Venture Capital Is Broken.
In 1999, it cost more than a million dollars for a typical startup to write its first line of code. Proprietary, wildly expensive hardware and development environments dominated each piece of the process. Once a company cobbled together all of these elements, the next step was to find some pricey real estate into which they could cram it all, lease an Internet connection for $2000 mb/s, and host lavish parties so print media would write about their pipe dreams.
Today, web services can be conceived, architected, tested, and deployed to millions of users for little incremental cost beyond rent and Ramen noodles for the entrepreneurs. Yet, many traditional VC funds have been loath to admit this and continue trying to inject massive piles of money into the earliest stage companies resulting in misaligned interests and inherent conflicts between founders and their investors. The entrepreneurs, their companies, and their users all suffer as a result.
Lowercase Capital was founded upon the recognition of this shift. We don’t think of ourselves as money managers. That isn’t to say we aren’t tireless and competitive. Nor does it mean that we don’t have a really big fund. In fact, we are ruthless negotiators, aggressive businesspeople, and have no allergy to disproportionately large returns. However, frankly, capital just isn’t that important to the early triumph of a company anymore. Much more vital in those inaugural days is collaborating side by side with a founding team that controls its own destiny. Entrepreneurs who are empowered by seasoned advisors, but free to frame achievement for themselves, are much happier. This inevitably shows in their products and the growth of their user bases and revenues.
We dive in to work with teams that obsess over user experiences, customer happiness, and that, to quote Paul Graham, “make something people want.” Along with relatively small amounts of money, we give them the time, attention, and the empathy that catalyze winning outcomes for all involved. Rolling up our sleeves, we help design front pages, invent new services, prioritize product features, negotiate partnerships, and deal with the everyday professional and personal challenges of startup life. We are grateful for the companies who have chosen us, and feel lucky for the chance to collaborate with such brilliant minds. The dealflow that comes to us is flattering, and we are beyond thankful for the other individuals and firms with whom we partner and learn from along the way.
At Lowercase, we enable startups, fuel the ambitions of their entrepreneurs, help them grow as people, and marvel at the audacity of their insistence upon changing the world. We measure the result of our efforts not just by the multiples we aim to return, but by the pride each of us can take in what our companies build, the admirable individuals our entrepreneurs become, and the happiness they bring to us all.
Private Equity Needs Geeks.
The world of private equity and advisory work has forever been the exclusive domain of imported suits exercising dominion over Excel-jockeying armies of indentured servants whose purpose is to weave an exculpatory blanket of harrowing analysis in the event leverage sneaks up on their owners when the coin flips tails.
To such characters, the Web has traditionally been a bit of a toy, a realm in which bit players strutted about a popular but unbankable stage. No longer. Smart money knows that the Internet’s scale and the rate of innovation upon it means that true investors cannot wait to be last and pick up the proverbial turds to be polished later. Instead, the inflection points at which truly disruptive technologies need capital infusions are coming earlier and earlier and those deals have no patience to wait for the uninformed to catch up.
In parallel, the destinies of the time-tested stalwarts of our media milieu, newspapers, television, radio, and books, are inextricably linked to clicks. Introverted brands wither in an undeniably social marketplace, while teams of no more than three or four engineers build concrete and revolutionary technologies that eviscerate the basic commercial tenets that comfort us. Off-shoring and on-demand manufacturing are empowering fly-by-nights of whom you have never heard to displace the names you have held dear for decades. There is no annual window to execute. Failure to presage the impending revolution will be fatal.
At Lowercase, we realize that successful private equity investing and advising starts with humility, an eagerness to learn and, sometimes, a willingness to start all over again. Our investments, and those of our investing partners, span sectors from wireless to media, commerce to infrastructure, and energy to transportation. Private equity today is no longer about backroom politics and pressing the flesh, and starched committees will take too long to admit the daring and risks that success will require. We won’t be wearing a suit, and our lawyers won’t arrange the meeting, but we look forward to crossing paths.