John Frankel’s ff Venture Rewrites Seed Investing

约翰·弗兰克尔充满了惊喜。

55岁的弗兰克尔出生于英国，受过牛津大学教育，是一名特许会计师，在高盛（goldmansachs）工作了20多年，现在管理着公司ff风险投资, a New York-based firm that specializes in early-stage investments. Instead of living off a Bloomberg terminal while peddling Goldman capital markets products tohedge funds, Frankel now trawls Austin’s South by Southwest (SXSW) conference and has invested in companies from TV’s “Shark Tank” and Twitter conversations.

In 1999, while still at Goldman, Frankel began personally investing in seed stage companies. After getting washed out of Goldman in 2008 in the financial crisis, he decided to try seed investing on a more organized basis.

在困难时期，弗兰克尔只筹集了700万美元左右，大部分来自朋友和家人。然而，从那时起，他和他的公司改写了数字时代种子投资成功的原因，当然是在东海岸。他们所学到的不仅仅是资本有助于种子投资的成功，他们还与创新型企业家（其中许多人缺乏商业经验）密切合作，建立有价值的可持续发展的公司。

The firm, which just closed its fifth fund, has performed well. The 2008 fund has annualized gross returns in excess of 20 percent. Funds launched in 2010 and 2012 have more than 45 percent returns. Ff now has $150 million in assets under management and has invested in nearly 100 companies, which have attracted significant follow-on financings. At last count, ff had assembled a network of more than 730 co-investors.

Ff取得了一些成功。2011年，加州的基石OnDemand公司Santa Monica上市，募集了超过1.8亿美元的资金。OnDemand公司生产基于云的应用程序，用于跨组织招聘、培训、管理和连接人员。基石价值8.5亿美元，目前价值超过20亿美元。

The following year, ff sold Culver City, California–based Thinknear, which provides location-based and targeted mobile advertising, to Sunnyvale, California–based wireless location-based service company Telenav for $22.5 million. And in 2013, it sold Austin-based Infochimps, a big data provider, to Falls Church, Virginia’s Computer Sciences Corp. for 3.1 times its investments.

Frankel估计，ff目前69家公司的投资组合中，约有20家已经为下一轮融资做好了准备。

Ff位于曼哈顿服装区的办公室就像一个孵化空间或前卫加速器。大多数纽约孵化器只是共享的工作空间，没有真正的指导或方向。Ff的运作方式不同。公司负责人在场，与企业家交谈，解决问题，提出新想法。弗兰克尔在一份声明中说：“我们的办公室和你通常的风投完全不同2014 Reddit interview。“没有办公室。站立会议桌旁,健身球坐on, and walls that you can write on.”

ff投资的原型是总部位于纽约的Distil Networks，该公司称“ff”代表“创始人友好型”。Distil Networks由33岁的Rami Essaid创建，Rami Essaid是叙利亚出生的软件工程师，毕业于北卡罗来纳州立大学。2009年，Essaid加入了位于弗吉尼亚州斯特林的科技公司Neustar。在那里，他开始与两位同事Engin Akyol和Andrew Stein一起开发基于云的网站内容保护网络。像大多数远离风险投资中心的极客一样，他们用家人和朋友的钱资助自己。

The first evidence that Distil might be on the right track came when Brad Feld’s Techstars Accelerator in New York City invited it to join. Techstars doesn’t have a lot of capital but has developed a reputation for showcasing promising entrepreneurs and technologies. A few months later Distil won SXSW’s Interactive Hatch Pitch Competition. Suddenly, Distil found itself courted by VCs from both coasts.

Then Distil’s world caved in. Neustar sued Essaid for working on the project while still in its employ and argued it owned the idea. Potential investors disengaged. By the time the suit was settled, Essaid and his partners were broke and Distil was out of cash.

That’s when Frankel and ff Venture Capital stepped in. The firm provided the bulk of the next round of financing and supported Distil with accounting, design help and even engineering. Today Distil has 130 employees and has raised more than $33 million in equity and $10 million in debt. It also has revenue in eight figures, though Essaid won’t disclose the exact number.

在向蒸馏器投出生命线四年后，弗兰克尔和ff仍然参与其中。Essaid说：“我不知道有太多的风险基金，无论是早期还是晚期，都能为他们的公司提供这种支持。”。大多数种子投资者正试图弄清楚如何从投资中获利，或者在后期担心如何提高估值。Essaid说，“Ff更关注价值而不是估值。”

Ff看起来像一个混合体，但在某些方面，它是对风险投资先驱之一，美国研究与发展，总部设在波士顿的公司在1946年推出的一个回溯。研发背后的创始天才是法国本土的乔治多里奥特，他长期担任哈佛商学院教授。与目前包括ff在内的大多数风险基金不同，AR&D在纽约证交所交易。由于资金紧张，研发部对其投资组合公司的投资限制在每家5万美元，除非得到整个研发委员会的批准。

Besides money, AR&D offered help. In its 1946 annual report, AR&D said it would “assist in the procurement of personnel for key positions, and will endeavor to make available the best possible technical, marketing and administrative assistance. It proposes, in short, to play a continuing and active part in the enterprises in which it has invested.”

这一策略得到了回报。数字设备公司（Digital Equipment Corp.）的7万美元投资在1957年必须获得董事会的批准，但在去年12月上市后，这项投资变成了近5.7亿美元。

与AR&D一样，Frankel也组建了一支非传统风险投资团队。合伙人兼ff首席财务官亚历克斯·卡茨（Alex Katz）领导会计团队，并与投资组合公司密切合作。他开始了律师生涯。亚当·普洛特金曾在对冲基金和高盛的杠杆融资集团工作过，之后作为常驻企业家加入ff。Ryan Armbrust在加入ff之前曾在哥伦比亚大学的技术转让办公室工作过。

The firm says its 29 professionals are dedicated to providing support and counsel on an ongoing basis. “We arm our companies with resources in finance and accounting, PR and communications, engineering, recruiting, community management, strategic counsel and much more,” Frankel noted inhis Reddit posting。“We provide all of these services to HELP management, not REPLACE it.”

Helping its entrepreneurs has created some unusual opportunities. “When trying to fill the role of director of communications at ff, we received around 500 resumes, brought in 50 people to interview and hired one,” recalls Frankel. “So we threw away the information on the other 499 applicants, not to mention the numerous hours of time and energy that went into the search.”

Ff realized that many of its portfolio companies were looking for PR, marketing and branding help, and might find these candidates useful. The realization led to a start-up named Wade & Wendy. Candidates looking for jobs talk to “Wade” — an artificial intelligence program that reviews skills and makes job-match suggestions. Meanwhile, “Wendy,” another A.I. program, interacts with recruiters and offers up candidates Wade has screened.

弗兰克尔说：“韦德和温迪将提高大规模数据集的生产率和效率，这些数据集过去是模拟的，现在是数字的。”。“我们实际上可以让人们找到工作，让公司更容易招人。”

John Frankel, founding partner of ff Venture Capital

Frankel, with his shaved head, Oxford shirts and jeans, says he is often asked why he works in New York, not Silicon Valley. New York has a different sense of reality, he says. Start-ups tend to be more rooted in solving problems and creating sustainable businesses. Many entrepreneurs want to be close to their markets and to those who can help. As the center of global commerce, New York is an ideal testing ground for digital start-ups.

IT industry veteran Sunil Madhu says he must have talked to as many as 150 potential investors — on both coasts — to finance Socure, his New York–based digital biometrics start-up, which provides real-time online identification. A number of Silicon Valley firms were interested but wanted him to relocate there. “I didn’t want to do that,” he says. “I wanted to develop the company and its products on the East Coast. That’s where my initial market is.” Socure’s target market: financial institutions.

Ff Venture participated in a $2.2 million round with three other funds — Abundance Partners, AlphaPrime Ventures and Archangel. Frankel became a de facto partner, helping Madhu with recruiting and marketing.

Two years later, as investors and entrepreneurs come to grips with identity theft and online fraud, Socure is emerging as a market leader — though it has a long way to go before it generates a sizable return for ff.

Frankel cautions against expecting too much too quickly. While the high end of venture-backed companies — unicorns such as Uber and Airbnb — get huge valuations subject to wild swings, he believes that in the long term, small, reasonably valued companies have a better chance at delivering steady growth and above-average returns.

克利夫兰家族理财公司morelandmanagement的总裁史蒂文•纳特（stevennutt）表示，他之所以被ff吸引，是因为它以一种非常严谨的方式投资数字媒体公司。他认为，这一战略承诺的不仅仅是投资上市公司或收购基金。同时，它也让莫兰与它通常不会遇到的公司取得了联系。

Still, ff, like other seed-stage funds, hasn’t broken through to institutional investors. Its story still doesn’t resonate in an alternative-asset world where investors want greater liquidity and quicker distributions.

2015年,风险资本d-stage investments rose 9 percent in dollars, but fell by 11 percent in deals, with $903 million going to 185 companies, according to PricewaterhouseCoopers/National Venture Capital Association MoneyTree Report. Seed-stage companies attracted 2 percent of the dollars and 4 percent of the deals. The average seed-stage round in 2015 was only $4.9 million.

Angels, superangels, angel groups or multistage funds provided much of the capital. Only a handful came from specialists such as ff. Ff’s challenge is to convince institutions that its investment style is unique and scalable enough to merit larger asset allocations. As venture capital searches for a way to systematically transform technology into sustainable businesses, some of the answers may reside inside a firm like ff.

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