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Ex-General Catalyst and General Atlantic VC announces $68M debut fund

As of 2019, the majority of venture firms — 65% — still did not have a single female partner or GP at their firm, according to All Raise.

So naturally, anytime we hear of a new female-led fund, our ears perk up.

Today, New York-based Avid Ventures announced the launch of its $68 million debut venture capital fund. Addie Lerner — who was previously an investor with General Catalyst, General Atlantic and Goldman Sachs — founded Avid in 2020 with the goal of taking a hands-on approach to working with founders of early-stage startups in the United States, Europe and Israel.

“We believe investing in a founder’s company is a privilege to be earned,” she said.

Tali Vogelstein — a former investor at Bessemer Venture Partners — joined the firm as a founding investor soon after its launch and the pair were able to raise the capital in 10 months’ time during the 2020 pandemic.

The newly formed firm has an impressive list of LPs backing its debut effort. Schusterman Family Investments and the George Kaiser Family Foundation are its anchor LPs. Institutional investors include Foundry Group, General Catalyst, 14W, Slow Ventures and LocalGlobe/Latitude through its Basecamp initiative that backs emerging managers. 

Avid also has the support of 50 founders, entrepreneurs and investors as LPs — 40% of whom are female — including Mirror founder Brynn Putnam; Getty Images co-founder Jonathan Klein; founding partner of Acrew Capital Theresia Gouw and others.

Avid invests at the Series A and B stages, and so far has invested in Alloy, Nova Credit, Rapyd, Staircase, Nava and The Wing. Three of those companies have female founders — something Lerner said happened “quite naturally.”

“Diversity can happen and should happen more organically as opposed to quotas or mandates,” she added.

In making those deals, Avid partnered with top-tier firms such as Kleiner Perkins, Canapi Ventures, Zigg Capital and Thrive Capital. In general, Avid intentionally does not lead its first investments in startups, with its first checks typically being in the $500,000 to $1 million range. It preserves most of its capital for follow-on investments.

“We like to position ourselves to earn the right to write a bigger check in a future round,” Lerner told TechCrunch. 

In the case of Rapyd, Avid organized an SPV (special-purpose vehicle) to invest in the unicorn’s recent Series D. Lerner had previously backed the company’s Series B round while at General Catalyst and remains a board observer.

Prior to founding Avid, Lerner had helped deploy more than $450 million across 18 investments in software, fintech (Rapyd & Monzo) and consumer internet companies spanning North America, Europe and Israel. 

When it comes to sectors, Avid is particularly focused on backing early-stage fintech, consumer internet and software companies. The firm intends to invest in about 20 startups over a three-to-four year period.

“We want to take our time, so we can be as hands-on as we want to be,” Lerner said. “We’re not looking to back 80 companies. Our goal is to drive outstanding returns for our LPs.”

The firm views itself as an extension of its portfolio companies’ teams, serving as their “Outsourced Strategic CFO.” Lerner and Vogelstein also aim to provide the companies they work with strategic growth modeling, unit economics analysis, talent recruiting, customer introductions and business development support.

“We strive to build deep relationships early on and to prove our value well ahead of a prospective investment,” Lerner said. Avid takes its team’s prior data-driven experience to employ “a metrics-driven approach” so that a startup can “deeply understand” their unit economics. It also “gets in the trenches” alongside founders to help grow a company.

Ed Zimmerman, chair of Lowenstein Sandler LLP’s tech group in New York and adjunct professor of VC at Columbia Business School, is an Avid investor.

He told TechCrunch that because of his role in the venture community, he is often counsel to a company or fund and will run into former students in deals. Feedback from numerous people in his network point to Lerner being “extraordinarily thoughtful about deals,” with one entrepreneur describing her as “one of the smartest people she has met in a decade-plus in venture.”

“I’ve seen it myself in deals and then I’ve seen founders turn down very well branded funds to work with Addie,” Zimmerman added, noting they are impressed both by her intellect and integrity. “…Addie will find and win and be invited into great deals because she makes an indelible impression on the people who’ve worked with her and the data is remarkably consistent.”

Titan nabs $12.5M for ‘next generation’ investment management

Titan, a startup that is building a retail investment management platform aimed at millennials, has closed on $12.5 million in a Series A round led by VC heavyweight General Catalyst.

A bevy of other investors put money in the round, including Sound Ventures (actor Ashton Kutcher and Guy Oseary’s VC firm), Scribble VC, Y Combinator, South Park Commons, Instagram founder Mike Krieger, Lee Fixel and others. 

Titan is hoping to build on the momentum it saw in 2020, during which it grew revenue, customers and assets under management by 600%, “with effectively no marketing budget, according to co-founder Joe Percoco. The New York-based company says it’s approaching $500 million in assets under management and was cash flow positive last year.

Percoco met co-CEO Clay Gardner while the pair were at the Wharton School of the University of Pennsylvania.

“We came from two different backgrounds with respect to investing,” Percoco recalled. “He was the type that bought his first shares of stock at the ages of 11 and 12. I’m the exact opposite and couldn’t invest myself until after Goldman Sachs, where I went to work after Penn.”

Because the duo both worked in the industry, they found that friends and family were always asking them how they should manage their capital.

“We were sending them to ETFs and mutual funds in our day jobs,” Percoco said. “But we realized they did not have the same access to investing that the wealthier did.”

Frustrated with only helping the rich get richer, the pair founded Titan in 2017 with the goal of disrupting what they viewed as “an archaic industry. They’ve since built an operating system aimed at giving “everyday investors access to the types of investment products and experiences that they’ve historically been locked out of.” Or, as they describe, it a mobile version of what investment giants Fidelity and BlackRock created decades ago.

Titan’s capital management platform is designed for both accredited and unaccredited investors. The company says it provides access to services that would historically require a $1 million minimum, such as direct portfolio manager access. It charges a fee amounting to just 1% of assets, compared to the 2% – and in some cases 20% of profits – that legacy players charge.

“We believe Fidelity 2.0 will be direct-to-consumer with no walls and no black boxes,” Percoco said.

(For the unacquainted, according to Investopedia, black box accounting is the deliberate use of complex bookkeeping methodologies to make interpreting financial statements challenging and time-consuming.)

Its simplicity sets it apart. As TechCrunch previously reported, Titan’s app “chooses the best stocks by scraping top hedge fund data, adds some shorts based on your personal risk profile and puts your money to work. No worrying about market fluctuations or constantly rebalancing your portfolio. You don’t have to do anything, but can get smarter about stocks thanks to its in-app explanations and research reports.”

The startup currently offers two stock-focused strategies on its platform,

One of those strategies, called Flagship, is focused on large cap growth. The other, called Opportunities, focuses on smaller, under-the-radar companies.

All clients have direct access to its investment team and investor relations via Titan’s mobile operating system. The company also offers instant deposits, personal digital vaults (or separately managed accounts), fractional share-trading, and no lock-ups.

Titan’s core customer is the young professional in the 25-35 age range. 

“They’re already investing money somewhere, even if not that much of their money,” Gardner said. “But they’re well attuned to the reasons they should be… And, most asset management products remain in the Stone Age, offering 90-page prospectuses and black-box client experiences.”

As former TC editor Josh Constine explained when the company raised a $2.5 million seed round in October 2018, Titan differs from Robinhood or E*Trade, where users essentially are left to fend for themselves. But clients also have some control, unlike passive options such as Wealthfront and Betterment.

Looking ahead, Titan plans to use its new capital to scale its engineering and investment team, as well as make “significant investments” in product, marketing and operations. It also plans to launch several investment products across a variety of asset classes.  

“Many legacy players are hungry to have an OS to serve more folks they historically could not,” Percoco said. “We’re getting inbounds from legacy players in the space seeking to manage capital for new generations and realizing it will shift to mobile operating systems like Titan’s. Eventually, we can enable them to build their own investment products on Titan.” 

Katherine Boyle, partner at General Catalyst and Titan board member, said she was struck by Percoco and Gardner’s “deep empathy” for investors who are often overlooked — such as millennials and new investors “who have cash sitting in their checking accounts and want expert management but don’t know where to go.”

“They don’t want to be stock pickers but they don’t want a set-it-and-forget-it product,” Boyle said. “There’s another level of sophistication with actively managed products where the best managers are making investment decisions on behalf of those who can afford it. But there’s no reason why retail investors should be excluded from this model.”

She thinks Titan can capitalize on what she believes is millennials’ “deep lack of trust” in legacy institutions.

“We need new institutions like Titan to combat this lack of trust,” Boyle said. “And these new institutions need to have incentives that are aligned with their clients, not with hedge funds or banks.”

Literati raises $40M for its book club platform

Literati has raised a $40 million Series B to pursue an unusual startup opportunity — namely, book clubs.

Founder and CEO Jessica Ewing (a former product manager at Google) explained that the Austin-based company started out with book clubs for kids, before launching its Luminary brand for adult book clubs last year. And the Luminary clubs live up to the name — they’re curated by notable figures such as activist and Nobel laureate Malala Yousafzai, NBA star Stephen Curry, entrepreneur and philanthropist Sir Richard Branson, journalist Susan Orlean and the Joseph Campbell Foudnation.

When you sign up for a Literati book club, you receive a print edition of each month’s selection with a note from the curator. You also get access to the Literati app, where you can discuss the book with other readers, and where curators host author conversations. For example, Curry is leading a book club focused on nonfiction about people who “transcend expectations” (he invested in Literati as well), while Yousafzai chooses books by women “with bold ideas from around the world.”

Ewing told me that she’s trying to build the first “new, innovative bookseller” since Amazon launched 25 years ago. And she’s doing that by focusing on curation.

“There’s too much choice, too many lists, it’s completely overwhelming for most people,” she said. And she argued that it helps to enlist celebrities and other big names to do the curation: “Books are aspirational. No one aspires to play more video games, people aspire to read more … People want their books to be recommended by someone a little bit smarter than they are.”

Stephen Curry book club

Image Credits: Literati

Ewing’s hope for Literati is to create “the next great literary social network,” bridging the gap between celebrity-driven lists like Oprah’s Book Club and Reese’s Book Club and what she described as “the wine-and-cheese, super intimate model.”

I would love to see in-person meetups once we’re out of the COVID environment,” she added. “But I also think there’s everything in between. We’re enabling threaded discussions [in the app] right now, and it’s cool to have asynchronous conversations about the books.”

And on the children’s book side, Literati is also working building personalization tools designed to recommend the best books for each child.

“To me, this is one of the most exciting applications: How do we make this generation of kids love reading by pairing them with the right books?” Ewing said.

Literati previously raised $12 million in funding from Shasta Ventures and others, according to Crunchbase. The new round was led by Aydin Senkut of Felicis Ventures, with participation from Dick Costolo and Adam Bain of 01 Advisors, Founders Fund, General Catalyst, Shasta, Silverton Partners, Springdale Ventures and — as previously mentioned — Stephen Curry.

“I wanted to start my own book club with Literati, because their mission to better the world through reading naturally aligns with my values as an entrepreneur and father,” Curry said in a statement. “I was a fan before I was an investor, and am so proud to be a part of a company that works to better the lives of others, one book at a time.”