I’ve become a limited partner in an early stage VC fund - here’s why
It’s something I never thought I’d do given my usual contempt for VC outfits. This is different.
It’s been over a month since my last story. There’s been a lot going on. Anyhoo, as the title of this story says I’ve recently become a limited partner (LP) in Fund 2 of Acadian Ventures, run by Jason Corsello and Thomas Otter. Why did I do that?
As a former accountant, I am naturally risk-averse so at one level this takes me way outside my fiscal comfort zone. But there’s more.
Folk who know me also know I have little time for VC. While I understand it’s a necessity as a provider of capital, I tend to view most funds as little more than casino chip vaults. Indeed, in the VC world, it’s well understood that you lay (say) 10 bets in the hope that one or two smash it out of the park to make the fund look good. Is Acadian any different? I hope so.
I’ve known Jason and Thomas more years than any of us care to count. Both are specialists in HR tech, an area of enterprise technology dominated by what I call ‘bookkeeping for people’ - ie hire, fire, retire and pay: all activities that have the flavour of bookkeeping and little more.
Jason and Thomas see many potential areas within the wider discipline of HR worthy of innovation. This is not just about improving productivity - a sore topic in the U.K. let alone elsewhere - but about topics like meaningful talent acquisition that steps away from the tired box ticking systems of the past, talent retention that looks beyond salary bribes, work-life balance as a net good, teamwork as a necessity rather than a PR stunt. In short, Acadian is looking for startups that genuinely put the humans back into Human Resources.
You might argue that these are well-understood topics that get their share of air time in tech media. Maybe in the minds of those who like to pontificate about such matters but on the ground in the real world? Not so much.
Just as ERP didn’t deliver much beyond digitising manual processes, HR tech has largely done the same in its domain. In the real world, command and control remains the order of the day, despite its many downsides. Where experiments have been taken to flatten hierarchies and improve decision-taking, they’ve not been accompanied by support systems that measure and manage such efforts. In this context I think of the catastrophic holacracy experiments at Zappos which led to chaos. The idea was sound, the execution dreadful.
For its part, Acadian is looking for startups that have the potential to make a genuine and sustainable difference. I like that.
But there has to be more.
As part of my due diligence, I pointed out to Jason and Thomas that you’d have to be an idiot to lose in VC land over the last 10 years. So how does their business model change in a world where capital is stepping back from startup investment?
The stock answer is that recessionary conditions always create opportunities and that is certainly true. Amazon really took off after the 1999 dot com bubble burst and again after the 2008 financial crisis. SaaS tech companies reaped rewards by being counter-cyclical in the same periods.
Acadian has a different approach to many other VC firms in that it relies to some extent on the collective knowledge and wisdom of its LPs. Thomas told me they welcome challenges from the LP pool. At the same time, Jason and Thomas actively assist their invested firm boards in making the right decisions. They can do this because they’ve both been there, done that and have the scars to show. In short, Acadian can be viewed as an active community of interest but with VC principles at its core. I like that too.
It helps that I know Jason successfully ran the VC funding arm of Cornerstone OnDemand, that Thomas was an integral part of building SuccessFactors following its acquisition by SAP and that other LPs are prominent and successful experts in the world of HR. David Clarke and Leighanne Levensaler are both senior advisors. These are people with great track records in HR and are people with whom I’ve had many detailed conversations in the past. Among the LPs there is no shortage of development talent upon which the fund can draw.
Unusually, there is an overall level of transparency with investors I find refreshing and comforting.
Finally, and despite its relatively small size, Acadian is global with investments in USA, Europe and Asia. I like that as it demonstrates the GPs are not Silicon Valley obsessives.
But over and above that, I’m investing because I want my children and grandchildren to know that in some small way I contributed to the betterment of the workplace by supporting technology that lifts the work experience beyond a pay check for hired hands.
In my mind, I couldn’t think of a better way to do that.
I'd love the chance to offer start-ups some low-level advice about Technology PR - mostly based on 30-years of 'learning points' - and the odd big success. That doesn't mean that I want back on the PR treadmill though ...