We continue to see more funds upfront, which is great for ideas that need a push to get off the ground. Today, startups have another new source of capital — but there’s a catch. Susan Fletcher must have invested in you before.
“I started Zelda Ventures late last year with a pretty basic thesis — invest in the next founders’ companies that I’d backed before,” Fletcher, general partner at Zelda Ventures, he told TechCrunch. “When I was investing on behalf of Stanford University, essentially in their alum companies, I estimated that about 10 percent of them were going to start a new company in a given year.”
During her two-decade career as an investor, she was a fund manager at Stanford StartX and a general partner at Prime Movers Lab. Fletcher has made over 350 investments, most notably in Sourcegraph, Hive, Alation, Turing, Dexterity and Orca Bio. Thirty of those portfolio companies exited, including Nearpod, Osmo and Sweep.
It was named after iconic video game character treasure-hunting, Bay Area-based Zelda debuts with $33 million in capital commitments.
Fletcher aims to be the first check on these new ideas. He has watched angel money, which would have been that seed capital, flee the startup ecosystem in recent years. At the same time, larger early-stage funds also pulled back to refocus on larger investments.
“This creates a wonderful opportunity for smaller upfront funds to play a very central role,” Fletcher said.
As a general fund in pre-seed companies, Zelda looks for passion and commitment on the part of the founders. Fletcher’s list includes founders with the ability to build a dynamic team and execute on their ideas. He also wants to know why a founder makes that next company.
“The idea has to really focus on how big the market is,” he said. “That’s a general approach, but with a very specific lens, and I think when you overlay how you look at serial entrepreneurs, across all the previous companies that you’ve invested in, it really lends itself to that prior knowledge of why. I want someone for the long term who wants to build a business that is generational, impactful and big.”
It took a year of fundraising for the new fund. During that time, Fletcher said she went to 446 meetings with limited partners and ended up with 80 who signed on, including Randy Eisenman, co-founder and managing partner of Satori Capital.
Meanwhile, Fletcher has invested in 10 companies from the new fund so far, including Andromeda Surgical, Pointable and Redcoat AI. It plans to invest in 40 companies in total.
“What I’m building is a boutique, early-stage, savvy entrepreneur product,” Fletcher said. “I’m very clear about what it is. I’m there to help you in the first 18 months to get you to Series A.”
