Notation Capital takes on pre-seed

If pre-seed begins to catch on in a big way, fund managers such as Nicholas Chirls at Notation Capital will help propel it.

Chirls raised about an $8 million maiden fund in February hoping to build a brand as a firm willing to work with founders exploring early ideas or even undertaking experiments.

His goal is to invest $100,000 to $200,000 in a company and he is happy to be the only investor. Chirls, a former investor at Betaworks, said his target startup will often have a technical or design oriented team and may have hacked something together.

Six months ago, when he started raising his fund, the pre-seed idea was novel. Now it is more accepted, he said.

“I definitely think it is going to happen,” he said of pre-seed funds. “I think there will be more of them.”

Pre-seed investing is similar to what accelerators are doing with their support and mentoring programs, he said. But he argues it is more hands-on, less formulaic and that he will spend more time with companies.

He sees a particular need in New York City. The city has experienced an increase in talent over the past five to seven years with tech-focused and design-focused alumni from such companies as MongoDB, among others.

Turnover has been extensive and people have gone on to new things, but the support capital is nothing like in Silicon Valley, with its angels and accelerators, such as Y Combinator and 500 Startups.

“That has opened a huge opportunity for a new class of very early stage investors,” he said. “There is going to be a lot more of it.”