8-Bit Capital, co-led by Jonathan Abrams, has closed its first fund with $40 million – TechCrunch

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Jonathan Abrams and Kent Lindstrom have partnered on numerous issues through the years. Lindstrom was an advisor and investor on the early social networking service Friendster, based by Abrams. He was additionally the COO of social information aggregator Nuzzel, which was based by Abrams and that offered to a subscription startup referred to as Scroll in 2019. (Scroll later offered to Twitter, which shut down Nuzzel in Might.)

As a result of each have been angel investing all of the whereas, and since there’s nonetheless some huge cash trying to discover its method into startups, it isn’t stunning that they determined extra just lately to boost an precise seed-stage fund from outdoors buyers, or that they determined to take a position it collectively.

Thus was born 8-Bit Capital, a model that refers to a time when computer systems have been solely in a position to retailer a most of 8 bits per information block, ensuing within the blocky graphics that individuals who grew up on Atari keep in mind nicely. Now, the duo is taking the wraps off 8-Bit’s first fund, a $40 million automobile that they raised from a large variety of well-known VCs and entrepreneurs, in addition to a number of institutional buyers.

We talked with Abrams earlier about a few of these backers, who he requested we not identify publicly (to protect them from extra capital requests). We additionally talked about how he and Lindstrom are excited about competing within the frothiest enterprise market ever and the way centered — or not — the duo can be on social platforms, given their historical past. Our chat, beneath, has been edited evenly for size and readability.

TC: Why leap into VC full time proper now?

JA: We’ve been serving to different entrepreneurs for a very long time, and the suggestions from numerous entrepreneurs through the years is that they actually appreciated he recommendation that we’ve given them. A part of which may be as a result of the enterprise capital “worth add” could could also be slightly overhyped within the trade, and half could also be that Kent and I are simply good at it. So despite the fact that there’s numerous buyers on the market, we thought it did make sense for us to do that.

TC: What are your most profitable “exits” as an angel investor?

JA: I might say that the perfect corporations, or probably the most profitable ones, nonetheless haven’t exited. That’s the loopy factor about about doing angel investing or enterprise capital — the early exits could be good however the the actual winners take a very long time. I used to be an investor in [the e-signature company] Hiya Signal, which was acquired by Dropbox [in 2019 for $230 million in cash]. I used to be invested in [the content sharing platform] SlideShare, which was acquired by LinkedIn [in 2012 for $119 million in cash and stock], and people have been very worthwhile exits. However among the corporations I invested in, like Instacart or Entrance or AngelList, are nonetheless not exited, they usually’re doing extraordinarily nicely and can be extraordinarily worthwhile investments.

It does require persistence. There are corporations which might be value tens of billions [of dollars], however oftentimes, the entrepreneurs have been engaged on these corporations for a very long time.

TC: You’re clearly a pioneer in social media, having began Friendster extra just lately began Nuzzel. In the meantime, social media is scorching once more. How are you in social as an space of funding?

JA: We’re open to it, nevertheless it’s not the world we’re most centered on proper now, and I believe that’s due to alternative. Each week, someone sends us some new social media pitch, however I’m nonetheless ready to see one thing that’s loopy and revolutionary. Normally we simply see issues like, ‘We don’t like Fb; we’ll by some means be higher. ‘

What we spend money on is software program. We’re not investing in biotech or mattresses or espresso or spaceships. Software program that connects individuals or companies in new methods is what Kent and I are actually captivated with.

TC: How can founders attain you? Do they want a heat introduction?

JA: introductions are nice. We wish to see an entrepreneur who can community. If no person on the founding crew of an organization has the power to get introductions to buyers, then how are you going to get introductions to clients and construct your crew and all these sorts of issues?

Alternatively, I’m on the board of Women in Tech, and Kent and I actually care about range and we all know that requiring an intro could be an obstacle to bettering the variety numbers in an trade that basically wants enchancment. So if someone sends me a chilly electronic mail, I’m going to have a look at it. The issue is, I get numerous chilly emails, they usually’re all horrible. They’re typically actually lengthy and don’t comprise any of the knowledge you want. So If [we’re sent] a chilly electronic mail, we’d most likely learn it, however typically, the chilly emails we get are simply not compelling.

A lot of the corporations that we’ve invested in, a few of them have been entrepreneurs who we already know, and lots of of them have been referrals. Usually, we wish to get deal move straight from entrepreneurs, and when different VCs ship us offers, we often don’t do them for numerous causes.

TC: As a result of they’re most likely sending the identical deal to everybody directly?

JA: One situation is adversarial choice the place, if that is one thing {that a} VC is sharing round and didn’t gobble up that allocation themselves, there could also be a difficulty there. One other situation is timing. We wish to know an organization tremendous early — ideally earlier than different VCs actually learn about it.

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