January Ventures’ New Fund Will Help Young Startups Navigate This ‘Darwinian Moment’

January Ventures’ New Fund Will Help Young Startups Navigate This ‘Darwinian Moment’

When Maren Bannon and Jennifer Neundorfer founded Jane VC, they sought to put a stop to the habit of “warm intros” in the software industry. The purpose was to support female entrepreneurs who weren’t from Silicon Valley, didn’t have a strong relationship with top investors from their Stanford days, and were mostly ignored by venture capital as an asset class. Fast forward to the present, and the business has certainly kept its word, having invested in 50 firms so far, 90 percent of which are led by women. January Ventures was rebranded in 2020 to be more welcoming of women from all backgrounds.

Investors such as The Kapor Foundation, Bain Capital Ventures, Marc Andreessen, Arlan Hamilton, Chris Dixon, and others have put new millions into the couple, who were formerly entrepreneurs and Stanford business school classmates, in order to bring more of the above into the digital ecosystem. January Ventures said today that it has raised $21 million in a new fund, the firm’s second and largest investment vehicle to date. The fund will invest between $250,000 and $750,000 in software companies focusing on topics ranging from the future of work to fintech and digital health. The pitch is as simple as it gets: a two-minute survey with no revenue, pitch deck, or warm introduction necessary.

January Ventures also offers an optional survey that asks about the founders’ gender, age, and ethnicity. It also requests input on ways to strengthen the entrepreneurial ecosystem as well as existing founder attitude on the market. According to the form, this section of the survey has no bearing on investment interest. What sticks out the most is that, after a few years, January Ventures isn’t looking to replace the network; instead, it wants to completely reconstruct it. A cold email accounted for almost 18% of investments, a measure corporations rarely reveal and presumably a sector where January tops the pack. However, the fact that 36% of investments came from January Ventures’ operator network is even more revealing.

Top IT talent, such as a Square engineering manager and Compass’s head of growth, are among the approximately 100 people on the network. “Taking the network out of venture is almost foolish,” Neundorfer told TechCrunch. “What we’re trying to do is open the top of the funnel and then really help those entrepreneurs in our portfolio gain the network that they need to navigate across the venture ecosystem,” she says. The operator network may be used by January portfolio firms for introductions to customers, other investors, and guidance in addition to functioning as a transaction engine.

Despite the new funding, January Ventures is still a modest company compared to Tiger Global, Accel, and Andreessen Horowitz, all of whom manage billions of dollars and have shifted their attention to the early stage. So how do cash-strapped businesses compete? The flood of cash has made it busier, but it has also created a divide between people who live in SF and have a solid pedigree and others who come from more unconventional backgrounds, according to Bannon. January believes that focusing on startups sooner than other organizations is the key to continuing to win agreements. Andreessen Horowitz announced a program for seed-stage creators this week, marking the firm’s first formal push into the early stages of entrepreneurship.

January Ventures is unconcerned. The public markets’ re-correction in tech stocks is one reason why late-stage investors are flocking to the early-stage scene. Neundorfer believes that even small businesses are currently being impacted and challenged. She feels that because they are focused on supporting a varied range of companies, they are already on the lookout for people who are comfortable dealing with negative mood. “We’re living in a Darwinian epoch,” she explained. “Our founders are more capital efficient in general, and they know how to stretch resources and expand in an ambitious manner. In current market, which feels significantly different than it was six or twelve months ago, we are positive on our thesis.” “A lot of company creation happens before you’re ready to receive a seed check from Tiger Global,” Bannon noted.