Powerset: A New Approach to Startup Investment
Powerset is reshaping the startup investment landscape by flipping the traditional venture capital model on its head. Founded in late 2022 by AngelList alum Jake Zeller and Athena’s Jonathan Swanson, this innovative program offers a compelling proposition: what if the most effective investors are not specialized venture capitalists, but rather fellow founders? This hypothesis forms the crux of Powerset’s mission to empower startup founders to reinvest in their ecosystem.
Unconventional Funding Mechanics
Every year, Powerset allocates up to $1 million to a select group of founders, enabling them to invest in other startups. Cohorts consist of five to ten founders who gain access to this capital without the strings typically associated with institutional investment. Applicants for the upcoming third cohort can submit their applications starting this week.
The appeal of Powerset’s model lies in its unique flexibility. Zeller explains that there’s no mandatory timeline for investment deployment and no controlling partners to second-guess founders’ decisions. Participants retain a hefty 15% of the profits from their investments, driving a mutually beneficial scenario.
Empowering founders to invest in innovation
Unlike angel investors who use personal funds, Powerset participants are not shackled by personal stakes but rather incentivized to make wise investment choices based on their extensive industry experience. This decentralized approach echoes aspects of traditional VC scout programs where founders assist VCs with sourcing deals, albeit with an ownership twist that places more power in the hands of the founders themselves.
The Power of Peer Insight
Powerset’s strategy thrives in its insight into the startup journey. Founders possess an intimate understanding of the hardships and nuances of building a business. “There’s no substitute for the expertise rooted in real-world experience,” Zeller notes, and this ethos positions Powerset’s investors in a unique place to recognize promising emerging businesses.
Cohorts have included notable figures such as Paul Copplestone of Supabase and Jordan Tigani of MotherDuck. These founders not only bring their deep knowledge but also expand their network, thus enhancing the quality of their investment decisions through a more intricate understanding of the market. “I’ve never encountered a brilliant technical founder who isn’t adept at making investment calls,” Zeller asserts, emphasizing the interconnected nature of entrepreneurship and investment.
Application Insights and Aspirations
Powerset is not just a free-for-all; the selection criteria are thoughtful. Candidates need to be actively engaged in building a company within the tech space. Zeller elucidates, “We are looking for those who are deeply entrenched in their sectors and are ideally witnessing organic interest from peers regarding their products.”
However, Zeller draws a clear line around who should apply. He rejects applicants viewing Powerset as a mere stepping-stone towards a full-time venture capital career. “Those who only see this as an off-ramp are bound to underperform,” he emphasizes. Instead, he asserts that the most successful participants are those who are committed to their startups for the long haul—planning to invest years into building their ventures, rather than detaching from it.
Future Prospects
With applications for their third cohort now open, Powerset is primed to redefine startup investments yet again. This model, straddling the line between angel investment and hands-on mentorship, stands to deliver significant returns—not just for the chosen founders but for the wider startup fabric as they reinvest in each other’s success. As Zeller succinctly puts it, “If your venture holds value, why would you settle for investing in an inconsequential company?”
Building connections for lasting success
Every investment choice becomes a stepping stone towards the next great innovation display; in Powerset’s eyes, it’s cultivating a communal spirit among founders that ultimately challenges the status quo in venture capital.
Conclusion
Powerset offers a refreshing perspective on how startup investments can evolve. By empowering founders to act as investors, they cultivate a productive cycle of mentorship and innovation. As they open the doors to their upcoming cohort, the venture community eagerly anticipates the next wave of influential leaders ready to invest in future game-changers.
