The most risky tech founders receive a $650 million bid from Redpoint Ventures

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For venture investors, noise is ironically important. Navigating through the constant streams of capital-seeking founders and startups can be the hardest part of the job, but it’s also essential to the success of the same job.

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So what happens if the energy around entrepreneurship slows down? As the economic downturn approaches, will fewer founders take risks? According to Redpoint Managing Director Annie Kadavi, fewer companies will be created next year than in the previous two. And, somewhat ironically, the investor thinks the impending slowdown is a “great thing.”

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“In an environment where it’s very easy to have a seed round, it’s very easy to launch your first product if you can put more money into the problem you’re trying to solve…it’s a different risk profile,” she said. “On the contrary, raising money is really difficult, and I have to create these products because I care so deeply about the issue.”

She added, “I think the total number of founders we’ll see will be less, but the quality bar is rising.”

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The Redpoint Ventures team, led by Kadavi and Managing Partner Erica Brescia, announced today the closing of a $650 million fund to support startups. The investment vehicle is the company’s ninth early-stage-focused fund closed to date, which it will invest in companies from seed to Series B stages. Check sizes will range from $2 million to $15 million depending on the company.

The firm is targeting the majority, about 70% of its investment from this fund, towards Series A funding, with the remaining 30% earmarked for seed and Series B startups. It aims for Series A ownership between 15% and 23% .

Brescia, who joined Redpoint last year after being fired as Github COO, says the firm hasn’t seen much activity from mega-funds like Tiger Global or SoftBank recently.

“The more players you have in the market, especially [last year] tends to drive up prices…and now we are seeing valuations dropping again,” she said. “I think it’s more beneficial for founders and investors, and I’m sure part of that is because we’re seeing fewer players actively involved in the same company.”

It’s not just grades that change because of changing sentiments; The investor said that competition is also changing in the startup country thanks to the conservatism of megafunds. “One of the things that makes starting an early-stage company much more difficult and more costly is the number of well-funded early-stage competitors that you need to take down,” Kadavy said. “But if it can be two or three companies instead of 10, 12 or 15, the likelihood of success, the ability of these companies to hire and retain great people, their ability to continue to raise funds, all of this increases. ”

Brescia added that Redpoint’s product and the megafund’s product as a venture capital service look completely different, and Redpoint’s biggest difference is that its early-stage GP team is led by former founders. The firm did not share its IRR target as requested.

The firm’s fresh capital comes after hiring. Last year, along with Brescia, Redpoint hired Github CTO Jason Warner. The team also added Mira Clark and Jordan Segall as investors.


Credit: techcrunch.com /

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