Jenny Fielding founded Switch Mobile, a voice-over-IP company, in 2006 and sold it in 2009. Silicon Valley had a well-established investor and advisor community for early-stage companies at that time, but New York City did not. She was located in New York City. Without mentors to advise her, Fielding made a lot of predictable mistakes.
To help early-stage founders avoid mistakes and as a way to give back, Fielding began mentoring and coaching early-stage founders as well as investing as an angel in their companies. "I'd meet these passionate founders, some of whom reminded me of myself," said Fielding. "I just wanted to help them start their journey. So I put in small amounts of money — about $25,000 — into their companies."
Founders who succeed at scaling their companies often give back to the community by supporting other ambitious start-up entrepreneurs by acting as mentors and providing funding. Receiving this kind of support was associated with approximately two times greater likelihood of performing well, according to Fostering Productive Entrepreneurship Communities: Key Lessons on Generating Jobs, Economic Growth, and Innovation, a research report by Endeavor.
Some successful entrepreneurs also band together to be part of formal programs. Fielding's passion for supporting entrepreneurs led her to manage several Techstars NYC programs including Techstars IoT, the Barclays Accelerator and the Cedars-Sinai Accelerator. In 2018, she became Techstars NYC's managing director. Her goal is to build deep ties with local organizations that foster community and promote inclusivity. "New York is one of the most diverse cities in the world, and Techstars is committed to having founders, mentors, partners, and program staff who reflect this mix of people and cultures," she wrote in a Techstars blog post.
It's no secret that the entrepreneurial tech sector has a diversity problem. Both the organization and Fielding know that money fuels the success of early-stage companies and that it is hard for founders — especially minorities, women and other underrepresented groups — to raise it. As a top accelerator in the US, according to Seed Accelerator Ranking Project, Techstars invests a small amount. But, of course, more is needed.
Yet, fewer investments are being made. While more money is being invested at the angel and seed stage — when companies are identifying product/market fit and solidifying go-to-market strategies — the deal count is down dramatically, according to The 1Q 2019 PitchBook-NVCA Venture Monitor. Data from the Center for Venture Research confirms this trend. Capital is being concentrated in fewer but more developed startups. Investors are derisking by funding more established companies. With fewer companies getting funding, startups are becoming increasingly savvy at bootstrapping operations, and at securing funding and resources through alternative means.
While there is no single path to developing a community to foster entrepreneurship, Fielding thinks that developing sources of funding is critical. To that end, with the help of three other like-minded entrepreneurs — Matthew Brimer, cofounder of General Assembly; Katie Hunt an early employee at Warby Parker; Adam Carver, CEO of Battlestar Capital and an employee of AngelList — they raised a small fund of less than $10 million. Called The Fund, it invests in pre-seed and seed tech companies based in New York City.
"We are a first check fund, which supports the next generation of great companies being built in New York City," said Fielding. The limited partners — the investors, which The Fund calls members — are some 75 successful New York City startup founders including Casper, ClassPass, ConsenSys, Handy, Meetup, and OneMedical. Unlike limited partners in venture capital funds who are not involved with portfolio companies, The Fund is a community endeavor. The members of The Fund source deals, help conduct due diligence and mentor portfolio companies.
The Fund does not deliberately seek companies with diverse founders, but its portfolio is extremely diverse. Members, who are diverse founders, make all referrals. "When the people making the decisions are diverse, then the portfolio is diverse without needing a thesis around it," said Fielding. "About 70% of our portfolio has a diverse founder and 45% of the portfolio a female founder." The Fund does not do any outbound marketing.
The Fund uses AngelList for its infrastructure, which provides the back-office infrastructure at an affordable price. The Fund is planning to expand into other locations. "We think that this model can be replicated in burgeoning entrepreneurial ecosystems," said Fielding. It's building communities of angels in other cities who will become the general partners. "We think innovation is everywhere, but capital is not," she continued. Think Austin, Denver, Salt Lake City, Southern California, and even Europe.
How will you support and grow entrepreneurial ecosystems?
