Co-founder and general partner Ali Hamed describes his firm CoVenture as “a new type of venture firm, a service-focused firm” — and he’s announcing that it’s raised $3 million in funding.
For the most part, the money won’t go directly into startups, but rather to funding CoVenture’s operations. Hamed told me the firm employs 55 developers and designers in Lahore, Pakistan, and it offers their services to startups in exchange for equity.
“In New York City, the biggest dearth of anything is engineers — it’s the number one limiting resource,” Hamed said.
But shouldn’t startups be building this stuff themselves? Hamed argued that this can actually be the wrong approach, particularly if you’re a founder without any technical skills. Sure, you could try to find a technical co-founder, but that might mean hiring the first remotely qualified person you find and giving them a crazy amount of equity, even if they’re not really ideal for the job.
Wouldn’t it be better to wait until you’ve got a real product and some users, and then raise some money, and then hire a technical team? At least, that’s what Hamed is proposing.
He also noted that CoVenture backs “tech-enabled companies” rather than tech companies. In other words, the firm isn’t looking for startups with a big technical breakthrough, but rather experts in other fields who want to use technology to solve problems in those fields.
“The CEO still needs to be head of product,” Hamed added. “It’s our job to teach them how to be head of product.”
The firm is also announcing that it has expanded its team with two new partners, Thatcher Bell and Mike Beller. Bell is an Investor-in-Residence at Cornell Tech, the university’s new graduate program in New York City, and he was previously a partner at Gotham Ventures. Beller is a member of the Advisory Council for Entrepreneurship at Cornell, and he founded Diamond Technology Partners, a consulting firm that went public before being acquired by PwC.
Those Cornell connections probably aren’t a coincidence. Hamed was a student there — specifically a former athlete who redirected his energies into entrepreneurship after an injury. He told me that he and Bell lead the investing side of the business, while Beller and their fourth general partner, Jamil Goheer, lead product.
The new funding comes from a whopping 57 investors, including Bob Adelson of Osage Partners, Gerson Lehrman Group, and Great Oaks Venture Capital. That might seem like, well, a lot, but Hamed said it helps him “get dealflow from 57 people who are active in the startup scene.”
And while most of the money will go to operations, CoVenture can also invest a little of it to give companies a “bridge” while they raise other funding.
CoVenture says it has invested in 15 companies so far, including Enriched Schools (temporary staffing for schools), Bib + Tuck (secondhand fashion), and FireStop (dispatching software for fire stations). It plans to invest in another 22 companies over the next two years.