5 ms·

Founders Fund Raises $1.3B

57 points by bko 11y ago

CaiGengYang 11y ago
I wonder how the 1.3B will be distributed ? How much capital allocated to invest in each startup ? What is the algorithm used to generate the investment decisions ? How do they judge which founders to fund ?
- lowglow 11y ago
  We're thinking of opening a fund for Baqqer to invest in startups/founders there, so I think about this. I would typically value the worthiness of a founder by several loose criteria: 1. Founders/Product fit 2. Product/Market fit 3. Social Proof 4. Team 5. Progress and frequency of activity 6. Dedication 7. Grit/Character 8. Past successes/failures (overall experience)
  - logicallee 11y ago
    take facebook: 1: Mark Zuckerberg wasn't a particularly social guy, so his founders/product fit was 0. 2. product/market fit: Facebook was a social network just for schools, this doesn't really show any product/market fit. it's a super niche product with no obvious revenue model. 3. founder had zero social proof. couldn't even bag any advertising clients. 4. founder didn't get along great with team, in fact all team members sued him. 5. the very first verison of the site looked and features it had in 2004 - https://www.quora.com/What-did-the-first-version-of-Facebook-look-like https://www.quora.com/What-did-the-first-version-of-Facebook... does not show that much progress or activity. 6. Mark was just a Harvard student, so were the other team members, no dedicated staff at all. 7. No basis to judge. 8. No prior past experience to judge from. Based on the above there is a 0.00% chance that you would fund Facebook at the seed stage, at any valuation. Out of 8 standards, you would have to give them a 0/8 on nearly all of them. but hey, the fact that your investment thesis fails with perfect hindsight, doesn't mean it can't succeed when things are a lot more murky. go get 'em.
    - akhatri_aus 11y ago
      Facebook and Apple are always given as the exceptions to all typical precedent when it comes to VCs. Yet these two are the definition of outliers in terms of value created by a long shot.
      - logicallee 11y ago
        I disagree with you and think they're completely typical, and that Zuckerberg's and Steve Jobs' megalomania and complete insanity of vision are completely typical of that success story. Take airbnb for example. you get the idea. I am saying that lowglow is like an NBA basketball coach who will only draft white men under 5 feet tall and over 30, on the theory that they'll try harder since they have something to prove. well, good for him. it's true that Michael Jordan is an outlier at 6 ft 6 in. But if you're only going to draft white men over thirty and under 5 feet tall, your team is going to suck. The investment thesis needs revision.
    - selectout 11y ago
      This is an example of just Facebook. I think all big time VCs have turned down mega companies that would have made them $$$$$. Also, Zuck did have a crazy grind work ehtic which would have gotten him most likely 1 point. And he did have a good history of projects he had built before and shown competence, maybe not multi-million dollar ventures but a lot of good chops.
    - rifung 11y ago
      > Based on the above there is a 0.00% chance that you would fund Facebook at the seed stage, at any valuation. Out of 8 standards, you would have to give them a 0/8 on nearly all of them. but hey, the fact that your investment thesis fails with perfect hindsight, doesn't mean it can't succeed when things are a lot more murky. go get 'em. I don't know if the given strategy would work, but saying it would not have bought FB isn't really useful in any way. After all, to be a successful investor you don't need to invest in every successful company; you only need your portfolio as a whole to be successful.
    - lowglow 11y ago
- stephenhuey 11y ago
  The answers to those question are not public. Quotes in the following articles provide a bit more insight than the posted link: http://www.businesswire.com/news/home/20160325005076/en/Founders-Fund-Closes-1.3-Billion-Venture-Capital http://www.businesswire.com/news/home/20160325005076/en/Foun... http://nypost.com/2016/03/16/tech-billionaire-peter-thiel-raises-1b-to-plow-into-startups/ http://nypost.com/2016/03/16/tech-billionaire-peter-thiel-ra... http://www.businessinsider.com/founders-fund-vc-scott-nolan-wants-startups-that-burn-cash-2015-4 http://www.businessinsider.com/founders-fund-vc-scott-nolan-...
brianbreslin 11y ago
I'm curious what people's experiences have been with Founders Fund investing in your companies. feel free to answer anonymously.
- ffceo 11y ago
  Responding anonymously to show there's no incentive to give praise. They led our (largish) seed round. Had a slightly negative experience with one partner, but the median person we worked with beat most firms we talked to in first principles thinking by quite a margin. They were all very bright and had a wide range of knowledge. They were far less interested in "who else is in" and more interested in your analysis of your business from basic building blocks. When we were doing due diligence on them, the main "complaint" we heard from people who had raised from them is that it's hard to read their judgement. They may seem bearish on you then invest last minute or the opposite. Most people had great things to say though. Hope this is helpful for anyone considering talking to them.
  - RateOurInvestor 11y ago
    Hi ffceo, Thanks a lot for your comment on FF. Feedbacks on investors are important for entrepreneurs, but unfortunately hard to find. I know too many entrepreneurs who spent too long time chasing investors who are unresponsive, unhelpful, or worst ("zombie investors"). The comments from you and nickpinkston above actually inspired me today to put together a little project called "Rate Our Investor" https://news.ycombinator.com/item?id=11378769 https://news.ycombinator.com/item?id=11378769. It is a crowdsourced spreadsheet that collects entrepreneurs' feedback on investors. Hopefully you don't mind the plug =) Thanks again for the inspiration!
- nickpinkston 11y ago
  I've really enjoyed our experience with FF at Plethora. They led all 3 rounds we've done, and I definitely plan to continuing working with them. They also invest in some really "hard tech" business - like mine - so they're comfortable with highly technical / risky ventures - if you're ambitious enough in what you're doing. They do live up to their name as "founder friendly" and Peter likes to show off the numbers that show that founder-led businesses outperform "professional" led companies and that they've never replaced a founder. Our relationship with their team has been that they move fast and are quick to help without being overly pushy like many firms. Their model is to invest in founders who they think will run the business better than they can, not try to put on a ton of pressure. I've always felt they were trusting of my judgment while properly pushing back when needed. Please email me (nickpinkston@gmail.com) or reply below - I'll try to do a little AMA.

57 points by bko 11y ago

I wonder how the 1.3B will be distributed ? How much capital allocated to invest in each startup ? What is the algorithm used to generate the investment decisions ? How do they judge which founders to fund ?

lowglow 11y ago
We're thinking of opening a fund for Baqqer to invest in startups/founders there, so I think about this. I would typically value the worthiness of a founder by several loose criteria: 1. Founders/Product fit 2. Product/Market fit 3. Social Proof 4. Team 5. Progress and frequency of activity 6. Dedication 7. Grit/Character 8. Past successes/failures (overall experience)
- logicallee 11y ago
  take facebook: 1: Mark Zuckerberg wasn't a particularly social guy, so his founders/product fit was 0. 2. product/market fit: Facebook was a social network just for schools, this doesn't really show any product/market fit. it's a super niche product with no obvious revenue model. 3. founder had zero social proof. couldn't even bag any advertising clients. 4. founder didn't get along great with team, in fact all team members sued him. 5. the very first verison of the site looked and features it had in 2004 - https://www.quora.com/What-did-the-first-version-of-Facebook-look-like https://www.quora.com/What-did-the-first-version-of-Facebook... does not show that much progress or activity. 6. Mark was just a Harvard student, so were the other team members, no dedicated staff at all. 7. No basis to judge. 8. No prior past experience to judge from. Based on the above there is a 0.00% chance that you would fund Facebook at the seed stage, at any valuation. Out of 8 standards, you would have to give them a 0/8 on nearly all of them. but hey, the fact that your investment thesis fails with perfect hindsight, doesn't mean it can't succeed when things are a lot more murky. go get 'em.
  - akhatri_aus 11y ago
    Facebook and Apple are always given as the exceptions to all typical precedent when it comes to VCs. Yet these two are the definition of outliers in terms of value created by a long shot.
    - logicallee 11y ago
      I disagree with you and think they're completely typical, and that Zuckerberg's and Steve Jobs' megalomania and complete insanity of vision are completely typical of that success story. Take airbnb for example. you get the idea. I am saying that lowglow is like an NBA basketball coach who will only draft white men under 5 feet tall and over 30, on the theory that they'll try harder since they have something to prove. well, good for him. it's true that Michael Jordan is an outlier at 6 ft 6 in. But if you're only going to draft white men over thirty and under 5 feet tall, your team is going to suck. The investment thesis needs revision.
  - selectout 11y ago
    This is an example of just Facebook. I think all big time VCs have turned down mega companies that would have made them $$$$$. Also, Zuck did have a crazy grind work ehtic which would have gotten him most likely 1 point. And he did have a good history of projects he had built before and shown competence, maybe not multi-million dollar ventures but a lot of good chops.
  - rifung 11y ago
    > Based on the above there is a 0.00% chance that you would fund Facebook at the seed stage, at any valuation. Out of 8 standards, you would have to give them a 0/8 on nearly all of them. but hey, the fact that your investment thesis fails with perfect hindsight, doesn't mean it can't succeed when things are a lot more murky. go get 'em. I don't know if the given strategy would work, but saying it would not have bought FB isn't really useful in any way. After all, to be a successful investor you don't need to invest in every successful company; you only need your portfolio as a whole to be successful.
  - lowglow 11y ago
stephenhuey 11y ago
The answers to those question are not public. Quotes in the following articles provide a bit more insight than the posted link: http://www.businesswire.com/news/home/20160325005076/en/Founders-Fund-Closes-1.3-Billion-Venture-Capital http://www.businesswire.com/news/home/20160325005076/en/Foun... http://nypost.com/2016/03/16/tech-billionaire-peter-thiel-raises-1b-to-plow-into-startups/ http://nypost.com/2016/03/16/tech-billionaire-peter-thiel-ra... http://www.businessinsider.com/founders-fund-vc-scott-nolan-wants-startups-that-burn-cash-2015-4 http://www.businessinsider.com/founders-fund-vc-scott-nolan-...

brianbreslin 11y ago

I'm curious what people's experiences have been with Founders Fund investing in your companies. feel free to answer anonymously.

ffceo 11y ago
Responding anonymously to show there's no incentive to give praise. They led our (largish) seed round. Had a slightly negative experience with one partner, but the median person we worked with beat most firms we talked to in first principles thinking by quite a margin. They were all very bright and had a wide range of knowledge. They were far less interested in "who else is in" and more interested in your analysis of your business from basic building blocks. When we were doing due diligence on them, the main "complaint" we heard from people who had raised from them is that it's hard to read their judgement. They may seem bearish on you then invest last minute or the opposite. Most people had great things to say though. Hope this is helpful for anyone considering talking to them.
- RateOurInvestor 11y ago
  Hi ffceo, Thanks a lot for your comment on FF. Feedbacks on investors are important for entrepreneurs, but unfortunately hard to find. I know too many entrepreneurs who spent too long time chasing investors who are unresponsive, unhelpful, or worst ("zombie investors"). The comments from you and nickpinkston above actually inspired me today to put together a little project called "Rate Our Investor" https://news.ycombinator.com/item?id=11378769 https://news.ycombinator.com/item?id=11378769. It is a crowdsourced spreadsheet that collects entrepreneurs' feedback on investors. Hopefully you don't mind the plug =) Thanks again for the inspiration!
nickpinkston 11y ago
I've really enjoyed our experience with FF at Plethora. They led all 3 rounds we've done, and I definitely plan to continuing working with them. They also invest in some really "hard tech" business - like mine - so they're comfortable with highly technical / risky ventures - if you're ambitious enough in what you're doing. They do live up to their name as "founder friendly" and Peter likes to show off the numbers that show that founder-led businesses outperform "professional" led companies and that they've never replaced a founder. Our relationship with their team has been that they move fast and are quick to help without being overly pushy like many firms. Their model is to invest in founders who they think will run the business better than they can, not try to put on a ton of pressure. I've always felt they were trusting of my judgment while properly pushing back when needed. Please email me (nickpinkston@gmail.com) or reply below - I'll try to do a little AMA.