Chemistry founders Mark Goldberg, Kristina Shen and Ethan Kurzweil have been “fearful” to get going. “We really feel the marketplace is correct for this,” Kurzweil mentioned.Jamie Viggiano for Chemistry
Mark Goldberg, Ethan Kurzweil and Kristina Shen left peak jobs at blue chip VC companies to release Chemistry, a brand new equivalent partnership inquisitive about backing Collection A startups.
After quitting his spouse activity at challenge capital agency Index Ventures in a marvel transfer closing December, Mark Goldberg headed out on vacation holiday together with his circle of relatives, promising his spouse that no paintings name would interrupt time with their two small youngsters. Then, like clockwork, Ethan Kurzweil rang. “That is an exception, a pal calling!” Goldberg, 39, insisted. He picked up.
However Kurzweil, a spouse at every other established agency, Bessemer Mission Companions, sought after to speak store – extra in particular, a seed that Goldberg had planted weeks ahead of, that in all probability they must crew up. “I will be able to’t forestall desirous about this,” Kurzweil, 45, instructed him. “This concept is like sand between my feet.”
Their subsequent name used to be to Kristina Shen, a former colleague of Kurzweil’s and a spouse at a16z. Shen, 37, had first heard about Goldberg’s plans within the ultimate days ahead of heading to the health facility for the delivery of her 3rd kid; now, she used to be atop either one of Goldberg’s and Kurzweil’s lists for a 3rd cofounder. “It’s a bit of loopy, however that is the time,” Goldberg pitched. “Let’s pass play offense with a targeted fund.”
Over the following couple of months, the trio graduated from weekly catch-ups to a day-to-day WhatsApp channel, mock funding discussions and, after what the companions estimated used to be 200 hours of check collaboration, a multi-day offsite at Stinson Seashore, north of San Francisco, the place they absolutely dedicated. Axios first reported on their plans for a brand new agency in April.
“It’s extremely uncommon for other people to come back in combination who’re in the fitting level in their profession to try this,” Shen mentioned. “It felt obtrusive.”
The result’s Chemistry, a brand new challenge capital agency that has raised $350 million for a debut fund. An equivalent partnership between Goldberg, Kurzweil and Shen, Chemistry will focal point on early-stage investments, particularly at Collection A, in most commonly business-to-business startups in spaces like fintech, paintings instrument and developer and infrastructure gear. Chemistry will glance to make concentrated, hands-on bets with the fund, with every spouse backing about two or 3 firms in every of the following 3 years.
Chemistry’s pitch: be offering founders the enjoy and monitor information they’d be expecting from a bluechip VC agency, with the additional consideration that may be tough to constantly obtain from a bigger fund. All 3 buyers can leverage that big-firm enjoy, they mentioned, with out the paperwork of a extra complicated, multi-stage agency with dozens of lively investments (which Goldberg described as “working with a parachute to your again”). “Founders are like, ‘oh wait, you’ll be able to if truth be told simply make this intro and now not need to triage it by means of asking 10 other people internally first,” mentioned Shen.
Chemistry’s companions carry a protracted monitor report of startup successes to the brand new fund. Whilst at Bessemer, Kurzweil, the son of famed futurist Ray Kurzweil, invested in unicorns LaunchDarkly and Intercom, in addition to now-public PagerDuty ($1.7 billion marketplace cap) and Twitch, bought by means of Amazon for just below $1 billion. At Index, Goldberg invested in unicorns Personality, Pilot and Plaid, in addition to Bridge, the crypto startup that Forbes first reported used to be lately bought by means of Stripe for greater than $1 billion. Shen, an alumna of the 2016 Forbes 30 Below 30 listing for challenge capital, sourced ServiceTitan, the carrier control supplier valued at just about $10 billion, whilst at Bessemer. Later becoming a member of a16z, she used to be an early investor in unicorn Pave, startups Tennr and Wrapbook, in addition to Decagon, a startup providing AI brokers for customer support that lately raised $65 million.
Northwestern College has signed on as a restricted spouse, as have Howard Hughes Clinical Institute and TrueBridge Capital Companions. Leader funding officer Amy Falls mentioned that it used to be uncommon to look a first-time fund with the blended monitor information of Chemistry’s trio. “We have been in particular inspired with the very considerate means from having 3 other other people with other DNAs, coming from other fund kinds, that might paintings in combination,” she mentioned. “That felt very robust.”
The most obvious, if aspirational comparability for Chemistry can be Benchmark, the storied agency that has controlled an equivalent partnership throughout a rotating forged of buyers around the previous 3 many years, maximum lately elevating a $425 million fund in June. Different moderately smaller partnerships, together with Midas Record investor Fred Wilson’s USV in New York and the Bay House fund Magnify, additionally served as inspiration, the companions mentioned.
Founders who labored with every investor credited Goldberg for his dating abilities and fine quality introductions, Kurzweil for his stabilizing presence and marketplace insights, and Shen for her always-responsive hustle. “She used to be the nearest factor I needed to a cofounder for a 12 months and a part, speaking just about each unmarried day,” mentioned Matt Schulman, CEO of repayment supervisor Pave, who counted each Shen and Goldberg, who invested later, as board individuals. “I used to be unquestionably unhappy once I heard the inside track they have been leaving us. But if I came upon they have been running in combination, I assumed, ‘hell yeah, that is superb.’”
The problem for Chemistry, Falls and trade friends famous, might be for the agency to turn out that its companions can paintings neatly in combination over a protracted duration, whilst profitable offers head-to-hand in opposition to the larger firepower of established companies like the ones they left. Many rising managers or first-time price range get started small, taking part with larger avid gamers ahead of shifting as much as aggressive lead assessments. However Chemistry is sized to move head-to-head from the beginning.
Esteban Castaño, cofounder and CEO of blockchain intelligence agency TRM Labs, mentioned he’d taken funding from Bessemer in particular as a result of Kurzweil and his enjoy. “In case you’re in Silicon Valley longer than a 12 months, you’ll quickly see dozens of startups which were sponsored by means of the fanciest manufacturers and nonetheless died,” Castaño mentioned. However he agreed that for in particular early-stage or much less skilled founders, peak tier VC companies raise logo clout. “It’s extraordinarily tempting, since you desperately need a very simple button. The unlucky fact is that there’s none,” he added.
Chemistry’s companions conceded that it may well be harder to right away galvanize founders unfamiliar with their reputations. “Our consciousness as a fund is just about 0 lately, and we’re used to having name playing cards that individuals acknowledge,” Goldberg mentioned. Chemistry will glance to construct that recognition by means of first of all making an investment in startups “the place we’ve got a excellent shot of profitable,” Kurzweil added, ahead of branching out.
The brand new agency hopes so as to add two or 3 companions through the years, however the trio mentioned they are going to want to steadiness that expansion with the chance of having sucked into competing with multi-stage, multi-billion-dollar price range. That suggests now not expanding fund sizes an excessive amount of, Chemistry’s companions mentioned, and drawing a line at making an investment in later-stage offers.
“You need to play the sport in entrance of you, however we consider that by means of being targeted, we will play that recreation higher,” mentioned Shen.
As for whether or not Chemistry’s companions can paintings in combination, that’s what all the ones hours of dialogue have been for, they mentioned. Then, there’s a bounce of religion. “It takes numerous guts to depart a top-tier fund within the first position,” mentioned CEO Michelle Valentine, a former colleague of Goldberg’s whom he later sponsored via her tax compliance startup, Anrok. “They’re mainly jumpstarting the method, and that could be a chance,” added Northwestern’s Falls. “It simply way we’ll know quicker if they may be able to take the plunge or now not.”
