Each week on The Cap Table (TCT) we highlight investors, operators, founders, and industry leaders in the private markets to share their tribal knowledge of how to get onto “the cap table.” Know someone we should feature? Let us know here!
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We’re thrilled to announce this week’s exclusive with Harvey Multani, founder at Employee Lead SPVs! An early Plaid, Coinbase, and Addepar employee, Harvey’s deep operating experience within the fintech industry inspired his leap into full time investing. Since 2016, he’s invested in notable companies such as Pipe, Carta, and Quiet, to name a few. Harvey’s latest project, Employee Led SPVs (Special Purpose Vehicle), is a unique approach for how startups can raise capital. With deep cap table knowledge, we sat down and discussed:
The 6 questions to ask before joining an early-stage startup 🧐
What’s next for Rolling Funds 🎢
Venture capital trends gaining momentum 🔥
How he thinks about mentorship and learning 📖
The state of Employee Led SPVs in 2030 🔮
TCT: Thanks for sitting down with us, Harvey. Let’s jump in.
How did you start out with regards to your career?
I always loved investing.
I started day trading on a Palm Pilot while in middle school and my love for investing continued to grow over time. I eventually learned about (Benjamin) Graham, (Warren) Buffett, and all the other legendary investors which inspired me to study finance at Washington University in St. Louis.
Originally, I had planned to move to New York and get into banking or investment management but I quickly learned that finance is fundamentally a support component to building companies. I soon realized Silicon Valley was where people were building companies. I decided to move to the Bay Area after graduating and find a way to merge my love of finance with entrepreneurship.
I learned about fintech and got my first role in the space through a series of unbelievably lucky encounters with exceptional people.
My career since then has been working/consulting with and investing in early and growth-stage fintech companies.
You were early at Plaid, Coinbase, and Addepar. What advice would you give for evaluating early-stage companies to join as an operator?
The only advice I’d give is that joining an early-stage company is an investment, not an employment decision. It can look like a job: you get a salary, benefits, a manager, etc. But, that’s where the similarity ends. Whether the company does well or not matters infinitely more than your role and even the outcomes you deliver. If the company succeeds, you succeed and vice versa.
By joining an early-stage company, you are making the same sort of bet that an early-stage VC makes, except you can’t diversify your career portfolio to the same degree a VC diversifies their investment portfolio. VCs can make multiple bets a year. You may make only a handful of bets across your entire career. So your investment criteria have to be far more extreme than that of an external investor.
While you may not have expertise in picking early-stage companies, you can at least get familiar with investment performance metrics. If you’re joining a Series A or younger company, assume the preferred share price needs to grow 100x within a decade for the company to be considered a breakout winner. You can then reason backwards into what that may take for a given space in terms of valuation multiples, margins, revenue growth, etc.
A few heuristics I recommend to friends considering joining early-stage startups:
Which company would you pay to work at for 3 months?
This helps you avoid selecting companies purely based on compensation. While optimizing for comp seems logical, it’s a local maximum. If you were really globally optimizing mostly for comp on a risk-adjusted basis, you’d target a much larger but still growing company instead of an early-stage startup.
Which company would you invest half your current net worth in?
If you wouldn’t invest your money, why would you invest your time?
Which company would you start tomorrow, if the current founders had to shut down the company for personal reasons?
You may or may not have the co-founder title, but it’s safe to assume that you’ll do your best work if you can find the same level of conviction as the founders. You need to know why this company exists at a gut level to the point where it would not make sense to you for it to not exist. This may be the only thing that keeps you leaving when you’re tempted with other more lucrative and easier going opportunities.
Which company has the emotionally healthier people?
You can trust your gut on this. If you get weird vibes, run. People are sometimes tempted to override their instincts to join a team that seems to have a lot going for it. Almost everyone I know who made that decision severely regretted it. A friend recommended The H Factor which has a helpful framework for thinking about emotional and personality traits.
Which company has people you’d most like to become similar to in a few years?
You’re going to spend years closely interacting with these people and the people they hire.
Which company has people who you’d invest in immediately if they left tomorrow to start their own company?
These people will be a major part of your professional network going forward. If you’re impressed by them now, that’s a great sign.
You’re currently the founder at Employee Led SPVs. Tell us about your experience so far.
I’ve talked a bit about the origin story recently but that doesn’t quite capture what a joy it has been to work on. I get to meet the most capable operators at the strongest early-stage companies and invest as much as I want in them. And they effectively diligence themselves! It’s like every early-stage investor's wildest dream!
I resolved at the start to build entirely in public and open-source the entire process such that someone else could run it if I got hit by a bus. That has been one of the best decisions I’ve ever made. It’s like having 1,000 co-founders. Every time I have any sort of problem or need help fleshing out an idea, I ask my audience for help using Twitter or my newsletter. I’ll often receive half a dozen responses and get connected to the exact expert I need.
I am excited to build a world where there are 1,000 employee led SPVs every year and the wealth they generate is reinvested into more early stage companies.
What trends do you see emerging in private markets and VC in the next 24 months?
SPACs and Direct Listings are going to virtually eliminate Series D and later rounds.
Audience First is the new Lean. Pre-seed rounds will virtually disappear as audience first founders find multiple ways to monetize their audiences such that they don’t need the dilution and distraction of raising a pre-seed round.
Startups will begin fundraising from accredited and institutional investors using general solicitation. The world of having 100 meetings to find a dozen investors to assemble a round is going to end. This is 100% a relic of the era when founders had no seamless way to generally solicit.
What are your thoughts on Rolling Funds as means for raising?
I am an enormous fan of Rolling Funds.
I believe this structure will also spread to the Private Equity and eventually Hedge Fund and Real Estate worlds. If nothing else, Rolling Funds have demonstrated that securities are just like any other product: it’s a lot easier to sell them when you can generally solicit.
I’m excited to see how Rolling Funds evolve. There is now a real business case to invest in lobbying to remove the 99 investor cap and broaden the venture capital fund advisor exemptions. That could make it possible to raise solo GP Rolling Funds in the $100m-$1bn range.
I’m also curious to see if anyone leads a Rolling Funds like structure to invest in secondaries.
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What are you passionate about outside of work?
My work and passions have become effectively the same so it's a tough question to answer.
I’m very into health and fitness. I’m constantly trying new tools and techniques to optimize every part of my health. I’ve gained 45 lbs since July 2019 and may try to gain another 30-50 pounds over the next year.
Suffice to say, I’m super bearish on the intermittent fasting and low carb trends that seem to have recently taken the tech world by storm. Almost everyone seems to be focused on losing weight when they really should be focused on increasing bone density and lean mass.
How do you go about learning new topics, and what role has mentorship played in your success to date?
They are low maintenance, always accessible, and get more valuable as time goes on. I’ve been lucky that countless people have helped me across my life and career: exceptional colleagues, CEOs, investors, and other collaborators. But I wouldn’t have known what to ask of them without books.
Whenever encountering any new space or problem, I read all the top books/articles in the space and write a “how to/what is” guide for myself. I then share that guide with experts in the given space and incorporate their feedback. Doing this rapidly bootstraps domain knowledge and establishes a network at virtually minimal cost. I’m continually surprised at how many domain experts will respond to a cold email and read a 20+ page doc written by a complete nobody.
What's your secret for getting on the cap table?
Truth be told, I don’t have one.
I got into a few great companies as an angel through luck or pre-existing relationships. I’ve also been muscled out of many allocations and realized that I needed an overwhelming advantage in order to compete with brand name investors.
I decided to build a machine. This machine needed to get me any size allocation into any company at any round. That’s how employee-led SPVs came about. I realized I could buy my way onto cap tables by co-leading SPVs (and sharing carry) with top tier startup employees to invest in their employers.
Employees win because they can now get carry in addition to options. Sometimes the carry across multiple SPVs can be 10x-100x what they would have made with options alone.
CEOs win because they have a new incentive alignment and retention tool to motivate their best people. CEOs also get capital from a known counterparty on great terms.
The SPV investors win because they get access to the strongest companies and the employee SPV lead is working full time to maximize the value of the single portfolio company. An amazing bargain for 20% carry and no management fee.
I’ve helped employees raise millions in the last year and hopefully billions over the next decade.
The year is 2030. What’s the state of employee-led SPVs?
By 2030, I’d like to see employee led SPVs and founders owning the bulk of startup cap tables at exit. A billion dollars raised via employee led SPVs over 10 years doesn’t seem unreasonable. I've built a roadmap of how to get there.
I’d also like to see a few super enterprising employees *lead* priced rounds and take board seats. I suspect there is far more latent talent here than many currently realize.
Thank you for your time and thoughts, Harvey. We look forward to the continued success of you and Employee-Led SPVs!
Follow Harvey on Twitter (@HarveyMultani) for more insights into employee led SPVs, venture capital, startups, and more!
Deal News 9/26-10/2
OnePointOne raises $12,000,000, led by | OnePointOne is a developer of an automated indoor farming platform that supplies fresh food and technology to retail and beyond.
Collective raises $8,650,000, led by Dan Lewis, Darian Shirazi, Dylan Field, Expa, Garrett Camp, General Catalyst, Gokul Rajaram, Gradient Ventures, Jared Hecht, QED Investors, Scott Belsky, Tectonic Capital, Topher Conway, Vitor Lourenco | Collective operates as an online back-office platform designed for self-employed people.
Macrometa raises $7,000,000, led by Benhamou Global Ventures, DNX Ventures, Fusion Fund, Partech, Shasta Ventures, Sway Ventures, Velar Capital | Macrometa provides real-time database, stream processing, and compute runtime for event-driven applications.
Cube Dev raises $6,200,000, led by Bain Capital Ventures, Betaworks, Eniac Ventures, Innovation Endeavors, overtime.vc, Slack Fund, Uncorrelated Ventures | Cube Dev is a computer software company that specializes in the fields of open source, analytics, databases, and developer tools.
Coiled raises $5,000,000, led by Anthony Goldbloom, Ben Hamner, Costanoa Ventures, IA Ventures, Techammer | Coiled is a modern solution for seamlessly scaling data science, machine learning, and AI in Python.
Retirable raises $4,700,000, led by Diagram Ventures, Primetime Partners, Vestigo Ventures | Retirable is a financial services company helping adults 50+ plan for a better future with professional retirement guidance and planning.
Buzzer raises $4,000,000, led by Anthony Noto, Grace Kim, Imagination Capital, Lerer Hippeau, R&R Ventures, Richard Parsons, Sapphire Sport | Buzzer is a notification-driven mobile platform for live sports personalized for fans.
Intelage raises $3,500,000, led by Blumberg Capital, Vulcan Capital | Intelage is a trade and logistics platform that brings together suppliers, buyers, and partners to manage trades from a single application.
Yotta Savings raises $3,300,000, led by CapitalX, Chapter One Ventures, FundersClub, Slow Ventures, TwentyTwo VC, Y Combinator | Yotta Savings offers free FDIC-insured bank savings accounts and rewards savings account depositors with weekly prize drawings.
Secberus raises $3,240,000, led by Florida Funders, Monitor Capital Group, LLC, TA Ventures, Trisib Capital Partners, LLC | Secberus is the only CSPM that provides an adaptable, CARTA-driven approach to enterprise cloud security & compliance.
Datasaur raises $2,800,000, led by Greg Brockman, Initialized Capital, Y Combinator | Datasaur develops productive tools designed for data labeling needs.
Fluree raises $2,500,000, led by 4490 Ventures, Engage, Good Growth Capital, Ray Rothrock, Revolution‚ Rise of the Rest Seed Fund | Fluree harnesses decentralized apps and a blockchain database.
Scener raises $2,100,000, led by David G. Martin, Glaser Investments, LAUNCH, RiffTrax, SeaChange, Sriram Krishnan | Scener is the virtual movie theater where you can interact with friends remotely over video chat while watching your favorite programs.
PayCargo raises $35,000,000, led by Insight Partners | PayCargo is an online payment settlement system for the Global Freight Maritime industry.
Sonoma BioTherapeutics raises $30,000,000, led by 8VC, Alexandria Venture Investments, ARCH Venture Partners, JDRF T1D Fund, Lifeforce Capital, Lilly Asia Ventures, Lyell Immunopharma, Octagon Capital Partners | Sonoma BioTherapeutics seattle-based company leading the development of adoptive Treg therapies cell for autoimmune.
Payrix raises $28,000,000, led by Blue Star Innovation Partners, Providence Strategic Growth | Payrix provides marketplaces, SaaS businesses, and ISOs solutions for flexible payment facilitation.
Cornelis Networks raises $20,000,000, led by Chestnut Street Ventures, Downing Ventures, Intel Capital | Cornelis Networks is a provider of purpose-built interconnects focused on high-performance computing and data analytics.
R-Zero raises $15,000,000, led by Bedrock Capital, DBL Partners | R-Zero is a developer of technologies and protocols used to reduce the damage each one of the viruses causes to the economy.
ScriptDrop raises $15,000,000, led by Ohio Innovation Fund | ScriptDrop is a medication access startup that connects pharmacies to a network of trained professional couriers.
Golden raises $14,500,000, led by Andreessen Horowitz, Data Collective DCVC, Gigafund, Harpoon, Scale Asia Ventures, Socii Capital, Vela Partners | Golden is a developer of a self-constructing knowledge database used to accelerate discovery and education.
Noyo.com raises $12,500,000, led by Core Innovation Capital, Costanoa Ventures, Garuda Ventures, Homebrew, Precursor Ventures, Spark Capital, Webb Investment Network | Language Learning Apps for Tablets
LARQ raises $10,700,000, led by Augment Ventures, Capricorn Investment Group, David Bell, DCM Ventures, Draymond Green, Gaingels, Heuristic Capital, Robert C. Walker, Seventure Partners | LARQ helps people access pristine drinking water easily and sustainably.
Snappr raises $10,000,000, led by Basis Set Ventures, Y Combinator, Yes VC | Snappr is a web and mobile-based platform that provides real-time matching of customer jobs to professional photographers.
Pixie Labs raises $9,150,000, led by Benchmark, GV | At Pixie Labs, we build machine intelligence systems that empower developers to engineer the future.
Elevate Security raises $8,250,000, led by Costanoa Ventures, Defy.vc, Foundry Group, Salesforce Ventures, Shasta Ventures | Elevate Security creates secure behaviors in employees that help prevent breaches.
Fligoo raises $7,100,000, led by 4P Investments, Suquet Capital Partners | Fligoo is a tech company from San Francisco, experts in AI, Big Data and Machine Learning with a focus on behavior analysis and prediction.
Aegle Therapeutics raises $6,500,000, led by DeepWork Capital, DEFTA Partners, New World Angels, Ocean Azul Partners, Tellus Bioventures | Aegle Therapeutics is a clinical stage regenerative medicine company that develops novel therapeutics.
Adlumin, Inc raises $6,000,000, led by ICBA, Leawood Venture Capital | Adlumin detects and stops identity-based attacks.
Papaya Global raises $40,000,000, led by Access Industries, Bessemer Venture Partners, Dynamic Loop Capital, Group 11, Insight Partners, New Era Ventures, Scale Venture Partners, Workday Ventures | Papaya Global provides a cloud-based HR and payroll platform for global workforce management.
Tend raises $37,000,000, led by GoodFriends, GV, Juxtapose, Redpoint, Tiger Global Management, Zigg Capital | Tend provides hassle-free, personalized, and straightforward dental services with a focus on patient happiness.
Axis Security raises $32,000,000, led by Canaan Partners, Cyberstarts, TenEleven Ventures | Axis Security manages and secures business applications through modern architecture, technology, and a zero-trust business-centric approach.
Coralogix raises $25,000,000, led by 2B Angels, Aleph, Janvest Capital Partners, O.G. Tech Ventures, Red Dot Capital Partners, StageOne Ventures | Coralogix is a SaaS platform that uses machine learning algorithms to facilitate delivery and maintenance processes for software providers.
Facet Wealth raises $25,000,000, led by Slow Ventures, Warburg Pincus | Facet Wealth is a provider of financial and wealth management services used to simplify the financial planning process.
Solo.io raises $23,000,000, led by Redpoint, True Ventures | Solo.io develops tools to help the enterprise adapt and make the most of innovative cloud technologies.
Rally raises $17,000,000, led by Alexis Ohanian, Global Brain Corporation, Porsche Ventures, Raptor Group, Relay Ventures, Upfront Ventures | Rally is a platform for buying & selling equity shares in collectible assets, enabling anyone to invest in one-of-a-kind collectibles.
Koneksa Health raises $16,000,000, led by MBX Capital, McKesson Ventures, Merck Global Health Innovation Fund, Novartis Pharma, Spring Mountain Capital, Waterline Ventures | Koneksa Health is a healthcare data analytics company that helps researchers incorporate emerging technologies into their clinical studies.
Bloomscape raises $15,000,000, led by General Catalyst, Jeffery Boyd, John Replogle, Ludlow Ventures, Revolution Ventures, Robert Mylod | Bloomscape is an online plant shopping platform that offers home ready plants and tools for plant care.
Coverance raises $10,500,000, led by CUNA Mutual Group | Coverance is to help seniors get affordable high-quality Medicare Insurance that perfectly fits their needs.
Cogniac raises $10,000,000, led by Autotech Ventures, Energy Innovation Capital, George Kaiser Family Foundation, Vanedge Capital, Wing Venture Capital, Yellowstone Capital Partners, LLC | Cogniac is an enterprise platform for AI-grade visual observation.
Leonardo247, Inc. raises $9,500,000, led by Level Equity Management | Saas, Multi-Family Operations, Risk, Maintenance Software
Siren raises $9,000,000, led by 500 Startups, Anathem Ventures, DCM Ventures, Founders Fund, Khosla Ventures | Siren is a developer of a diabetic foot monitoring system used to detect and treat diabetics.
XtalPi raises $318,800,000, led by China Life Healthcare Fund, Morningside Venture Capital, PICC Capital Investment Management, Sequoia Capital China, SIG China (SIG Asia Investments), SoftBank Vision Fund, Tencent Holdings | XtalPi is a biotech firm that uses artificial intelligence and computing to accelerate the development of new pharmaceutical drugs.
Olema Pharmaceuticals raises $85,000,000, led by Avoro Capital Advisors, BlackRock, BVF Partners, Cormorant Asset Management, Deerfield Management, Foresite Capital, Janus Henderson Investors, Logos Capital, OrbiMed, RA Capital Management, Surveyor Capital, Venrock, Vivo Capital, Wellington Management | Olema Pharmaceuticals is a preclinical biotechnology company that develops targeted therapies for women's cancers.
BEGiN raises $50,000,000, led by 3one4 Capital, Gymboree, Interlock Partners, LEGO Ventures, Sesame Workshop, Trustbridge Partners | BEGiN is the award-winning education technology company that creates learning products to bring children the highest quality education.
HOMER raises $50,000,000, led by 3one4 Capital, Interlock Partners, LEGO Ventures, Liquidity Capital, Sesame Workshop, Trustbridge Partners | HOMER is a developer of an educational application used to offer a learn-to-read program for kids.
Carmot Therapeutics raises $47,000,000, led by Amgen Ventures, Horizons Ventures, The Column Group | Carmot Therapeutics develops drugs to treat inflammatory, metabolic and neurological diseases.
ButterflyMX raises $35,000,000, led by Egis Capital Partners, RiverPark Ventures, Stifel Financial Corp., Volition Capital | ButterflyMX is developing a contactless entry intercom that provides secure, convenient, and affordable property access from a smartphone.
Cardiac Dimensions raises $17,500,000, led by Aperture Venture Partners, Arboretum Ventures, Hostplus, Life Sciences Partners, Lumira Ventures, M. H. Carnegie & Co. | Cardiac Dimensions is a medical device company developing tools and techniques for the treatment of heart failure and related conditions.
ShipBob raises $68,000,000, led by Bain Capital Ventures, Hyde Park Angels, Hyde Park Venture Partners, Menlo Ventures, SoftBank Vision Fund, Y Combinator | ShipBob is a technology company that fulfills e-commerce orders for direct-to-consumer brands.
Allbirds raises $100,000,000, led by Baillie Gifford, Franklin Templeton Investments, Rockefeller Capital Management, T. Rowe Price, TDM Growth Partners | Allbirds is an apparel and fashion company that specializes in manufacturing eco-friendly wool shoes.
SOPHiA GENETICS raises $110,000,000, led by aMoon Fund, Credit Suisse, Endeavour Vision, Era Funding Administration, Eurazeo, Generation Investment Management, Hitachi Ventures, Pictet Private Equity Investors S.A., Swisscom Ventures | SOPHiA GENETICS is a biotechnology firm that aims to support healthcare professionals by maximizing the power of Data-Driven Medicine.
Seismic raises $92,000,000, led by Ameriprise Financial, EDBI, Jackson Square Ventures, Lightspeed Venture Partners, Permira, T. Rowe Price | Seismic is a sales enablement and marketing orchestration platform that improves close rates & delivers larger deals for sales teams.
Sources: Crunchbase, LinkedIn, Twitter
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