Underscore.VC Looks to Align Boston Tech Community With Startups
This has been the spring of new Boston tech venture funds. While most of the area’s traditional players are still going—along with more recent firms—a new crop of investors is trying to change how companies get funded and built in this town.
Venture capitalists are all wrestling with similar issues: how to identify and get closer to promising entrepreneurs; how to bring their networks and expertise to bear on relevant startups to maximize impact; how to better align the investment and support process with founders; and, above all, how to bring more than just money to the table.
Over the next decade, we’ll get to see who wins—and what they’re able to achieve in Boston and beyond.
The latest exhibit is _Underscore.VC, formerly known as Assemble.VC. (The firm says the use of an underscore is a reference to a software coding practice—not a ploy to annoy journalists—but we’re only including the symbol this one time.) Underscore is led by a trio consisting of former North Bridge general partner Michael Skok; ex-Demandware CEO John Pearce; and C.A. Webb, former head of the New England Venture Capital Association.
The Boston-based firm has raised a $75 million fund and is now talking about its approach, which sounds pretty ambitious. It will invest in “cloud intelligence” companies (more on that below) at the seed and Series A funding stages. It will make those deals and help build companies by harnessing what it calls “curated cores” of experts—each “core” is pulled from a pool of people in the firm’s network who know the startup business. More than 50 core members are already engaged, the firm says.
The innovation here lies in the structuring. Underscore is organizing its network by sector and functional expertise; there are “cores” for cloud infrastructure, open-source software, commerce and marketplaces, big data and machine learning, sales, and marketing. The people involved include tech executives like Dries Buytaert of Acquia, former Constant Contact CEO Gail Goodman, and Ellen Rubin of ClearSky Data; but they also include some who are deeper in the trenches in areas like design, finance, and marketing.
Some are investors in Underscore’s fund, and some will be investors in a different way. “They can get shares in our companies, out of our pocket,” Skok says, as a reward for spending time working with startups. And some will be allowed to invest in companies along with the main fund. “They get exactly the same terms as us,” Skok says. “We genuinely make them partners of the firm. That’s never been done before.”
What he means is that it hasn’t typically been done in a systematic way. Around town, Accomplice invests alongside individual investors through its Boston Syndicates(BOSS) program. G20 Ventures and Pillar—another new fund unveiled this spring—have tech founders and CEOs as part owners and fund investors. OpenView Labsprovides direct support to portfolio companies. And most VC firms (and startups) have structures in place for compensating advisors and mentors.
But Underscore is trying to build something greater, and perhaps harder to grasp right away: a community of experts aligned with both entrepreneurs and the fund through a formal structure. With the purpose of making home-run investments, of course, but also “building companies to become iconic for decades,” says Skok (pictured above on left with the Underscore team).
It’s a common lament that Boston doesn’t have more homegrown anchor tech companies. Now Skok and others are trying to crack the code and create a process for making those types of businesses grow more readily.
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