Tandem Capital, which claims to be Silicon Valley’s first startup accelerator to focus exclusively on early-stage mobile businesses, is announcing today that it has raised $32 million for its second fund, Tandem Fund II.
The capital comes from a host of executives, entrepreneurs, and organizations, including notable industry veterans (and LPs) like Verifone CEO Doug Bergeron, former Apple and Oracle general counsel Dan Cooperman, Google founding board member Ram Shriram, Playdom founder Rick Thompson, NetApp Board Chairman Dan Warmenhoven, and Amazon SVP of Consumer Business Jeff Wilke — to name a few.
Tandem Co-founder Doug Renert tells us that the fund’s investors were chosen not by the amount of money they were willing to invest, but as strategic investors that would be able to add direct value to its accelerator. “With Tandem II, we chose people that we knew would bring something to the table beyond money,” Renert said, “those who are in the game not just for the return, but to actually work with and help entrepreneurs, are looking to partner, and really become part of the equation.”
That may sound like spin, but Tandem is serious about taking a creative, hands-on approach to working with its mobile startups. Even though Tandem is a capital fund (that’s invested in and advised startups like Juice In The City, Playhaven, and ZumoDrive), a startup accelerator, and a team of advisors, the founders refuse to be labelled as such. “Tandem is not a VC firm or a group of angels or advisors who simply lob ideas or suggestions from afar,” their site proclaims.
So, startups, if you’re not comfortable with a hands-on approach, you might want to send your applications elsewhere. That being said, the capital fund/accelerator has a lot to offer. Literally. It will spend one-third of its new fund on providing its chosen startups with $200K in seed funding (with the remaining two-thirds reserved for follow-on rounds), free workspace, and daily meetings and hair-braiding (just kidding) with mentors and advisors in areas like business development, product design, marketing, user acquisition, etc.
Tandem is making a concerted effort to steer away from the large-scale approach pioneered by Y Combinator, designing an accelerator program that takes place twice a year, for a six-month duration, and generally includes six startups. Renert said that they’d tried 3-months but that was too short and a year, which saw companies relying too much on the accelerator for, well, everything. It’s all about finding a balance.
A six-month program, relatively small class sizes, and the fact that there’s no demo day or set graduation date (teams can hang out at Tandem as long as they want) all work towards setting it apart from accelerators like YC and 500 Startups — well, that and the fact that it focuses exclusively on mobile companies.
But, so far, its alternative model has been working out. According to the Renert, the accelerator has seen a 90 percent success rate with its portfolio companies thus far, including ZumoDrive being acquired by Motorola in 2010 and YouSendIt’s acquisition of Attassa last year. Localyte and FlightCaster were also both acquired in 2010, with the remainder of Tandem’s nine investments having gone on to raise second rounds.
There also appear to be some success stories brewing in its current batch as well, like BitRhymes, for example, which makes social (and casino) games for a female audience. The startup’s flagship title, Bingo Bash, has nearly three million monthly active users, is one of the top 30 grossing apps on the App Store, and is the number one casino game on the iPad.
Each of the four startups from its current batch have closed — or will soon close — follow-on rounds. This success, the co-founder says, has come from an improvement in how the Tandem team is identifying (or selecting) its startups. Today, he says, the team really hones in on good product teams that have proven they can build, even if they have zero market traction. If they can build a great product, we want to help bring them to market and raise capital, the co-founder said.
The deadline for the accelerator’s next program is on July 1st. Entrepreneurs interested in applying can go here.
Tandem is made up of a few entrepreneurs who have founded companies and taken them to liquidity. They now invest their time and money in othersâ€™ early stage software and Internet startups through Tandem. The Tandem team does not consider itself a VC firm. They refer to three primary types of capital that are required to make a startup successful â€“ Financial Capital (money), Human Capital (sweat) and Social Capital (friends). Tandem explains that VCs bring mainly financial capital, some...