Back in June we reported news of a new venture firm called Founder Collective, which had gathered around $30 million in commitments. Last week the firm made it official, debuting a web site and describing its philosophy on Partner Chris Dixon's web site.
Founder Collective is quite literally just that. A collective of founders, looking to invest in seed stage companies. The firm calls it "peer-to-peer" investing.
According to Managing Partner Eric Paley, the firm has closed the fund with $40 million in commitments. The capital comes from around 20 investors, an even mix of entrepreneurs, family offices, and institutional funds of funds, he said. Founder Collective used its partners' personal investment track records as a selling point. In the last six years, they invested more than $20m in 31 companies, yielding an IRR of greater than 75%, the majority of which is realized.
The New York and Cambridge-based firm has already invested 10% of its fund in around 10 seed stage investments, after looking at "well into the 100s" of companies, Paley said. "The demand for this type of capital is extremely high," he said.