We like lists. We like some lists because we are on them -- like the recent one from CB Insights that showed that Social Starts is the most active moment-of-inception investor in New York and second most active in California. And some lists we like because we aren't on them. That's the case with last week's report from CB Insights on 135 start-ups that failed this year. We are delighted to have exactly zero companies on this list. And, we feel gratified to see many companies on this list we looked at and passed on.
Now, we aren't claiming we never have flops. Every active investor has flops. In fact, an investor who doesn't have failed investments isn't taking anywhere near the risks necessary to produce high value consistently. But we have developed a unique method for early stage investing that should produce far fewer failures than the norm; and the recent list from CB Insights gives us confidence that our method is working. The key components of our method are:
Vision: We invest only in areas directly tied to the world millennials are building. A world that is 100% social/mobile, borderless, spanning the increasingly intertwined work and personal lives of rising young adults, at the apex of commerce and media. By centering ourselves in the heart of the emerging future, we are giving ourselves the greatest chance of success with each investment.
Focus: Within the broad sphere of social/mobile, we focus investment into only the small set of areas we know well. Of which, there are five: media, analytics, mobile commerce, work platforms and the IoT software stack. In each of these areas our intent is to be aware of every possible deal, touch half of them, meet with all that have high value potential (around 10%) and make our investment choices informed by this substantial context (about 1%). We will touch more than 3,000 companies in these five areas this year.
The Heart of the Entrepreneur: We know few things expertly well, but, what we know, we know better than anyone. And that includes how to plumb this essential question: is this entrepreneur going to win? We dig deep into the inner workings of every founder we back. We are testing for confidence, realism, flexibility, grit, balance… even the capacity to engender and accept love. The result is a set of leaders who believe in success and won't accept failure easily. Entrepreneurs who can, as they say, take a lickin' and keep on tickin'.
Discipline: We don't react to trends. We don't seek the hot new thing. We don't care who the cool kid in class is. And we don’t make our decisions based on who the popular investors think the cool kid is. We are determined to be disciplined investors, implementing our method and making as much money for our LPs as we can over time.
Structure: Our unique two-fund approach -- separate moment-of-inception and Series A funds -- enables each fund to focus purely where it matters most, while being richly synergistic. Our Series A fund provides market perspective, VC relationships, acquirer insight and scale to our moment-of-inception fund. Our early investments, 100% with pro rata rights, represent valuable proprietary dealflow, enhanced by strong relationships with management, for our Series A fund.
Social Starts designed this unique set of advantages to produce stronger movements to value and lower rates of failure than other investment approaches. It seems to be working. And we are growing. Today we have 2 historic funds and 2 active funds, each doing moment-of-inception and Series A. We will soon have fully invested our first Series A fund. We look forward to initiating our second Series A fund this fall.
We’re honored to have been a part of over 200 investments since 2010, to have learned a lot and to have been helpful as well. And the most important part is yet to come -- the 30 years of growth ahead of us as this revolution unfolds.