When you’re a rookie, you’ve got to hustle, and Mike Rothenberg is ready to bring some sweat to venture. Today he unveils his seed fund Rothenberg Ventures. With up to $5 million to invest, it’s already backed eight startups just led Chat Sports’ $1 million seed round. Rothenberg’s lean firm hopes to offer big value through intros and advice for a chance to make small investments.
The 28-year-old Rothenberg explains that the goal of his one-man firm “is to open up my network to the founders and be available as a sounding board for them while taking a fraction of the cap table space that larger investors take. My network is often complementary to the other investors on the cap table, as they are often older than the founders while I typically invest in founders around my age.”
Rothenberg’s young, scrappy, go-getter attitude led him on a trip across the country to start the fund. And unlike most VCs, he was crashing on couches.
The Lean Fund
Rothenberg was a top 30 US math olympian in high school before going to Stanford. There he ran the famed Entrepreneurial Thought Leaders seminar for two years and helped bring in people like Mark Zuckerberg, Marissa Mayer, Jim Breyer, and Reid Hoffman to speak to packed auditoriums of students and local tech folk.
After their presentations, Rothenberg would get to talk to the speakers, and his favorite question to ask was “Before you made it, how did you figure out what you wanted to work on?” The answer he kept getting was “You might fail at whatever you do, so you might as well dream big, because then if you succeed, you succeed big.” That would eventually lead him to start a venture fund, rather than work at one.
While still at Stanford he built a tutoring company with 25 employees and later a real estate investment fund. After graduating he went into tech consulting at Bain, and will get his degree from Harvard Business School in May. But this summer he set off on a quest to explore whether he could make Rothenberg Ventures a reality.
“I rented out my apartment, wasn’t paying a lease anywhere, and travelled to six different cities to meet 50 investors, 50 potential LPs, and 50 entrepreneurs. I slept on couches so I didn’t have to get a hotel room the entire summer.” That’s a stark contrast to the easy living most people imagine when they think of venture capitalists. Rothenberg was treating his fund like the founder of a lean startup because he hasn’t had some big exit payday yet. Rothenberg Ventures is his shot at success, not a way to leverage his past accomplishments.
Betting On A Rookie
During his journey, Rothenberg tells me “I’d have three to four meetings a day, and the consensus was ‘you’re thinking about this the right way. You’re new to this, but you seem to have the right network, and are wiling to learn quickly.’”
Fourteen limited partners agreed to opt-in to backing Rothenberg’s seed fund. They include Draper Fisher Jurvetson’s Brandon Farwell, and other professional investors, high-net worth individuals, founders, and executives. They hail from Silicon Valley, LA, Cambridge, Texas, and beyond. Rothenberg Ventures plans to make around 25 investments in the $10-100K investment range, plus lead a few rounds, devoting time to each startup in his portfolio.
The LPs believe in Rothenberg’s value proposition, which partly relates to his age. “Almost all my deal flow comes from entrepreneurs, people at Stanford with me, people at Harvard with me. I know a lot of people our age. The average age of my LPs is significantly older than me, and they don’t necessarily have access to these deals.”
For startups, Mike’s connections and proximity to cutting-edge ideas could make him a valuable addition to their cap tables. “I can give them an intro to someone they can hire, find investors to fill out a round, and help them figure out their business problems.”
They Like Mike
More than seven companies have now taken on Rothenberg Ventures. Mike says “Everyone I’ve invested in has founders that are the right match for the market.” The portfolio now includes:
- Careport Health – A Healthcare IT company focused on managing post-acute care needs – Harvard MDs and MBA founders
- Chubbies – A clothing startup with impressive marketing and early traction – Stanford founders
- Swing By Swing Golf – A mobile app for all your golf needs including a GPS range finder, course maps, media – Harvard founder
- Bloodhound – A complete mobile solution for event programs – Stanford founder
- New Hive – An online blank canvas for creativity
- 27Bards – A tour booking and management software company – Stanford founder
- Chat Sports – A personalized sports news app, the seed round of which was just led by Rothenberg Ventures this week
As Mike said, a lot of these companies have young founders he went to school and are deals that older VCs might not have gotten a shot at. The startups were convinced by his willingness to get deeply involved, not just cut a check.
Chat Sports’ CEO James Yoder tells me “We consider him smart money vs. dumb money from the first VCs to make an offer. He created an account and saw the value of a personalized sports page for the web before he even met me. He can give product feedback, and his connections can help Chat Sports grow faster than if we took money from elsewhere. He wants to get his hands dirty and open up his rolodex to us, and that differentiated him from any other investor we spoke to.”
Can One Man Make It Work?
Turning Rothenberg Ventures into a success is not going to be easy. Mike is quick to admit that founders and especially LPs are taking a chance with him. He’s never even worked in venture, and is still looking for a serious mentor. But he says “ultimately, they think of me as a startup. I feel a very strong fiduciary duty to my LPs even though they know they’re taking a lot of risks. If I return zero, I think my investors would be forgiving, but that would be a big disappointment. If it’s an utter failure it’s hard to imagine anyone will give me any more money.”
On the other hand, “If it’s a big success I can keep doing it. If it’s a modest success, I can keep doing it.” Why not get some experience at a firm first? Rothenberg tells me “I think it’s wrong to think you’re necessarily going to learn the most by paying your dues. People who work at a big company aren’t engaged. That’s a slower trajectory. But if you’re young and jump in, sure you’re going to make a bunch of mistakes but you’re going to learn quickly.”
Going fresh from Harvard Business School to starting a venture firm is ambitious bordering on audacious. But there’s more and more proof that young people have a keen eye for the future of tech. Sure, Mike isn’t in 10th grade, but at 28 he can strike a balance between being young enough to be immersed in the next big thing and old enough to understand the world it’s disrupting.
And for founders considering whether to bring a small Rothenberg Ventures investment onto their cap table or go with more established firms, Mike asks, “Would you rather have five me’s or one of them?”