I have been struggling with the latest ecommerce trend to spread like wildfire: “” in a box. The list of startups is long: meundies, whittlebee, blissmo, beachmint, babbaco, kiwicrate, foodzie, birchbox (met the founders of birchbox recently at Summit Series and they are impressive)
Yesterday was a great day. Freestyle is backing a kickass, made entrepreneur that we missed in his last startup. But we had to go through a little hell to get there and it was mostly my fault. For reasons that I will explain, freestyle now has a minimum investment size: 500k.
We raised $27mm in May and will invest that capital in 20 - 24 companies over 2 years. We also reserve 50% of our fund for follow-on investments. Back to the 500k minimum. We make fewer investments/partner/year then most seed funds. I target just 5 startups per year because that’s all I can handle. We strive to be the most active seed investor in every startup we back until they raise their series A. That’s our goal and we achieve it 90% of the time.
We also never make more then one bet in any segment and we define each segment broadly so that we aren’t ever in conflict. We want our relationships to be as simple and clean as possible. So because we invest in so few startups every year and we only target one startup per broadly-defined segment, our investments need to be meaty, substantial, meaningful. We believe that 500k captures that need. It’s less about ownership percentage and more about haveing enough capital at risk to feel like we are totally in it with the founders.
So back to yesterday”s conflict. I didn’t communicate our minimum clearly when the entrepreneur and I were “dating”. When I “proposed”, I surprised the entrepreneur with my 500k requirement. Over the weekend we both stewed on it, the entrepreneur came back, I reiterated our belief in him and the entrepreneur kindly agreed to let us in with 500k.
We both felt great about it and I promised him that he would feel it was dilution well spent. He will get everything he wants from us and hopefully a little more.
fuck your lux