Tiger, but make it Pre-Seed
November 16th, 2021
Tiger Global has upended the world of late-stage VC - can something similar happen in the earliest stages?
The game of Venture Capital continues to evolve and in a lot of ways it still feels like it’s just getting started. Most notably, Tiger Global - the VC/hedge fund crossover famous for big checks and record closing times - has been credited with leading this charge in the later stages. If you haven’t checked them out already, here are a couple of great articles that breakdown the Tiger Global strategy and why they’re winning:
Here at OnePager, we like the Tiger.
We like Tiger Global because they’re putting more money in the hands of founders faster than anyone else. They did this by changing the rules under which they play the game. Under these new rules, they’re best positioned to win. In this case, winning means investing in the best companies and providing great returns to their investors.
More specifically, here’s how Tiger Global has changed the rules:
They have a different model than the typical late-stage VC.
While other VCs deploy capital in 3 years and target 30% returns. They deploy in 1 year and target 18%. This allows them to pay higher valuations to founders and invest in more companies.
They offer something tangible to founders.
While other VCs offer vague “value add”, Tiger offers cash and then basically more cash. They don’t pretend to be a suite of resources or roster of close advisors. It’s not very romantic, but it turns out straight cash is a pretty solid cure-all.
We want to change the rules in the earliest stages in order to get more money in the hands of founders faster.
More specifically, here’s how OnePager is looking to change the rules:
We have a different model than the typical early-stage VC.
Pre-Seed and Seed stage check writers are all operating under similar fund structures that require them to pick “winners” from an almost endless sea of options with very limited data. Many Pre-Seed and Seed checks are written well before product-market fit (or anything resembling it) and it can be hard to make an educated guess as to who a “winner” might actually be. To add to the challenge, it’s hard for even the largest funds to bet on everything they think is interesting because at the end of the day they only have so much money to give out.
First of all, we are not a fund. We do not try to pick “winners” because, as previously stated, that’s very hard. Rather, we look to match founders with funds and leave the picking to them. Founders are looking for investors. Investors are looking for founders. We help make that happen. Then, after we’ve helped founders build some momentum in their round, we open up the opportunity to the smaller check writers through a syndicate that we earn 20% carry on. This is a newer phenomenon, but as it stands today if you have strong signals from professional investors (they’ve already invested in your round) the appetite from Angels to fill out the rest is almost endless. In this way we’re able to help as many founders as possible find funding without the limits of a set fund size and are still participating in the upside.
We offer a service to fundraising founders before we’re on the cap-table.
As a Pre-Seed or Seed stage investor, you not only have to pick companies to invest in, but you also have to convince the founders to let you invest. Especially for the most exciting companies, investors will have to explain why their money is better than another’s. This is often characterized by future promises of support and connections: “Once we invest we’ll be able to unlock X, Y, and Z for your company…” - but not until then. At OnePager, we look to leverage “Product-Led” principles to earn our spot before any money changes hands.
Our Investor Day systematically introduces founders to over 1,000 of the top early-stage investors in the world every other week. This is something that we offer for free to any founder who’s interested in getting more exposure. In order for us to get to the point where we’re even asking a startup for an allocation, they will have already gone through Investor Day and received a notable amount of interest from professional investors. It’s only after we’ve made those introductions and even helped them secure a promising lead that we look to secure allocations.
The more startups we help fundraise, the more deals we will get to be involved in. The better the investor we match founders with, the easier it will be for us to syndicate.
From our earliest days in this space we have always been acutely aware of incentive structures and looked to align ourselves with founders. We believe that with this model we’re truly incentivized to help as many founders as possible find great investors and we’re excited to get the flywheel spinning.