It’s been a busy 16 months since former Goldman Sachs investment banker Scott Stanford and Menlo Ventures Shervin Pishevar formed Sherpa Ventures.
The two men, who met after investing in the Series B round for a young company called Uber, have managed to raise $150 million; made five core investments in Munchery, Shyp, Storehouse, BackOps and Coin; and made early stage bets on over 20 other startup companies.
According to Stanford, the firm’s strategy is to come in as a co-investor in the early stage to track young startups, then take a significant stake in the companies at the A or B round. So far, it’s a strategy that seems to have worked out pretty well. The firm recently doubled down on its investment in the food delivery company Munchery, leading the Series B and committing a total of $25 million to the San Francisco-based company.
For both Pishevar and Stanford, the fundraising process was more about building a portfolio and then taking that to investors to get the $150 million commitment. They began investing with their own money, and eventually brought on the private equity giant TPG as an anchor investor. With TPG’s backing, the firm was able to make a number of early stage bets to bring before potential limited partners. “We decided early on we would raise the fund off of a portfolio and not a PowerPoint deck,” Stanford said.
Much of that portfolio is predicated on the investment thesis of the on-demand economy. Pishevar’s understanding of the transformational nature of giving people an ability to work for themselves dates back to his childhood and watching his father work as a taxi driver in Washington, D.C. “When you look at the advantages of being out from under the corruption at every level of the taxi industry. [It’s] the reason why there probably won’t be a taxi industry in San Francisco,” Pishevar says
The Uber deal, says Stanford, is a good example of why venture is the best place to invest right now.
“Uber was probably the perfect inflection point of a world that is changing so fast in terms of consumers that are… pushing that button and using the mobile phone as the remote control for their life,” Shervin says of the deal that launched Sherpa’s fund. “How many times do you have the opportunity to build a global brand that will be bigger than FedEx? Whole cities and economies will be shaped by this on-demand economy.”
While the on-demand economy has the downside of a lack of a safety net, Stanford said the upside was the freedom that it affords to workers who want to control their own destinies. “A third of our workforce in the U.S. are freelancers,” says Stanford. “I think we’ve come a long way in our economy from lifetime employment or guaranteed employment.”
Beyond the firm’s investments, Sherpa has set up what it calls the “Sherpa Foundry,” run by serial entrepreneur and corporate executive Tina Sharkey. Operating as a strategic advisory firm, Sherpa Foundry works with corporations and startup portfolio companies to make connections and “build bridges”, according to Sharkey. “We help stretch them to work with founders to unlock the entrepreneur inside these organizations.”
The business is funded in part by membership dues that these corporations pay to the Foundry to facilitate these interactions. “The DNA inside corporations is awesome,” says Sharkey. “We’re actually there to help them look at the categories are getting disrupted around them.” By working with the “disruptors” these corporations can determine how to either align or invest with new businesses, instead of getting consumed by them.