This startup has a new application that ensures that VCs are useful

This startup has a new application that ensures that VCs are useful


Like any venture capitalist, Craft Ventures partner Brian Murray asks the founders the same questions over and over again: Can you introduce me to a potential customer? Do you know any suitable candidates for the position I am looking for? Can you tweet this article about us?

It can be difficult for startup founders to find out which of their tens or even hundreds of investors and advisors to turn to for help. “There has never been a good way to activate this group of people,” says Murray.

Murray and former colleague Fahim Ferdous, the former founder of the startup, therefore decided to create a tool that would bridge the disconnection between the founder and the investor. Their new company, Cabal, received $ 8 million in initial funding led by Murray’s Craft and Seven Seven Six, with funds such as Y Combinator, Backstage Capital and Day One Ventures, as well as angel investors such as Li Jin and Max Mullen. . The application is already used by 2,600 organizations, mostly companies looking for their best shareholders and advisors who can provide the most help.

“The receipts will be there,” says Alexis Ohanian, founder and partner of Seven Seven Six. “There will be cases where advisers do more work for the founders than people who have paid to stand on the ceiling ceilings as investors. That transparency is bad for lazy investors, but that’s okay – it’s good for everyone else. “

Cabal was founded in early 2020 by Murray and Ferdous, former colleagues of the Yammer corporate social network, as a hobby project that they could use for themselves and close colleagues. The application spread rapidly among the founders of Silicon Valley and came at an opportune time when the growing number of solo investors and the market friendly to the founders led to an increase in the number of shareholders on the startup ceiling tables. Last year, the company participated in the startup accelerator Y Combinator as an opportunity to network with hundreds of founders from the ground up.

Founders can use the Cabal web application to send regular e-mail updates to investors and connect their investors’ networks. For example, it integrates with Salesforce or other CRM tools, so the founder can see who in his network has a connection in a particular company so that he can provide a warm introduction to a potential business agreement or partnership. The application is available through the freemium model – Cabal charges users a subscription fee for features to connect to sales tools – even though it has earned little revenue so far because it only started monetizing in April, Murray says. This week, Cabal is launching a mobile app that provides investors and advisors with a dashboard to see all the ways they can help their portfolio companies.

Murray says he anticipates even more usefulness for Cabal as the venture investment slows and the market shifts from founder-friendly conditions. “I think the founders should look inward a lot at these times, towards their limit table and their advisors who want to get support,” he says. “They’re still there and they want to help you – especially if they’re less active in making new investments, you can let them contribute more actively to your business.”

Murray and Ferdous also decided to “gamify” the system by creating a ranking that tracks what help each investor or advisor provided. This can lead to VC liability, but also reward those who pull oversized cargo. Cabal synchronizes with cap table management tools such as Carta and Pulley, and allows companies to provide capital to the most useful advisors or other individuals who are not interested (say, someone who has advocated a company on social media). “Capital has historically been a very powerful way of building wealth, but it has been quite limited to people who are already rich as investors,” says Murray. “People can now build a portfolio and build equity based on their contributions and their real interest and willingness to help companies.”

Ohanian says he is most excited about Cabal’s potential to help launch a “venture capital division” that will divert power from traditionally dominant venture capital firms. To use an analogy from the Marvel Cinematic Universe, Ohanian says that in the past, a startup that chose a top-level company would be like signing a partnership with the Avengers. “The most sophisticated founders can cut through BS, and what they realize is that you can have the Avengers on the cap table, but when Thanos shows up and they send Hawkeye, they’ll say, ‘Why the hell would you send Hawkeye?’ I need Thor, “he says. “Now the best founders can build a table of ceilings based on the individual superheroes they can pull.”

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