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Exponent Founders Capital, an early-stage enterprise agency based by alumni of startups reminiscent of Plaid, Robinhood and Ramp, has closed on $75 million in capital commitments, TechCrunch is the primary to report.
The agency, which is rising from stealth at this time, raised $50 million for its first fund in November of 2021.
Managing Companions Charley Ma and Mahdi Raza co-founded Exponent after assembly whereas Ma was main fintech progress at Plaid, and Raza was main progress and funds at Robinhood. On the time, Robinhood was one in every of Plaid’s largest prospects, so the pair typically discovered themselves on reverse sides of the negotiating desk.
The pair invested individually as angels earlier than teaming as much as begin their very own enterprise agency.
Exponent, which focuses on enterprise SaaS, fintech, infrastructure and GTM (go to market) software program corporations, invested in about 40 startups out of its first fund. Amongst these startups are Apollo.io (which raised $100 million at a $1.6 billion valuation in August), observability platform Chronosphere (which raised $115 million at a $1.6 billion valuation in January) and legal-tech startup EvenUp (which raised $50.5 million in June).
The agency has already had some exits, as nicely, together with software program startup Tactic being offered to TaxBit earlier this yr and different offers Ma says might be disclosed “quickly.” As angel traders, the pair backed the likes of Fashionable Treasury, Unit, Moov, Lithic, Persona, Stytch and Persona, amongst others.
Ma was one of many first enterprise hires at Plaid the place he led the fintech and developer gross sales vertical in San Francisco and helped construct out the corporate’s New York workplace. Later, he was one of many first enterprise hires at expense administration startup Ramp and helped launch its company card as that startup’s head of progress. Extra just lately, Ma served as the pinnacle of progress at Alloy, an identification and threat infrastructure platform for monetary establishments.
Raza grew to become an operator after roles in fintech and know-how funding banking at Evercore and investing at GIC. He labored in progress and funds at Robinhood earlier than becoming a member of Stytch to steer early progress there.
“An enormous shift for us in fund one was shifting upwards in possession from our typical ‘pleasant’-sized angel verify, to being one of many bigger traders within the spherical, to outright main and pricing early-stage rounds,” he informed TechCrunch. Actually, when investing out of its first fund in 2023, the agency led or co-led the rounds of all the businesses by which it invested.
Funding thesis
Exponent’s verify dimension depends upon the spherical dynamics, however can vary from $500,000 to $5 million. Ma mentioned. The agency goals for minimal 5% to 10% possession within the corporations by which it backs.
Seventy-five % of the agency’s new fund might be used towards investing on the early stage, together with pre-seed rounds. The rest is reserved for follow-on investing. Exponent is concentrated on investing within the U.S. and Europe.
The second fund shut was oversubscribed, in keeping with Ma, who cites Carnegie Mellon College, Prepare dinner Kids’s Well being Care System, LGT Group and Subsequent Legacy as a few of Exponent’s restricted companions (LPs). The agency plans to put money into 20 to 30 corporations out of its second fund.
“We’re a thematically centered, generalist agency protecting all components of enterprise software program — together with vertical AI, infrastructure and utilized AI — and fintech and funds,” Ma mentioned. “Particularly, we’re excited by the chance for companies and outputs as software program, constructing core mandatory workflows throughout buyer experiences in lots of domains.”
“Over time, we’ll proceed so as to add new themes into our arsenal — for example, just lately we’ve been going deep into authorized companies, pharmaceutical workflows and core banking infrastructure,” he added.
Classes realized
The pair imagine their backgrounds as each operators and angel traders offers them an edge as traders.
“A very powerful lesson we’ve realized is the right way to strategy issues from a primary rules perspective. Each firm that we’ve labored for has gone by way of completely different durations of progress and every additionally had very completely different GTM motions,” Ma mentioned. “We discovered that attempting to use a framework that labored in a single firm, not often labored instantly at one other and is the truth is a standard lure that many former executives and founders fall into when working with new corporations. What’s extra vital is asking the fitting questions and going as deep as attainable into determining what’s blocking progress throughout GTM, product, crew, market, prospects, and many others.”
Fundraising as an rising supervisor in 2023 was “undoubtedly not simple,” Ma admits.
“Everybody we talked to gave us the recommendation that this was the worst time to fundraise within the final decade, however we had been beginning to get pulled into a couple of institutional LP conversations, so we determined to kick off our fundraise in earnest in April,” Ma mentioned. “We had been intentionally focusing on long run, nonprofit institutional traders for fund 2 with a goal of $60 million and a tough cap of $75 million.”
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