Afore Capital, a company that claims to be the largest dedicated seed investor, says the initial check on new startups should be greater than what most accelerators and early stage investors were offering. It is based on the idea that there is. When it raised the aforementioned third $150 million fund in 2022, the company wrote checks ranging from $1 million to $2 million.
The company's strategy worked. Today, its portfolio of 200 companies has a collective valuation of over $13.5 billion, claiming it has returned $47 million (one times the first fund) to limited partners over the last year. Since its founding in 2017, Afore has invested in startups such as Modern Health, Benchsci, Neo Financial, New Lantern and Hightouch, closing rounds of 80 million at a $1.2 billion valuation this week.
Despite Afore's early success, Banerji and Jain say that not all young startups need as much capital as the company offers. On Thursday, the company announced the aforementioned $400 million fund and new strategy, with the company calling pre-seed 2.0. Partners describe a sophisticated investment approach in one word: flexibility.
“We can write small checks and write bigger checks, but the idea is that we want to help you get your business off the ground,” Banerji said.
For founders who already know what they want to build, the company is still considering investing up to $2 million. However, the aforementioned wants to bet on aspiring entrepreneurs who have not yet come up with specific startup ideas. Often, those people may not need that much funding, as they have not yet left their jobs or are college students.
Image credit: The aforementioned capital
The foregoing has launched an 8-Week Founders (FIR) program for founders who are still in their ideas stages. The company claims that FIR is very different from accelerators like YC. Each cohort consists solely of five to eight founders who are given the opportunity to explore startup ideas. “The goal is to invent. The goal is to build. The goal is not fundraising,” Jain said.
Unlike YC, which offers standard terms for each company, it seeks to customize each investment of the FIR founder according to the needs of the startup.
“We're the opposite polarity of the accelerator. Or we're not trying to accelerate anything. We're trying to invent a product with our founders,” Banerji said, and the company is now in charge of startups. I want to give them the opportunity to pivot or iterate without the pressure of time.
From the fourth fund, approximately 35-40 seed companies mentioned above and 50-75 founders may pass the FIR program.