“Right now we’re in this Empire Strikes Back moment” says Initialized Capital’s Garry Tan, referring to tech giants ruthlessly copying and competing with fresh ideas. “We think the startups represent the Return Of The Jedi.” It’s that willingness to stand up against incumbents and give founders their best shot at disrupting them that’s won Initialized a place on the cap table’s of some of today’s fastest rising companies. Instacart, Coinbase, Flexport, and Patreon all count Initialized as investors because Tan and Serena Williams’ husband jump in the trenches with them, dispensing advice and connections over text message.
Now Initialized Capital has raised enough money to tackle its next challenge: the Series A crunch. Their first fund of just $7 million in 2011 taught them to be scrappy, and consider nascent companies yet to find product market fit. But even with their $39 million 2013 fund, and the $115 million third one they raised in 2016, they didn’t have enough cash to always follow on or fill out rounds the way they hoped.
That changes today with the announcement that Initialized Capital has closed its fourth fund of $225 million.
“We’ve always been the first high conviction check, and often the smallest check” Tan says, recalling how he tracked Airbnb’s Brian Armstrong as he left to start Coinbase and Initialized invested the first $50,000. With the $225 million fund, we can actually do most of round rather than being the first check and then send 30 emails trying to get people to invest in it.”
Williams’ husband, commonly known as Reddit co-founder Alexis Ohanian, is the face of Initialized. But it’s Tan and the software he’s built that lets Initialized wield The Force when picking startups, and then rearing them into Jedi. Tan had experience from building BookFace, Y Combinator’s internal community Q&A system that’s often cited as one of the accelerator’s biggest value-adds, when he and Ohanian were still partners there.
“We use software as a means of constantly sharing knowledge” Tan explains. “every phone call, every email we have . . . it all goes in there. Then we take the software that we built…and augment those really talented founders into cyborgs.” From partnerships to recruiting, all that information allows startups to scale faster, and hopefully get to that Series A Initialized now has deep enough pockets to fund.