Former Tello CEO Doug Renert dropped me a note yesterday to tell me about his new gig, an investment fund called Tandem Entrepreneurs. In Doug's own words:
We built Tandem to address a startup landscape that’s transformed over the last couple of years. Traditionally, startups have required 15-20 people, two+ years and millions of dollars before they gain any significant traction. However, there’s now a class of startup that can, with a few people and a small pot of capital, get substantial user adoption in a matter of months. (sound familiar to you?) Anyway, traditional forms of early capital are not structured to participate in these. The startups do not need the amount of money normally invested by these firms, and most would not see the kind of exits that traditional early capital consider viable.
We concluded that a different type of vehicle was needed for a new breed of founders, so we created Tandem. We invest our sweat and usually less than $1M in a startup over a period of 2 years working very closely with the founders during that time. We are all entrepreneurs; none of us is a VC.
The three founders are Doug Renert, Sunil Bhargava, and Joyo Wijaya. Judging from their bios, they must have all met at Oracle. They work alongside the founders contributing time and expertise to ensuring that the business can succeed. To date, they've raised $15M, with which they hope to be able to support 6 to 8 businesses per year. Their concept is very much like an incubator, but they invest in businesses rather than employees that might grow into businesses. Doug says, "When we get involved, we put in slightly less than $1M and work with the founders for two years. We're the only money in typically, and our goal is to get the business to significant market traction with a liquidity event as an option in that time."
It's a good concept, and fits a very underserved part of the capital market.