Announcing $175m more to Bridge the Digital Divide
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Today, I am excited to announce that Equal Ventures has raised $175m to further our mission to “Bridge the Digital Divide.” These funds are split across two vehicles, $100m for Equal Ventures Fund 2 and $75m for our first Opportunity Fund. Equal Ventures Fund 2 will continue with our core strategy of leading seed investments in climate, insurance, retail and supply chain (with initial investments of $2-3m), while the Opportunity Fund enables us to double-down on our most promising companies in subsequent rounds.
When we started Equal back in 2019, we felt that founders building companies in analog markets (like climate, insurance, retail and supply chain) were put at a significant disadvantage given the lack of native experience most VCs have in these spaces.
Our goal was simple - to leverage a better understanding of these markets to provide those founders with the same quality and consistency of experience that traditional technology founders have grown to expect when engaging with traditional venture capitalists.
At that point, the concept of venture outcomes in these industries had never been proven, but we felt we were seeing an inflection point. Famed economist and author Carlota Perez posits that innovation cycles go from stages of “Technology Installation,” categorized by IP development core to that technology cycle, to “Technology Deployment,” where the technology becomes more addressable to mainstream society and enables huge leaps forward in productivity and living standards. This work very much inspired the creation of Equal Ventures. We felt that we were amidst the “turning point” between these phases and that the next leg of the innovation cycle (the “Deployment” phase) may require a different type of venture capital firm to meet the needs of a new class of founders.
There were a handful of software companies addressing these industries, but the scope and scale of their success was nothing like that of traditional IT. Over the last 5 years however, we’ve seen that narrative shift. Software began eating the world and venture followed suit. We saw billions of dollars used to fund digital insurance companies, trucking carriers, energy devices and next-gen retail concepts. All of a sudden EVERY company was a tech company and with that, virtually every type of company was within the scope of venture capital. As the aperture of venture widened, so did its complexity. VCs were no longer evaluating solely software companies with known economic structures and best practices - they now needed to understand the nuanced patterns of these industries or risk massive missteps (and losses) along the way. Recent advancements in AI may further accelerate this transition, making software development accessible to virtually everyone.
Over the course of these last several years, we’ve been fortunate to back some of the most exciting companies in these industries at the earliest stages, making multi-million dollar commitments to these companies often before a single line of code has been written. We weren’t buying lottery tickets either - investing in a total of just 15 companies in our first fund, believing that “conviction favors concentration over diversification.” For industries traditionally shunned by venture capital, these 15 companies have collectively raised >$600m and garnered a follow-on rate of >90%, with many of these rounds coming from the most notable investors in the market. We were double-digit equity holders in every single one of these companies and often served as their first board member. Our initial results (albeit on paper) are top decile and have started to garner recognition from our peers. Those who have known us the longest can attest to how much we’ve grown over the short arch of Equal. We’ve done this through a devout focus on Equal’s “product” for founders - a product built on the foundation of hands-on support, independent conviction and, above all else, a prepared mind.
We’ve deepened our conviction in the original hypothesis as we’ve witnessed results of our industry research and networks play out in the market. As one of our founders recently told me, “it’s a rare thing to speak with an investor who has as much knowledge and passion for the market as I (the founder) do.” Our ambition is to leave every founder we interact with feeling the same way - that Equal is THE most informed, passionate and helpful partner to startups building in these industries. As a firm, we’ve made “Prepared Mind” the basis of our system, embedding it within the core activities of our firm. We’ve invested into enhancing our capabilities across these activities with the belief that these investments will compound over time. Much like with the startups we back, our hope is that these investments will enable a flywheel that makes our organization stronger everyday. As I wrote in our most recent LP update, “Albert Einstein once said compounding is “the eighth wonder of the world…He who understands it, earns it; he who doesn’t, pays it.” As I reflect upon our last 5 years as a firm, it’s clear that these investments are starting to compound - our product offering is stronger than it has ever been and that is gaining us access to opportunities that simply weren’t accessible to us when the firm started in 2019.
There is no “I” in “Equal”, but I for one am proud of how our firm has bonded together over our individual strengths to serve founders in a way that I think is unique to anything I’ve seen before. We’ve evolved so much from our days, including most recently adopting our “3 hats on the ball” approach. We treat Equal like a startup and are working tirelessly to improve our product offering for founders. As with startups, product-market fit is elusive and ever changing, which is why we constantly work to improve the depth and quality of what we can offer to the founders we partner with.
Our team is continuing to evolve and grow as we take this step forward into our next set of funds. Ali Afridi has rejoined our firm as a Principal to help our founders in their earliest stages of going from Zero to One and identify amazing investment opportunities across each of our 4 verticals. Grace Penders recently joined us from Energize Capital and will be leading our Climate vertical. We’ll also be adding a Supply Chain Product Owner and several Associates to the team as we continue to grow the Equal family. Lastly, Richard Kerby will be transitioning to a Venture Partner role, where he will continue to advise Equal companies and serve in his board capacities. Rich will share more on his transition shortly, but we thank him for his contributions to the firm and look forward to his continued success as he takes the next step in his career.
At Equal, we often say “it takes a village”, and I can say without hesitation that we wouldn’t be here today without the support of that village over these last 5 years. My daughter was born the month that our fund was closed and I was flat broke. When we pitched our anchor LP a few weeks later, we slept on a cot at a hostel the night before. Shortly after that, my mother-in-law was diagnosed with pancreatic cancer and I spent weeks working out of an ICU waiting room (she has miraculously beaten the odds and is now nearly 5 years cancer free). In March of 2020, we announced our first fund several days before lockdowns were initiated in NYC. We then had to figure out how to win deals and serve companies in a remote environment, while attempting to reconcile the extreme volatility that the pandemic brought to many of our core markets. While the venture industry is never meant to be easy, life’s obstacles haven’t made it any easier.
That said, I’ve been beyond fortunate, gifted with the immense support of the “village” of founders, co-investors, LPs and team members that supported this journey. For that, I consider myself truly blessed.
I’m humbled by the amazing founders that we’ve had the chance to partner with - you are the superheroes that we admire and are delighted to serve. I’m grateful for the many co-investors that we have worked with to support these companies and for the immense camaraderie I’m able to share with my peers in the Emerging Manager Circle. While we were heavily oversubscribed in these latest funds, we received over 400 “no’s” when raising Fund 1 and I’m eternally grateful for the LPs that believed in us early and to those who have decided to join us as we take this leap forward. Many of these LPs have provided far more than capital, often acting as mentors through our growth and evolution. I’m especially thankful to our team members who have embraced our firm’s startup mindset and contributed beyond the call of duty. They’ve not only proven to be great investors, but have shaped what Equal is today. I’m fortunate to work with peers that I admire, view as family and know that without any of them, we would not be where we are today. Lastly, I’m thankful to my wife, Lauren, and my children, Sutton and Hayes, for the invaluable support they’ve provided and for believing in me and Equal along the way.
Our team believes that technology can be a force to bring people together, to make opportunity more equitable and to mend the gaps within society. Across the industries we invest in, there is not only trillions of dollars of economic opportunity, but unimaginable potential to improve the way we work and live. As a team, our mission is to help the world’s greatest founders transform these markets and open the doors to that future. We’re honored to continue that mission.
Thank you.
Rick Zullo
Managing Partner - Equal Ventures