This startup has a new app to make sure VCs are useful
Like any venture capitalist, Craft Ventures partner Brian Murray has answered the same questions from the founders over and over again: Can you introduce me to a potential client? Do you know good candidates for this position I am looking to fill? Can you retweet this article about us?
For startup founders, it can be overwhelming to figure out which of their dozens or even hundreds of investors and advisors to turn to for help. “There’s never been a good way to activate this group of people,” Murray says.
Murray and his former colleague Fahim Ferdous, a former startup founder, therefore decided to create a tool to bridge the disconnect between founder and investor. Called Cabal, their new company has raised $8 million in company-led seed funding from Murray Craft and Seven Seven Six, with participation from funds like Y Combinator, Backstage Capital and Day One Ventures, as well as angel investors. , including Li Jin and Max Mullen. . Already, 2,600 organizations are using the app, with most of them looking for their best speakers and advisors who can help them the best.
“The receipts will be there,” says Alexis Ohanian, founder and partner of Seven Seven Six. “There will be instances where advisors will do more work for founders than people who have paid to be on the caps table as investors. This transparency is bad for lazy investors, but that’s okay. , It’s good for everyone.
Cabal was started in early 2020 by Murray and Ferdous, former colleagues at the corporate social networking company Yammer, as a hobby project they could use for themselves and close colleagues. The app quickly caught on among Silicon Valley founders, coming at an opportune time when a growing number of individual investors and a founder-friendly market had led to a proliferation of shareholders on startup cap tables. . Last year, the company participated in the Y Combinator startup accelerator as an opportunity to network with hundreds of founders from the ground up.
Founders can use Cabal’s web application to send periodic email updates to investors and access their investors’ networks. For example, it connects to Salesforce or other CRM tools so a founder can see who in their network has connections with a certain company to provide a warm introduction for a potential business deal or partnership. The app is available through a freemium model – Cabal charges users a subscription fee for features to connect to sales tools – though it generated little revenue until it was released. began to be monetized only in April, explains Murray. This week, Cabal is launching a mobile app that provides a dashboard for investors and advisors to see all the ways they can help their portfolio companies.
With a slowdown in venture capital investment pushing the market away from founder-friendly conditions, Murray says he foresees even more utility for Cabal. “I think founders should look inward a lot during these times, to their cap table and advisors for support,” he says. “They’re still there and they want to help, especially if they’re going to be less active in making new investments, so you can engage them more actively in your business.”
Murray and Ferdous also opted to ‘gamify’ the system by creating a ranking that tracks the help given by each investor or advisor. This can hold VCs accountable, but also reward those who pull an oversized load. Cabal syncs with cap table management tools like Carta and Pulley to allow companies to give capital to the most helpful advisors or other non-stakeholders (e.g. someone who has championed the company on social networks). “Equity has historically been a very powerful way to build wealth, but it’s been pretty limited to people who are already wealthy like investors,” Murray says. “Now people can build a portfolio and build equity based on their contributions, genuine interest, and willingness to help businesses.”
Ohanian says he’s most excited about Cabal’s potential to help usher in a “venture capital unbundling” that will move power away from traditionally dominant venture capital firms. To use a Marvel Cinematic Universe analogy, Ohanian says that in the past, a startup choosing a top company would be tantamount to signing a partnership with the Avengers. “The more sophisticated Founders can cut through the BS, and what they realize is you might have the Avengers on your cap table, but when Thanos shows up and they send Hawkeye, they They’re like, ‘Why the hell would you send Hawkeye? I need Thor,” he said. “Now top founders can create a cap table based on individual superheroes that they can build on.”