Venture capital Industry is built on brands. Lead investors help close a round, pro rata rights show a company’s prospects, and a partner title gives approval to people inside companies looking to close deals.
Revere, a new bet is being developed by a former AngelList executive. Eric Wow and family office operator Chris ShaneIt is playing on these features. The startup, which officially launched today, is building a ranking system for the venture capital industry. The goal is to create a more standardized way to track information about emerging fund managers so that institutional investors know how to navigate the changing landscape.
“There’s so much influence over a few people, if Keith Rabois or Elon Musk tweet something, everyone just jumps on the bandwagon,” Woo said. “In the emerging managers space, typically that signal comes from the big anchor LPs.”
How it works
RespectfulA wider audience wants to participate in the support of venture capitalists. You just need an indication of where you’re going and how to measure it (thanks to the whole 10-year horizon thing, since constant return proofs aren’t necessarily true).
Using data provided by emerging venture firms, Revere uses 20 categories to determine, summarize and research the firm’s quality in 5 areas: resource, team, value addition, track record and firm management. It then creates a heat map using the same provided data set that shows at a glance the strengths and weaknesses of an organization in the specified categories. Research reports include everything from fund formation details, management structure, strategy and service providers when evaluating a company. He’s doing his due diligence, and to date, Revere has written more than 80 reports.
The strategy is reminiscent of what Cambridge Associates has been doing for years, but the startup says it will operate cheaper, faster and with emerging fund managers as a key focus. For example, Revere does not charge fund managers for reports; Instead it charges LPs per level, or a monthly subscription fee to access all reports. An 11-man startup currently takes around two weeks to report. Over time, if demand increases, it will be difficult to turn around reports within the same time frame.
As Revere collects more data, it sees an opportunity to create additional performance metrics for the asset class, something Pitchbook and Cambridge Analytics haven’t done well, according to Woo. “The moment we’re able to get up and down here are the benchmarks, and we can show you why the lower the funds, the earlier the better, we think that’s going to be a real sea change. Risk Awareness”, from the LP side.
The startup currently has more than 100 funds on its platform. Revere declined to share the names of clients, but said one of his first clients was a large investment adviser. The company does not appear to be a marketplace to facilitate transactions between certified firms and interested LPs. However, as a result of his reports, he confirmed that millions were invested in the funds.
While Revere does not distribute actual fund manager data widely, the sample data in the sample report below gives a good idea of the format, tone, and structure of what subscribers will see.
REVERE Ratings – Lantern Vee… by TechCrunch
But who determines the ratings?
Ratings is a sensitive subject in ventures, so I’m amped up by some of the responses I’ve gotten from investors when I talk to them about the ratings forum. VC level sites are mainly owned, mostly run by the elite and respected, but they always struggle with the choice of negative fans and the problem of being verified by certain accounts. Backchannel, currently accepting beta users on Testflight, wants to be a private subchannel for founders and LPs. Revere needs to convince investors that this isn’t a ranking of who’s hot and who’s not, but rather research-based recommendations intended for LPs (not tech witware).
Still, Revere can fall into the same trap that others have. The subject of quality reporting for some new companies may raise questions. The company doesn’t use hard science or artificial intelligence to draw conclusions about the company, which means bias can easily creep in. The depths of the family office world? When it comes to supporting new ventures, getting people to rely on data rather than brands is the problem.
Waugh and Shane believe that Revere’s job is not to give a thumbs up or thumbs down if a particular venture fund or person is a good idea, but rather to provide a complete picture of what an entity is currently offering. . That said, in a mock-up of the report, Revere lists companies in categories like “Best of” and “Best in Class,” a designation reserved for “all-around performers who rank well across multiple categories.” Each year, the company ranks a handful of organizations as Best in Class, Rising Stars or Proven.
“One of the reasons people like to invest in venture capital is because it’s intangible, right? If you’re just looking for returns, and they’re good risk-adjusted returns, there are other asset classes,” Woo said.
So far, Revere has raised $5.62 million since its launch; From a May 2021 pre-seed round of $1.35 million investors including Angelist, Twitch co-founder Kevin Lin and Blue Future Partners. It has raised a $4.27 million round from Cherubic Ventures, Overlay Capital, Benhamou Global Ventures, Oyster Ventures, MDSV and others.
Revere wants to disrupt the industry by setting standards rather than trying to match investors’ needs with design and check certain boxes. Let’s see if the market is ready to ask for help; And if the requirement is weak enough to disintegrate, PDF style.
