Capital-as-a-Service: A New Operating System for Early Stage Investing
At Social Capital, we’re most excited about entrepreneurs that challenge assumptions, that take a non-consensus view of the world, and then validate that view with experiments and data. It’s only natural that we’d apply that same lens to our own discipline. In that process it’s become clear that some of the assumptions upon which early-stage venture investing was founded don’t hold to be true. With this insight, we’ve been working on something with the potential to disrupt the status-quo and accelerate our mission: capital-as-a-service, a new operating system for early-stage investing.
Before I talk too much about the solution, let me offer some background on how I first came to understand the problem. I’ve only been a professional investor for two years, but I started picking startups long before I added “investor” to my LinkedIn profile. I’ve spent most of my career in product management, building B2B SaaS products such as SurveyMonkey, Optimizely, and DocuSign. In the making of these unicorns I was part of several traditional venture fundraising rounds. As an operator, I found the process deeply frustrating, inefficient, opaque, arbitrary, and most bewildering of all: distracting! Energy that should have been focused on moving the business forward was spent instead on pretty PowerPoints and superficial pitch meetings.
Two-and-a-half years ago, as I was looking for the next opportunity to get excited about, I joined Social Capital as an Entrepreneur-in-Residence still saying I would NEVER become an investor. But, as I met the team and found a set of compatriots ready to question the same assumptions that I had questioned and lean into the same non-consensus views that I had been forming, I realized that becoming an investor didn’t have to mean I was part of the problem. In fact, it could be an opportunity to be part of the solution. Since joining Social Capital I’ve immersed myself in the world of venture investing and have realized that the consensus view of the industry today is flawed.
It is not true that there are too many dollars in venture.
Today it seems fashionable to say that there’s too much money in venture. You can look left and right and see companies solving one-percenter problems raising new rounds of funding when they should be failing fast and cheap. Or companies incinerating heaps of venture dollars in spectacular fashion that would have been better served by less funding and more focus. But, it’s not because there’s too much money, it’s because that money is chasing too few opportunities.
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