Tech’s riskiest founders are getting a $650 million bet from Redpoint Ventures – TechCrunch

For venture investors, Noise is ironically important. Fighting through constant streams of fund-seeking founders and startup pitches might be the hardest part of the job, but it’s also essential to the success of the same job.

So what happens when the energy around entrepreneurship dies down? Will fewer founders take risks as the downturn looms? Fewer companies will be founded overall next year than in the last two years, according to Redpoint CEO Annie Kadavy. And somewhat counterintuitively, the investor thinks the looming slowdown is “a great thing.”

“In an environment where it’s really easy to raise a seed round, it’s really easy to get your first product to market as long as you have more money to spend on the problem you’re trying to solve…that is.” a different risk profile.” She said, “In contrast, it’s really hard to raise money and I have to build these products because I care so much about the issue.”

She added, “I think the overall number of founders that we’re going to see will be lower, but the quality bar is going up.”

Led by Kadavy and Managing Partner Erica Brescia, the early-stage team at Redpoint Ventures announced today that it has closed a $650 million fund to support startups. The investment vehicle is the firm’s ninth early-stage fund to date, which will invest in companies from seed to Series B stages. The check size ranges from $2 million to $15 million, depending on the company.

The company aims to invest the majority, around 70%, of its investments from this fund in the Series A space, with the remaining 30% dedicated to seed and Series B startups. It is targeting Series A ownership interests between 15% and 23%.

Brescia, who joined Redpoint last year after being relieved of her role as GitHub’s COO, says the firm hasn’t seen much activity from megafunds like Tiger Global or SoftBank lately.

“Especially the more players you have on the market [last year] tends to push prices higher… and now we’re seeing valuations drop significantly again,” she said. “I think that’s healthier for founders and investors, and I’m sure part of that is because we’re seeing fewer players actively pursuing the same company.”

It’s not just valuations that change due to a shift in sentiment; The investor said that thanks to the conservatism of megafunds, competition is also changing in startup land. “One of the things that makes it a lot harder and a lot more expensive to build an early-stage company is the number of well-funded early-stage competitors that you have to reduce,” Kadavy said. “But if that can be two companies or three companies instead of 10 or 12 or 15, the likelihood of success, the ability of those companies to hire and retain great people, the ability for them to continue raising funds, everything increases. ”

Brescia added that Redpoint’s product and the product of a mega-fund as a venture service look quite different, with Redpoint’s biggest difference being that its early-stage GP team is all led by former founders. The company did not share its IRR target when asked.

The company’s fresh capital comes after a flood of hiring. Last year Redpoint recruited CTO Jason Warner alongside Brescia GitHub. The team also added Meera Clark and Jordan Segall as investors. Tech’s riskiest founders are getting a $650 million bet from Redpoint Ventures – TechCrunch

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