Exponent Founders Capital, an early-stage enterprise agency based by alumni of startups reminiscent of Plaid, Robinhood and Ramp, has closed on $75 million in capital commitments, TechCrunch is the primary to report.
The agency, which is rising from stealth at present, raised $50 million for its first fund in November of 2021.
Managing Companions Charley Ma and Mahdi Raza co-founded Exponent after assembly whereas Ma was main fintech progress at Plaid, and Raza was main progress and funds at Robinhood. On the time, Robinhood was one among Plaid’s largest prospects, so the pair typically discovered themselves on reverse sides of the negotiating desk.
The pair invested individually as angels earlier than teaming as much as begin their very own enterprise agency.
Exponent, which focuses on enterprise SaaS, fintech, infrastructure and GTM (go to market) software program firms, invested in about 40 startups out of its first fund. Amongst these startups are Apollo.io (which raised $100 million at a $1.6 billion valuation in August), observability platform Chronosphere (which raised $115 million at a $1.6 billion valuation in January) and legal-tech startup EvenUp (which raised $50.5 million in June).
The agency has already had some exits, as properly, together with software program startup Tactic being offered to TaxBit earlier this yr and different offers Ma says will likely be disclosed “soon.” As angel buyers, the pair backed the likes of Fashionable Treasury, Unit, Moov, Lithic, Persona, Stytch and Persona, amongst others.
Ma was one of many first enterprise hires at Plaid the place he led the fintech and developer gross sales vertical in San Francisco and helped construct out the corporate’s New York workplace. Later, he was one of many first enterprise hires at expense administration startup Ramp and helped launch its company card as that startup’s head of progress. Extra just lately, Ma served as the pinnacle of progress at Alloy, an id and threat infrastructure platform for monetary establishments.
Raza grew to become an operator after roles in fintech and expertise funding banking at Evercore and investing at GIC. He labored in progress and funds at Robinhood earlier than becoming a member of Stytch to guide early progress there.
“A big shift for us in fund one was moving upwards in ownership from our typical ‘friendly’-sized angel check, to being one of the larger investors in the round, to outright leading and pricing early-stage rounds,” he informed TechCrunch. In actual fact, when investing out of its first fund in 2023, the agency led or co-led the rounds of all the businesses during which it invested.
Funding thesis
Exponent’s test dimension is dependent upon the spherical dynamics, however can vary from $500,000 to $5 million. Ma stated. The agency goals for minimal 5% to 10% possession within the firms during which it backs.
Seventy-five % of the agency’s new fund will likely be used towards investing on the early stage, together with pre-seed rounds. The rest is reserved for follow-on investing. Exponent is targeted on investing within the U.S. and Europe.
The second fund shut was oversubscribed, based on Ma, who cites Carnegie Mellon College, Prepare dinner Kids’s Well being Care System, LGT Group and Subsequent Legacy as a few of Exponent’s restricted companions (LPs). The agency plans to spend money on 20 to 30 firms out of its second fund.
“We are a thematically focused, generalist firm covering all parts of enterprise software — including vertical AI, infrastructure and applied AI — and fintech and payments,” Ma stated. “In particular, we’re excited by the opportunity for services and outputs as software, building core necessary workflows across customer experiences in many domains.”
“Over time, we’ll continue to add new themes into our arsenal — as an example, recently we’ve been going deep into legal services, pharmaceutical workflows and core banking infrastructure,” he added.
Classes discovered
The pair consider their backgrounds as each operators and angel buyers offers them an edge as buyers.
“The most important lesson we’ve learned is how to approach problems from a first principles perspective. Every company that we’ve worked for has gone through different periods of growth and each also had very different GTM motions,” Ma stated. “We found that trying to apply a framework that worked in one company, rarely worked directly at another and is in fact a common trap that many former executives and founders fall into when working with new companies. What’s more important is asking the right questions and going as deep as possible into figuring out what’s blocking growth across GTM, product, team, market, customers, etc.”
Fundraising as an rising supervisor in 2023 was “definitely not easy,” Ma admits.
“Everyone we talked to gave us the advice that this was the worst time to fundraise in the last decade, but we were starting to get pulled into a few institutional LP conversations, so we decided to kick off our fundraise in earnest in April,” Ma stated. “We were deliberately targeting long term, nonprofit institutional investors for fund 2 with a target of $60 million and a hard cap of $75 million.”
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