Founded in late 2022, Powerset is an investment program with a simple hypothesis. “What if your best investors aren’t venture capitalists, but other founders scribbling checks between late-night coding sessions and board meetings?”
Founded by AngelList alum Jake Zeller and Jonathan Swanson, founder of coaching firm Athena, PowerSet invests $1 million in other startups each year to five to 10 founders. and could potentially give away millions more if the founders bring in good investment. Past members include Paul Copplestone, co-founder of developer platform Supabase, Jordan Tigani, co-founder of analytics company MotherDuck, and Wes McKinney, a software engineer who created the Python pandas project. Applications for the third group will open this week.
Zeller described PowerSet as a type of decentralized venture fund. There's no program to “teach” founders how to invest, no timeline for when founders need to commit money, and no group of managing partners who can veto deals. Founders take home 15% of the profits from the deal.
This is somewhere between angel investing (except the founders aren't investing their own money) and old-school VC scouting programs, where VCs hire people, including founders, to help source deals. It is an experimental model. Cohort founders are then encouraged to mentor and advise portfolio companies, just like other investors.
But in Powerset's case, the investment was made entirely at the whim of its already overworked and stressed founders. “Some founders don't invest at all because they're so busy and picky about their company,” Zeller says. Or founders could go from having no investment to being the most active one very quickly.
Despite the complications, Zeller believes PowerSet's strategy will yield huge profits. “Often the best founders who are building the best companies end up contributing to the best investors,” he said.
After all, founders deeply understand the complexities of building a startup in their field and are always looking for top talent. “I've never seen a genius-level technical founder build a great company just by being bad at investing,” he says.
There are no hard and fast rules for who can participate in Powerset's programs. It's just that you've founded a company and are immersed in the technology ecosystem. “Hopefully your company is at a scale where you can have some organic connections,” Zeller said. This means other founders like your product and will naturally reach out to you.
But Zeller has one deal-breaker problem. That said, it's not of interest to people who see the power set as a gateway to running a company and have the desire to immediately become a full-time venture capitalist. “Those guys are going to perform badly,” he said.
He argues that the best-performing PowerSet participants are founders who plan to build their companies over the next five to 10 years. “If you're building something very important, your life's mission, your life's work, you're not going to invest in a frivolous company,” he said. “That doesn't justify the activation energy.”