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Alexa von Tobel (second from right) brought on cofounder Penny Pritzker (right), partner Mark Batsiyan (left) and partner Lucy Deland (second from left) to run the firm. Between the four of them, they’ve build ten companies, which von Tobel says is a differentiator for Inspired Capital.
COURTESY OF INSPIRED CAPITAL
Serial founder, investor and 2012 Forbes 30 Under 30 Finance honoree Alexa von Tobel announced this week a $330 million fund III coming from her latest venture, Inspired Capital. This comes off the back of a $200 million fund I and a $281 million fund II. The investment firm now has approximately $900 million in AUM, and they specialize in writing $1 million to $15 million lead investment checks.
She launched the early-stage, generalist fund in 2019 after years of angel investing and educating others on how to invest their own money. In 2008, she dropped out of Harvard Business School to found LearnVest, a financial planning company that made it cheaper and easier to learn about investing and saving.
“It was a very mission-oriented company based on what I considered to be an injustice,” she says, adding that she wanted to solve the question of “‘How do we go and help everyday people get access to financial advice?’ It made no sense to me that great financial advice is gated.”
Under her leadership, LearnVest grew to nearly three million users. After five years running the startup, it was acquired for $375 million by Northwestern Mutual.
After selling the company, she dove into investing—she’s personally invested into unicorn companies like Form Energy, Airtable, IDMe, Lemonade and Chime. During her days angel investing, she realized how much she enjoyed helping other startups and their founders grow. So she launched Inspired Capital in 2019.
Inspired Capital has invested in companies like MosaicML, a generative AI company that creates software to train large language models, which was acquired by Databricks for $1.3 billion last year; Chief, a $1.1 billion women’s networking organization; Dandy, a full-service dental company founded by Forbes 2023 30 Under 30 Enterprise Technology listers Daniel Hanover and Toni Oloko; and Finix, a fintech startup that builds payment processing software.
Von Tobel says as a fund that writes lead investment checks, Inspired Capital avoids companies with lofty ideas and inflated valuations—which she says was prominent over the last few years. Instead, she and her team seek out high-risk companies. “Those that have a high probability of failure, but if and when successful, have the potential to transform industries and generate outsized returns” are the key to Inspired Capital’s success.
Throughout all stages of the process, her biggest piece of advice is to lean into the pain.
“The best founders wake up every day to solve the hardest problems, in their strategies in their business,” she says. “And I think those are the founders that cover the most ground fastest.”
See you next week,
Green Hydrogen Could Help Save The Planet. This Startup Wants To Make It Cheap
Electric Hydrogen CEO Raffi Garabedian is hoping to displace dirty industrial hydrogen with a greener alternative.
CHRISTIE HEMM KLOK FOR FORBES
The global green hydrogen market is worth more than $120 billion. This unicorn startup, where 2023 Under 30 Energy lister Supratim Das heads corporate development, is trying to become the top player by making the energy source affordable beyond industry standards.
Lister Lowdown
-In honor of International Women’s Day next week, 2020 Under 30 Games lister Renee Gittins is releasing a video game on March 7 that follows a coming-of-age tale of a young witch, called “Potions: A Curious Tale.” Gittins, who’s the founder of the Seattle-based game studio Stumbling Cat, says a lot of the story is inspired by her own personal and professional life. It will be available to play on desktops, debuting on online video game service Steam, for roughly $30.
-Roslyn McLarty, cofounder of a women’s sports newsletter called The Gist, announced on Tuesday she’ll be stepping down from her role as head of growth, operations and finance and coming on as a strategic advisor instead. The 2020 Under 30 Media lister, who has two other cofounders, says she came to this decision after a long time of dealing with the mental challenges of being a founder. “Founder burnout — any burnout — is no joke. Being a founder adds an additional layer because of the risk, the lack of resources, the emotional roller coaster, and the sheer womanpower required to turn a vision into reality,” McLarty wrote in a post.
–2022 Under 30 Social Impact lister Ariela Safira, the founder of an app called Real that provides people with guides and workshops on topics like seasonal depression, announced that her business has been rebranded to “Zeera,” broadening its services to specifically tackle mental health in the workplace. Companies can partner with Zeera and offer its products as a mental wellness benefit to their employees, which includes things like being able to anonymously join groups with licensed therapists and other members of the Zeera community.
Venture View
Sakib Jamal was born in Bangladesh, and he’s crowd-sourced a book for junior investors, with proceeds going to a foundation for Bangladeshi school children.
COURTESY OF JAMAL
Time to take a look inside the world of venture capital.
This week, we sat down with Sakib Jamal, a 2024 Under 30 Venture Capital lister and vice president of Crossbeam Venture Partners. Jamal helped Crossbeam reach $280 million in assets across two core funds since joining in 2020. He shares his thoughts on the increasingly difficult metrics founders have to meet in order to find funding, and how other investment options might outpace venture capital in the coming years.
The following responses have been slightly edited for length and clarity.
What initially pushed you to invest? Was it something you were always interested in growing up? I was always interested in entrepreneurship. My first business was a company my friend and I started in high school. Years later, when I was working at JP Morgan, a friend of mine then started Crossbeam and asked if I would join as the first employee. But it felt like a nice balance of my skills that I had learned being in a banking role, and also merging my interest in startups.
What has been the biggest change in the investment space, whether that’s where money is going, or how much money is being deployed, since you started five years ago? The AI answer is pretty cliche, so another big change that we’re seeing is people are going back to milestone-based investing. In the past it was like, ‘What if this became a massive business?’ Now, because of where the capital markets are, everyone’s really focused on the little milestones that you need to cross to get there. There’s a lot more financial discipline.
What are some of those milestones that you look for before you make an investment? There’s the revenue, how many customers you have, how quickly are you growing. But a less obvious one is utilization. How many times are the customers logging in? Are they getting a ton of value from it? Because often, if you have very high utilization of a product, it becomes a leading indicator of retention. And word of mouth is pretty useful, too: how many customers did you get inbound versus how many have you gone outbound?
What are the industries or the types of businesses that you and your investor peers are looking to most right now? Which are you most excited about or see the most potential? Almost nine out of 10 people will give you the answer of AI. It’s almost dumb to say that AI is not going to change things, but I think the part that is interesting for us is use cases for AI.
What are your thoughts on the future of AI in business? Investors are spending a lot of time understanding AI, but not enough are spending time understanding use cases for it. If you think about the past 10, 20 years, a lot has been powered by the cloud. While investors need to know the basics, they don’t need to understand every little thing about the cloud. What you really need to understand is ‘will this cloud-business have a good distribution aspect?’ ‘Will customers actually care for it?’ How much will they be willing to pay for it?’
There’s a lot of noise in AI. But a lot of companies are going quickly because they’re allocating budgets and trying every different tool with it. It’s hard to figure out which ones will actually stick.
What would you say is the biggest challenge that founders are facing right now? The bar is really, really high. In the past, founders had many more shots at a goal. You could raise enough money to try a bunch of different things. Now you can only try two or three different things. If it doesn’t work, you’re kind of out.
Do you think that that’s going to impact the way that founders find investments in the future? Will angels or crowdfunding or other forms of investments start to pop up due to these additional challenges? That’s already happening. If you’re not the right fit for VC, you have to find family offices or other sources of capital to get started. And the sad part is the people who need it the most are often boxed out of those funding methods. But I think there’s going to be some creative opportunities and alternatives to VC. There are smaller funds that are doing that. The government’s doing it with SBA loans.
What’s your best piece of advice for young founders or investors today? The best advice I’ve ever received sounds very cliche, but try to be interested versus interesting. In a world where VCs are always pounding their chest and trying to market, doing all these branding exercises, being able to calm down and really listen to people, ask the right questions and being able to have that service mindset is incredibly powerful.
