities in Seattle, with reach to the broader Pacific Northwest. We would back this group of general partners in any market but we believe they have a special platform in Seattle and we are excited to be part of their activities across Studio and now PSL Ventures.
We look forward to a continued long relationship with the PSL team as they build and invest in the best companies in the Pacific Northwest.
The Foundry Group Manifesto on Board Meetings
(Boulder): Today, Foundry Group, a venture capital firm focused on making early-stage technology investments, participating in select growth rounds, and identifying and supporting the next generation of venture fund managers, released a video manifesto on board meetings.
After years of painstaking research, the firm discovered that nearly 13,729 hours of time are wasted per day by entrepreneurs, venture capitalists, and board members attending meetings that, while well intentioned, usually contain multiple inefficiencies that are needlessly present.
“Over the past 25 years of being a professional board member, I’ve kept a diary of every single annoyance that I’ve experienced in board meetings. When I realized that each of my partners had done the same, it occurred to us that there was a real problem,” said Brad Feld, Managing Director.
Managing Director Seth Levine added “I’ve been to a board meeting before.”
Jason Mendelson, Managing Director and Chief Video Officer explained why, once again, Foundry Group was resorting to a visual medium in dealing with such an important subject. “I think video is the only real way to show how bad the situation is. It’s a topic that people don’t want to talk about and it’s time to set the record straight.”
Please see below for the full content:
So Seriously? A third video?
Yep. It’s been four years since our last video, Worst of Times was released. In that one we poked fun of current technology not always being as helpful as it could be. Two years before that we released I’m a VC which made fun of venture capitalists (which, to be fair, are very easy targets). In total, the videos had nearly 400,000 views before we accidentally erased the counter which, apparently, is an unrecoverable event. (Thanks YouTube).
We figured it was time to do a new one, but we were having trouble deciding who/what to make fun of. One day, Jason, who leads the creation of our videos, found himself listening to an unprepared venture capitalist berate a CEO to triple her burn and move her well-performing company to the Silicon Valley for no apparent reason. Immediately after this meeting, he started working on Bored Meeting. (True Story).
We had a lot of fun spending time with our entire little company, and a bunch of our friends, making this. Some companies have offsites. I guess that we have “make video day.” Either way, it’s a good bonding experience between all of us and we hope that you find some enjoyment in our lunacy.
Introducing Our New Partner – Jamey Sperans
We are excited to announce that Jamey Sperans is joining Foundry Group as a partner.
When we started Foundry Group in 2006, we were very clear that we were not going to build a legacy venture capital firm; one meant to outlive its founders. There would be no generational planning, no transitions to younger partners, and no senior partner hold-outs who would hang onto economics well after they had stopped working. Simply put, when we are done investing, we will drop the mic and shut off the lights.
We continued these conversations on a regular basis. The 20-year view of Foundry Group that we had created in 2006 was a decade old and, when we reflected on this, we realized that we had far exceeded in a decade what we had expected to accomplish in 20 years. This caused us to step back and extend our time horizon further into the future. As part of this, we reaffirmed to each other that we would work together professionally for the duration of our careers.
As we have stated in prior posts, the venture business is an inherently challenging one to scale. Leverage – of time, capacity, and capabilities – is hard to achieve. Our ability to continue to manage our business effectively was limited by our individual time and capacity.
However, when we started Foundry Group, we decided we never wanted to have a large team. We had experienced that in prior firms and felt we could create a much more effective firm, and better returns, with a small team that had direct and continuous interaction with the founders and executives that we fund. We also didn’t want the organizational overhead of building a firm beyond the principal investors, so one of our deeply held beliefs was never to have associates, venture partners, or EIRs as part of our firm.
When we added Lindel, we made a short list of other people that we’d consider adding. We had several requirements, including that they be people we’d worked with in some capacity since at least the inception of Foundry Group, that they be functional peers of ours, and that they be able to meaningfully add leverage to what we were doing on a daily basis, without changing our strategy beyond the one we defined originally with Foundry Group and then extended with Foundry Group Next.
In the spring of 2017, we added Chris Moody to our team. We’d worked with Moody as an executive, entrepreneur, CEO (of Gnip, which we were investors), and board member going back to the formation of Techstars in 2006, where Moody was a mentor in the very first program. Moody immediately gave us leverage by taking over board seats from us, and he has been off to the races as a board member with a particular focus on our B2B SaaS-related companies where he has some of the most scaled experience of any exec we’ve worked with.
The other name on our list was Jamey Sperans. Jamey, like Lindel, was an early and significant investor in the first Foundry Group fund in 2007 through his role at Morgan Stanley Alternative Investment Partners (“AIP”), where he’s been a Managing Director of Private Equity since 2001. Jamey was introduced to us by Fred Wilson at USV, who also originally introduced Lindel to us. Like Lindel, Jamey was an early investor in the first USV fund. He and Lindel have invested in numerous other funds together over the years.
In addition to making fund investments, Jamey and the team at AIP also had a co-investment strategy. As part of this, they co-invested alongside of promising investments from their managers across a wide spectrum of industries and company stages. Over the years, Jamey and AIP co-invested with us in a number of companies.
As with Lindel and Moody, Jamey became an extremely close friend to us over the past decade. In addition, Lindel and Jamey have worked together on a number of fund investments, sat on Advisory Boards together, and become best friends in their own right.
Jamey joins us to help execute our Foundry Group Next strategy. He’ll bring both his fund investing experience along with his co-investment experience to us, working alongside Lindel to help build our partner fund portfolio, while working closely with GPs to identify early and growth-stage opportunities for us to make direct investments in, such as the ones we’ve already done in Formlabs, HelloSign, Pilot, and WorkMarket.
