Jyoti Bansal, the founder of AppDynamics, which he sold for $3.7 billion just as it was about to go public, and John Vrionis, a former venture partner at Lightspeed, where he invested in companies like MuleSoft, Nimble Storage and Bansal’s AppDynamics, today announced the launch of Unusual Ventures, a new $160 million seed fund.
Vrionis will take board seats and handle the day-to-day activities of the fund while Bansal will focus on mentoring the startups (and his own startups).
According to Bansal and Vrionis, early-stage investing is at an interesting stage. They argue that many of the larger funds have moved to larger investments and many of the seed-stage investors aren’t necessarily in a position to really help fledgling entrepreneurs through the hardest few years of building their companies. And when larger funds make seed investments, they often can’t provide the right kind of resources to help these companies.
“If you look at the mega-funds today, the model has really changed over the last years,” Vrionis told me. “Now the funds say they do everything from pre-seed to pre-IPO rounds.” But while VCs tell founders to focus, the VCs themselves don’t.
So to better help entrepreneurs, Bansal and Vrionis decided to tackle the issue from first principles. They concluded that what founders really need is help to learn fast. “In a two-year period, you have to learn so much,” Bansal explained. “How to lead people, how to inspire people, how to define product/market fit, packaging, pricing.”
To tackle this issue, Unusual Ventures will offer regular classes for its entrepreneurs, something that many accelerators also do, but with a few twists. The so-called Unusual Ventures Academy will consist of two cohorts a year, with eight companies each. The plan is to bring a group of master practitioners who, once a week, will lead three- or four-hour in-person sessions over the course of a six-week span. Vrionis noted that the focus of every session will be on one particular kind of challenge that startups face and that founders will have to create their own solutions — and then teach them to the other participants.
Unusual Ventures will also offer its startups a lot of hands-on support. The fund will have its own recruitment team, for example, to help founders hire the right engineers right from the get-go, and offer legal help and other infrastructure services so that founders can focus on building the product.
One other interesting twist here is about how the fund itself is funded. Bansal and Vrionis told me they were fortunate enough to be able to rethink this model, too. So the fund’s partners aren’t the traditional insurance companies and pension plans, but nonprofits. Most of these are historically black colleges and universities, foundations, endowments and health-related institutions. When a company has a successful exit, “who does the funding go to in the end?,” Bansal asked. “We want it to go to causes that we care about. We want to give it to those who don’t usually participate in the Silicon Valley wealth creation.”
The two co-founders also stressed they are looking for unusual founders, too. “We really encourage and welcome unusual backgrounds, histories, mindsets, ideas, people,” Bansal said.
So far, the fund has made four investments (two in the enterprise space, one consumer marketplace play, and one company in the crypto space). They are still at a very early stage and it looks like they aren’t quite ready for the limelight yet.