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The 'Godfather of Silicon Valley's' investment firm, which helped launch Facebook, Twitter, and Airbnb, says it won't raise a new fund
Ron Conway, one of the tech industry's most prominent and powerful startup investors, who had early stakes in Facebook, Twitter, and Airbnb, said in a Medium post on Thursday that his early-stage investment firm, SV Angel, will not be raising a new fund.
Conway and his son, Topher, who co-manages the fund, said they will continue to use the SV Angel brand and cut checks — but in smaller amounts and as angel investors.
"Writing smaller checks allows us to stay true to our DNA, remain nimble and fulfill our commitment to supporting founders," said the letter, which was co-signed by the Conways, as well as general partners Brian Pokorny, Kevin Carter, and Robert Pollak.
The letter described a changing ecosystem in early-stage tech investing — a space that has "gone through significant changes over the last 10 years."
Seed funding was once a field in which angel investors and specialized firms invested tens of thousands or hundreds of thousands of dollars into unknown startups. Since then, the competition and the prices have grown significantly. On Thursday, for instance, San Francisco women's health startup Modern Fertility raised $6 million in seed funding (in a funding round that included SV Angel).
While there were just a handful of funds investing in seed rounds when SV Angel launched in 2009, today, there are thousands of firms and individuals investing. In 2016, about 250 venture capital funds raised over $40 billion — breaking a 10-year record — to deploy into startups, according to the National Venture Capital Association.
As billions and billions more dollars flowed into venture capital, it become tougher for some investors to compete for participation in a company's funding round.
With it no longer raising outside funding, SV Angel will operate, effectively, as a family fund run by the Conways. They expect to invest $25,000 to $100,000 per company.
Here's the Medium post in full:
"The investing ecosystem has gone through significant changes over the last 10 years. When we started SV Angel, there were just a handful of funds investing in seed rounds. We all worked together for the best outcome of founders and our early investments in companies like Twitter, Pinterest, Airbnb and Square were done in that spirit. We invested in great founders who pitched a compelling vision for the future, rarely having more than their word to invest on.
"Today there are thousands of firms and individuals investing in seed rounds. Seed investors are raising larger funds, becoming more ownership-focused and investing primarily on adoption and traction. Seed investing now encompasses both backing founders at the earliest stages of a company and investing in teams with early-adoption. The amount of money raised in seed rounds has doubled and valuations have increased significantly.
"As we thought about how best to serve founders in this environment, we also realized we no longer need to write big checks in order to help. There are many great investors that we'd like to partner with and being involved at any level in a company we like is more important to us than getting the right allocation for the fund.
"As this dynamic materialized more, we realized there were diverging interests between what's best for founders and what's best for our investors.
"For this reason, we have decided to go back to basics and invest as individual angels instead of raising a new fund. Ron and Topher will continue to use the SV Angel brand going forward, investing $25k — $100k per company. This allows us to better align ourselves with founders and other investors which is ultimately what' best for founders.
"With these changes, we will scale back the existing SV Angel team. Our partners, Brian Pokorny, Kevin Carter and Robert Pollak, will stay on as advisers to SV Angel. We all plan on remaining active members of the investing community and collaborating with each other on future investments.
"Ron and Topher will continue to co-manage the existing SV Angel funds to help founders and evaluate follow-on opportunities.
"Writing smaller checks allows us to stay true to our DNA, remain nimble and fulfill our commitment to supporting founders. This approach and unmatched relationship network will continue to set us apart in our ability to support startups at every turn.
"We know that if we continue to get behind the right people, success for us and the founders we support will follow.
"- Topher, Ron, Brian, Kevin, Robert"
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