We are pleased to announce that we have completed our initial investment in Chewse, Inc. Based in San Francisco, CA, Chewse has created a platform that makes it easy for businesses to order and manage meals for their employees.
The U.S. market for corporate food delivery is over $30 billion a year. It’s not a new market, but it’s one that is rife with frustrations. The market is fragmented, with the three largest restaurant chains that supply the corporate market being Subway, Panera and Chipotle with market shares of 3%, 0.8% and 0.05%, respectively. There are over 11,000 caterers in the U.S. with the top 50 largest controlling less than 15% of the market.
The experience of food ordering is pitiful. Most of the options involve telephones and faxes. The person at the company who is responsible for ordering the food has almost no hope of getting everything correct when employees have dietary restrictions. Each time a food order is desired, the admin must either remember each person’s preferences or ask for the 100th time “are you the one who is allergic to onions, or the one who is gluten free?” In the end, this is a thankless job that rarely goes as expected, leaving at least some of the employees disappointed and the person who ordered left holding the bag.
Furthermore, there are many restaurants who have capacity and desire to reach corporate clients but don’t know how. They can sign up with a Restaurant Runners-type service, but then have no control over how their food is presented or delivered. As for timeliness, forget it. And this, again, is all run by phone calls and faxes.
Chewse is building a two-sided marketplace to connect corporate clients with restaurants. They have created a platform that allows administrators to easily and quickly order food based on the preferences of their employees. In addition, each restaurant is vetted by the company to ensure that the food is of high quality at each price point. This means that Chewse has direct relationships with these vendors which ensures that the Chewse menu always has a large list of options.
The company was founded by Tracy Lawrence and Jeff Schenck and we are stoked to work with them.
Our Newest Fund – Foundry Venture Capital 2016, L.P.
We are very happy to announce today the closing of our fifth fund, Foundry Venture Capital 2016, L.P. The fund is the same size as our last one: $225,000,000 in limited partner commitments. We are pleased to be working with a great group of investors.
We will continue to do exactly what we have always done: invest in seed and early-stage investment opportunities in the software and IT space that are located across the United States. We’ll also continue to pursue a strategy of Thematic Investing that has served us well over our investing careers.
We very much look forward to working with another group of great entrepreneurs and portfolio companies.
– Jason, Ryan, Seth and Brad
P.S. For those of you keeping track this is the exact same blog post we used to announce of 2013 and 2010 funds except for this P.S.
Our Investment in Glowforge
We are pleased to announce that we have led a $9 million round in Glowforge, a Seattle-based desktop 3D Laser Printer company.
In 2010, when we invested in Makerbot, the maker movement was just beginning. While 3D printing technology had been around for 30 years, there were no desktop 3D printers. The concept of using an additive process for 3D printing, where you built up a 3D object from continuous extrusion of a material such as ABS or PLA (plastics) was well understood. But this technology had not been brought to the desktop at a $2,500 price point. Makerbot did that and has created an entirely new market segment within the 3D printing industry.
Glowforge is playing into the same trend that made Makerbot successful but in an inverse way. Instead of an additive process, Glowforge is using a subtractive process to create objects. While the additive process is called “3D printing” the subtractive process is generally called “machining” and there has never been a particularly good retronym for it. To date, most subtractive processes still conjure up visions of giant machine tools cutting different materials with very sharp objects or dangerous lasers.
Glowforge has a product that uses lasers to perform the subtractive process. While there are expensive, industrial 3D laser cutters, there are very few inexpensive desktop laser cutters. And they are all positioned as “cutters”, rather than a 3D laser printer, which has a broader range of functionality.
In the same way that Makerbot completely disrupted the 3D additive manufacturing industry, we believe that Glowforge can completely disrupt the 3D subtractive manufacturing industry. In support of our premise, the two leaders of Makerbot – Bre Pettis and Jenny Lawton – have each invested alongside us in Glowforge. We are also joined by our close friends at True Ventures, who were also our co-investors in Makerbot.
We are excited to be working with Dan Shapiro, Tony Wright, and Mark Gosselin, all multi-time entrepreneurs with a broad range of experience. Guys – thanks for letting us join the gang!
Our investment in Simbulus
We’ve recently invested in Simbulus the makers of Woot Math. Located in Boulder, CO, the company is building a software application that we believe will revolutionize the way that kids learn math.
We’ve long believed that current education methodologies are archaic. The process of education seems to be one of the last markets that have resisted technological advancement. From time to time, we’ve considered whether or not we wanted to pursue an education investment theme, although to date, we have not made that decision.
That being said, we are all highly active in education. Ryan has sat on the board of his son’s school. Seth has three grade-school aged children and with them has worked with a large number of apps and technologies targeted at students, parents and schools. Brad and Jason have both been adjunct professors at the University of Colorado. We all participated in the Techstars Kaplan program, which was based around education technologies. We’ve each seen the challenges up close.
Woot Math a tablet and web application that teaches kids fractions, which are broadly recognized as the gateway to algebra success. In time, they intend to move up to more advanced materials where the addressable market is over $400 million a year (math only). The cost is between $6.99 and $8.99 a student and they sell to educators – from superintendent down to individual teachers and parents.
Woot Math is unique in that it personalizes and adapts to each student and fully supports in-class out out-of-class sessions. It also provides feedback to the teacher to help them optimize their lesson plans and knowledge about particular students. Woot Math is also funded by the National Science Foundation through an SBIR grant, a great program for innovative startups.
If the company is successful in building a big business and able to move to higher complexity levels, we believe there is room to go into other competency verticals.
The company was founded by Krista Marks, Tom Fischaber, Sean Kelly, Brent Milne, and Jeff Ward. We were advisors to their last company Kerpoof that was acquired by Disney in 2008, and we’ve known Krista and Brent for many years and have always wanted to work with them.
A little over a year ago – and very shortly after AngelList announced their “syndicates” functionality – we decided rather than postulate about how AngelList Syndicates may or may not change, transform, or challenge the venture capital industry, we’d jump in with both feet. When we formed FG Angels we were the first institutional venture firm to launch a syndicate. We committed $2.5M to the effort with the intent of “making 50 investments between now and the end of 2014 in companies that list on AngelList…[investing] $50,000 of our own money in each company and the balance from our syndicate.”
Since that time we’ve invested in 42 different startups through AngelList (our first investment – OnTheGo – closed on 12/19/13, our most recent investment – Sportsy – closed last week). Our syndicate currently has 176 members and a total backing of $570k for each investment. We thought now would be a good time to reflect on how the program is going and share some of the underlying data from our experience.
Below are some of the key statistics from our year on AngelList:
Total number of investments: 42
Average syndicate investment amount per deal: $316k
Largest syndicate investment in any single deal: $785k
Total number syndicate investors (syndicate members who invested in at least one FGA deal): 116
Total number of investors (all investors who have joined FG Angels in at least one deal): 410
# of investors who have participated in at least half of FGAngels deals: 30
Most active syndicate member investment total: $905k across 41 of our 42 FG Angels deals
% of investments with a female co-founder: > 20%
Overall, FG Angels has been a good experience for us. It’s given us the ability to work with some great entrepreneurs (you can see all of the companies FG Angels has backed so far here) and to make investments in a number of seed-stage companies that we would otherwise have passed on had the program not existed (by way of comparison, Foundry Group has made investments in nine new companies in this same time period).
Going forward, our plan is to complete the 50 investments that we initially allocated for and to continue to invest in promising seed stage businesses through the FG Angels platform beyond that. We don’t have a set number of companies that we intend to target with this expansion, rather we’ll keep investing so long as we feel that the program is adding value to the portfolio and driving returns for our investors and syndicate members.
