Freestyle, company The fund company, which cut initial investigations into companies like Airtable, Patreon, BetterUp and Narwar, has closed its $130 million sixth fund.
The latter fund is also the company’s largest investment vehicle to date, but still seems small compared to Andreessen Horowitz’s $400 million seed fund or Greylock’s $500 million seed fund. However, according to general partner Jenny Lefcourt, the conservative growth was deliberate: a growth ploy for the company, founded in 2009, to stay the same despite valuations and pressure from the broader initial market.
“The size of the fund ultimately determines the strategy,” Lefcourt said. If Freestyle raises a $500 million start-up fund, Lefcourt said, the company will have to change its model, hiring employees and focusing on investing in more founders rather than deep work with a select few. “Building a large fund is tempting if people want to give you money, but you may be used to management fees rather than transferring them.”
Freestyle is truly unique in that it sticks to its core investment strategy even with today’s newly announced funds. The company runs less than a dozen seed rounds a year, aiming for 10% to 15% ownership and betting across all verticals. With average stakes ranging from $1.5 million to $3 million, freestyle has grown slightly year on year to stay at the same level. Despite the Web3 companies that Lefcourt says it invests in, despite the difference in ownership and valuation, Freestyle does not select “successful companies” with high valuations, which it believes to be in excess of $20 million.
“We both felt like we saw how this movie ended, and too quickly high ratings hurt the vast majority of the founders,” said Lefcourt, who led the company’s investments in BetterUp, Narwar and the Daily. “While the number of deals has certainly increased, the overall quality has remained low.”
However, the company has one (unfortunately) controversial feature: ownership is split in half between Jenny Lefcourt and Dave Samuel. Despite the steady increase in the number of female writers in the Czech Republic, Lefkour noted that in institutional firms, the title “partner” does not always indicate actual ownership or decision-making power. About 43% of companies in the portfolio have historically underrepresented founders and co-founders, defining freestyle as non-white men and women of any race and ethnicity. About 29% of existing fund companies have female founders and/or co-founders.
Last year, co-founder Josh Felser left to create another venture capital firm, this time with a clear focus on climate change startups. His new company, Climatic, is on a very different roadmap than Freestyle: It has hired a number of consultants who previously served as sales and marketing executives at other companies but have not yet raised a formal fund and are not in the round.
The departure did not hurt the limited partners’ interest in freestyle. The company’s new fund came together within a month, all from existing investors, and the team was able to hire Josh Gilbert, chief financial officer of Lerer Hippeau. Despite this momentum, Lefcourt believes freestyle could draw attention given competition from brand new foundations.
“Going back to the old days, people in the industry really knew that Freestyle was a great startup fund,” she said. “Now Silicon Valley is everywhere, and we understand that we need to let the world know that we are here a little more than before.”