Confronted with this evolution we made a decision to change Homebrew. Pushing aside, for the time being, ownership targets, institutional venture models and other people’s money.
In other words, Satya and I wanted to maximize our time with the bees themselves, not the size of our beehive and support systems necessary to prioritize scale.
What there isn’t a whole lot of: Early stage investors with institutional lead check experience (and a small support team, large networks, etc), who are investing their own capital, in a flexible manner, and then working post-investment to provide additional ongoing support. This is Homebrew Forever.
See: Best summarized by the following list of ‘referral sources’
Cold Inbound: Steady (which is good — we see a lot)
Cold Outbound: Slight increase (we’re trying to do more of this now but still retuning our processes)
Angels: Steady, but we need to continue creating relationships with new angels
Seed Funds that write non-lead checks: Down by ~50%. We still see a ton of collaboration with the funds we’re closest with, but others have definitely taken us off their list with our model change. Not for competitive reasons (I don’t believe) but because they are primarily trying to help a startup find a lead investor, and we used to be that for them, but now rarely lead seed rounds. So they might like us, think we’re useful to companies, etc but their ‘job to be done’ is to find a lead because that closes the round -AND- helps secure their allocation.
Previously ‘Competitive’ Seed Funds and Multistage Funds: Up by 100%. So this is the other side of the coin from above. The funds we were always friends with but where our shared ownership goals made co-leading seed rounds fairly unlikely are now much more likely to share opportunities with us (and us with them). And the larger multistage funds who would normally lead A rounds for our portfolio but where there wasn’t much collaboration with their seed practices, well, that’s switched too. What I’ll emphasize here is that we don’t seek out FIRMS, we seek our GPs. That’s to say, there are ~24 or so GPs spread across an almost equal number of firms that I just LOVE to work with on cap tables, and I’m targeting them like a thirsty multichannel marketer.
Overall I’m happy with 2022 opportunity flow but we’re not even close to the performance ceiling and have a bunch of work in 2023 to improve.
Win: 11 offers made, 11 offers accepted. The ‘sacrifice’ we made to achieve this win rate is of course we’re now predominantly deploying six figure checks instead of seven figure ones (we did one new investment greater than $1m and brought in some friends on that one for a seed SPV), but that’s the goal here anyway. Bespoke beekeeping instead of agribusiness, remember?
Side note: I did get ghosted by an entrepreneur on a potential personal angel deal and that stung (bee pun!) because it was someone I’ve lightly known for a while, he asked me early for help/advice, acknowledged that when he raised money I’d like to angel, then stopped returning communications once the round finalized. See, it happens to investors too, not just founders.
Support: Homebrew tries to be a force multiplier for founders, which compounds over time, improving their probability of building the best version of what their company could become. Neither Satya or I would continue doing this work if we were turned into passive investors, no matter the financial success.
so tldr, we’re happy at the day-to-day level but working on the higher level product and go-to-market with a sense of urgency to turn ‘good’ to ‘great.’ Just like many of the startups we’re fortunate to support!