Our Fund I Investment Thesis

By September 15, 2019 April 24th, 2020 No Comments

About Vertical404

Vertical404 is an Atlanta-based venture capital firm and accelerator focused on early-stage SaaS and Online Marketplaces led by Black & Latinx founders.

Our Investment Focus

We strongly believe that there is ample opportunity for technology to continually evolve our economic sectors and to solve the inefficiencies present in our daily lives. We are focused on digital transformation and invest in founders who are driven to redesign our everyday economy. 

We define “everyday economy” as industries that serve or impact our daily routines — and this perspective has guided our focus to center around investing in early-stage SaaS across health, education, finance, and future of work.

We are true pre-seed investors, meaning we are often pre-revenue investors. Of course, the opportunity to invest in companies with early-stage profitability is ideal but not required. Our team has a defined set of metrics that we value and look for in each investment opportunity, and have developed an expansive network of resources to assist early-stage founders in defining and reaching their continual growth milestones. 

Who We Invest In

We have a specific focus of investing in companies with at least one Black or Latinx founder and Chief Executive Officer. 

This guideline is a requirement for participation in our accelerator program (which we will discuss later), but not for all fund investments. Although we have this distinct focus, we are also aware of the dangers of forcing a deal for the sake of fitting the entirety of our thesis. We are committed to invest responsibly and have devoted 75% of the fund to opportunities led by founders of colors. 

Why The Black & Latinx Focus

In recent years we have seen an uptick in the number of public conversations had by venture capitalists on the importance of emphasizing diversity & inclusion within their portfolios — unfortunately, this has mainly become no more than lip service and PR capitalization. 

To be candid, our focus on founders of color is not grounded on the premise of forcing diversity & inclusion within venture capital, but one driven by data.

Between the years of January 2013 to February 2017, DiversityVC researched the investment data of the top 135 venture capital firms in the US. Over that 5-year span, the 135 firms made a combined 4,475 investments. Of those investments only 1% of founders were black and 1.8% were Latinx. 

So based on the data what does this mean? The data confirms that there is a massive opportunity in investing in untapped & underrepresented founders of color.

Why do we feel this way? Our team is active within tech & entrepreneurial ecosystems throughout the United States and knows firsthand that the lack of success black & brown tech founders has historically faced is not due to the lack of valid ideas but of the lack of capital and operational experience.

These two factors have often been crippling barriers in the ability of these founders to successfully scale their companies. So to remedy these issues for the founders we invest in, we have created a network & programming to provide the resources to inspire, empower and position founders of color with the ability to build sustainable high growth tech companies.

We believe that with the right support, Black and Latinx founders can build companies that fuel economic & generational change – and founders such as Sheena Allen of Capway, Rodney Williams of LISNR, Christian Zimmerman of Qoins, and Tope Awotona of Calendly are proving this to be true.

How We Invest

Here are a few quick points on the investment strategy of our inaugural fund 

  • Size: $10M+
  • Check Size: $100K-$250K 
  • Investments: 15 investments annually (10 via the accelerator)
  • Focus: SaaS & Online Marketplaces serving lifestyle, finance, education, and health. 
  • Capital Deployment: Invest total fund within 2-3 years

Learn more about the fund here >>

How We Support

We are here to be a valued asset to our portfolio companies and to provide more than first money in, but hands-on support and guidance. We created an in-house accelerator program to help navigate our founders through the process of scaling and progressing towards profitability and Series A funding.

Our accelerator is a 12-week program designed to provide founders of color with the education, mentorship, network, and capital required to lead companies that have an economic and generational impact. Each company will receive a $100k investment for 5% equity.

Our curriculum is centered around growth-hacking and is designed to position our founders for scaling their companies based on data. Our team works directly with founders on the positioning & optimization of their market, product, brand, team, and sales & marketing strategies.

Upon graduating from the accelerator, founders receive an additional 12-months of support via bi-monthly check-in/problem-solving sessions. 

Companies receive designated workspace in the heart of Atlanta, work 1:1 with a team of experienced facilitators/consultants, gain access to industry-specific mentors, and receive substantially discounted access to premium services such as; Amazon Web Services (AWS), HubSpot, Microsoft For Startups, and Zendesk to assist in the growth and management of their operations.

Our accelerator is held twice a year, with batch sizes of 5. The batches are intentionally small so we can really get into the weeds of the company’s operations & desired growth. 

There is a programming fee of $25k for attending the program. This fee is not invoiced but is taken out of the investment amount. ($100K-25K = $75K check for 5%)

Learn more about the accelerator here >>

What’s Next

We are excited to announce the launch of our inaugural fund & accelerator and look forward to partnering with founders who are problem-solving the issues of everyday people. 

Our team is committed to being a resource to the underrepresented founder, to be a supportive & hands-on investor to our portfolio companies, and to continually build our network of resources for guiding our companies toward profitability and growth.

We appreciate that founders have options when choosing who to partner with and that picking the right investor is not always easy. For this reason, we are transparent about our preferences and look forward to partnering with founders who share our vision of disrupting the everyday economy.  

Antoine Woods

Antoine Woods

Antoine is the founder and Managing Partner at Vertical404. He is a strong advocate of entrepreneurship and has spent his career working with tech startups as an entrepreneur, developer, operator, and investor.