Taking a Closer Look at Alumni Ventures’ Seed Fund

Our Seed Fund contains promising seed and pre-seed startups spanning a wide array of industries, verticals, and technologies

Seed being planted
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Alumni Ventures’ Seed Fund allows accredited investors to own a diversified portfolio of ~20-30 venture-backed pre-seed and seed-stage companies — rigorously vetted and scored by our experienced teams. Each vintage features high-tech game-changers and disruptive business models from a variety of sectors, regions, and lead investors.

Young startups are often at the cutting-edge of innovation, and they typically offer attractive valuations and significant potential upside. In 2021, more than 17,000 startups around the globe raised nearly $30 billion, a 56% jump year over year. While funding is slowing down a bit, seed valuations are still strong — and seed has done well in various markets, including in past recessions. For a deeper look at our investment thesis and outlook for this year’s Seed Fund, we interviewed Chief Investment Officer Anton Simunovic.

Anton Simunovic
Anton Simunovic
Chief Investment Officer, Alumni Ventures

Anton has over two decades of technology experience as a proven venture capital investor, entrepreneur, and operating executive in companies ranging from startups to Fortune 10 organizations. Anton possesses substantial international experience in Canada, China, Europe, and Israel and has served on the board of directors of more than 20 private and public companies.

Seed Fund Closing December 31

Alumni Ventures’ Seed Fund lets you invest in a fund of ~20-30 diversified, venture-backed companies at the earliest stage, where the opportunities for value creation are typically highest and company valuations are usually at their lowest.

What’s the 40,000-foot overview of Alumni Ventures’ Seed Fund?

Anton: The Seed Fund is one in a series of funds we’ve created focusing on early-stage startups. It targets between ~20-30 investments for each vintage. The fund is also diversified in terms of sector, region, and syndicate, ensuring broad coverage of opportunities and a disciplined approach to portfolio diversification. Finally, our Seed Fund maintains ~25% reserves for follow-on investments, meaning we’re able to support strong companies in their downstream rounds.

Can you explain more about the opportunities in seed investing?

Anton: Venture as a whole is a high-risk/high-reward asset class, and this is especially true of pre-seed and seed investments. While failure rates are higher, and product-market fit may not be well established at this stage, valuations are lower, and — with that — the opportunity for outsized return is higher. As investors, we constantly balance risk against entry price and upside potential.

While we’ve seen a decline in late-stage investing in 2022, seed-stage investing has been the least affected by the current funding environment. Seed startups raised $21.3 billion across 10,551 rounds in the first half of 2022, outpacing the same half-year time frame in 2021.

Additionally, early-stage investing has experienced significant growth from a long term view. More than 23,000 seed startups received funding in the past decade, compared to just 3,200 companies between 2006 and 2010. In that timeframe, the average seed round has grown from $1.7 million to $4.6 million. At Alumni Ventures, we believe in diversifying, buying quality, and not trying to time the market. Compounding returns over long periods of time with consistent investments is the secret sauce of building wealth.

Seed Investing Case Study: Uber and AirBnB

Alumni Ventures Managing Partner Ludwig Schulze uses Uber and Airbnb as examples of venture-backed companies that have done extremely well, from seed round to IPO.

See video policy below.

What kinds of companies does the fund consider for investment?

Anton: We aim to identify a diverse set of quality investments at reasonable terms for our investors. It’s important to understand that, as a seed fund, breadth and depth are essential. Our previous seed investments have included everything from AI-powered real estate platforms to agricultural renewable energy startups.

Some considerations for us:

  • We like to invest in companies with strong founders/teams — the earlier the stage, the more important the team. Therefore, founder/market fit is critical and, ideally, we like to see previous startup experience/success on management’s resumes.
  • Our model is to co-invest behind seed-experienced VCs. Even better, we like to see a strong syndicate of investors who can help shape strategy and products/services, assist in recruiting, and make valuable introductions.
  • Ideally, the company has existing paying customers — and/or the potential for strong unit economics with the prospect for high margins and high scalability.
  • We also like companies that are solving difficult problems, so there is a technical  complexity/IP and the potential to build strong competitive moats.
  • We seek good terms, which includes an attractive price and valuation and always aim for pro rata rights.

Can you tell us about the team managing the fund?

Anton: Our Seed Fund is an actively managed fund led by a team of veteran investors with deep connections to seed ecosystems with strong investing track records. Moreover, the Seed team is able to leverage our internal network of ~50 investment professionals across Alumni Ventures to identify and access the most promising startup opportunities. We also leverage our considerable external network.

How do you identify promising opportunities for the Seed Fund?

Anton: Alumni Ventures is the #4 most active venture firm in the world at the angel and seed stage (PitchBook 2021). Hands-on portfolio construction is overseen by our Seed Fund team, in consultation with our centralized Office of Investing. The fund team is chosen for experience in and passion for seed investing, along with their network contacts in the space.

Our Seed Fund team will source and evaluate pre-seed and seed opportunities that are being led by an established lead investor. We use a consistent scorecard and rigorous internal approval process to evaluate companies. Our aim is to identify a diverse set of quality investments, at reasonable terms.

The Seed Fund benefits from the extensive use of our massive network from across the investing world, including more than 8,000 investors and 600,000 community subscribersOur engaged community provides value to our Seed Fund team through sourcing deal flow and capital, as well as connections and customers for portfolio investments.

How We Evaluate Investment Opportunities

See video policy below.

Can you give an example of one of Alumni Ventures’ previous seed deals?

Anton: While there’s no typical seed investment for us, an example of one past seed deal was TripleBlind. Organizations are actively seeking countermeasures to protect themselves as ransomware attacks increase in frequency and severityTripleBlind is developing a platform that offers enterprise-scale data encryption and collaboration. Their cryptographic technology is well-positioned as demand for encrypted communication and secure information sharing is ramping up across many industries.

Seed Fund Closing December 31

Alumni Ventures’ Seed Fund lets you invest in a fund of ~20-30 diversified, venture-backed companies at the earliest stage, where the opportunities for value creation are typically highest and company valuations are usually at their lowest.

Contact [email protected] for additional information. To see additional risk factors and investment considerations, visit av-funds.com/disclosures.