Hi folks, time for a thread with an update on @earnestcapital Fund II. Dig in if you want to learn about building a new fund (ignore if that sounds super boring!)
AMA if you read to the end
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AMA if you read to the end
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We closed Earnest Capital Fund II (or rather we're in the middle of closing + also it's still open, I'll explain below) so hooray we get to keep investing in more founders and proving out our 'funding for bootstrappers' model 🎉
For some back story, we soft launched the idea of Earnest with a blog post in Oct 2018, transparently asking the bootstrapper community to help us design a funding model that was truly built for them earnestcapital.com/funding-for-bo…
We went live in Feb 2018 with a $3.1m pilot fund which we are just now finishing up. The deepest public dive I've done on this process was probably this interview
$3.1m is not a ton in the context of $1B VC funds, but it works out to about a 1 investment per month, which was a lot considering just me investing while we also built out our investment structure (earnestcapital.com/shared-earning…) , mentorship program (earnestcapital.com/mentorship/), and more
We could have invested in *a lot* more given enough capital. The opportunity here of founders who want to build profitable sustainable businesses is huge. Far bigger than all of VC most likely. I laid out the case here in a memo in January earnestcapital.com/investment-mem…
That memo drove a ton of interest from entrepreneurs, operators, and family offices who intuitively get that traditional VC is not the only way to invest in early-stage entrepreneurs and not how most founders want to fund their company
So we re-thought our fund model to align better with those kinds of investors who want predictable capital calls and more flexibility in their commitments. The result is our Quarterly Subscription model which we used for Fund II earnestcapital.com/quarterly-subs…
The gist is that our capital to invest nows comes in a predictable quarterly flow which will let us ramp up our investing pace. We'll go from 1/month to 2-3/month over the next year and some day 100s per month.
It's like running your business off MRR rather than a venture round
It's like running your business off MRR rather than a venture round
We closed our first quarterly batch of investors this week (the model works!) but the fun part about it is new investors can join any time by signing up for a 4-quarter commit of at least $5k/qtr. You just hop into the next available quarter (eg 1 Oct) earnestcapital.com/start/for-inve…
Another nice thing about it is this means a whole new squad of Earnest mentors just joined and they are impressive as hell... we'll start sharing those over the next few weeks on the @earnestcapital feed 👀
Any questions?
