Yesterday, Mike broke the news on stage at Disrupt that SV Angel is doubling down with Yuri Milner once again to invest in all willing Y Combinator grads. Today, SV Angel is announcing another partnership, this time Ron Conway & crew are looking east. SV Angel and Lerer Ventures— which also announced a new fund yesterday– will announce today that the two are entering a formal partnership to invest in one another’s deals.
There are limits to how cozy they are getting. The funds are still distinct, with no direct financial stake in one another. And there’s no requirement or quid pro quo. Indeed, SV Angel’s fund is much larger, so there will likely be more West Coast deals being closed between the two. Like the Y Combinator deal, this is just an offer on the table for all new SV Angel and Lerer Venture portfolio companies. “It will always be at the discretion of the entrepreneur,” said SV Angel’s Ron Conway backstage at Disrupt.
So with such loose assurances, how do we know this partnership will amount to more than a nice marketing announcement? Because the two firms– while pretty established in their own spheres– have a lot to gain from one another. When you’re talking about being the very first money into a company one thing matters: Amazing dealflow. And if you aren’t living day-to-day enmeshed in a startup community you are miss the serendipitous moments that lead to robust deal flow. No matter how good an investor is things fall through the cracks. It’s the most intensely local part of being a venture capitalist, and if you are out of sight that’s an opportunity for a competitor. Lerer Ventures knows it can never match SV Angel’s deal flow, so it’s not going to even try. Likewise, even a firm as established as SV Angel doesn’t have Lerer’s tentacles into the New York media and advertising world– particularly now that former Huffington Post CEO Eric Hippeau is managing the fund full time. “We’ll be each other’s eyes and ears on each coast so hopefully we don’t miss the next great company,” Hippeau says.
Think of the random stories you hear about Conway solving a problem for a portfolio company by making a phone call to a well placed friend at a tech giant. If one of his companies takes Lerer’s money, Hippeau could make the same call in the media sphere. And for New York-based startups, it’s vice-versa. “This is all about creating more leverage in our relationships,” says David Lee, SV Angel managing partner.
I asked Conway and Lee if this was a continuation of the Yuri Milner strategy, and we should expect more deals like these when appropriate. One word: “Absolutely.”