Powerset: Empowering Founders to Shape the Startup Landscape

In a world where traditional venture capital can often be out of touch with the groundbreaking ideas of today, a new investment initiative called Powerset seeks to change the game. Founded in late 2022 by ex-AngelList member Jake Zeller and Athena’s Jonathan Swanson, Powerset operates under a compelling hypothesis: what if the most insightful investors are not the seasoned VCs, but the very founders immersed in the startup ecosystem?

Powerset’s unique structure allows between five to ten chosen founders each year to access a $1 million investment fund. These selected individuals can invest in their peers’ startups, creating a cycle of mentorship and support that has the potential to yield impressive returns.

Powerset challenges the traditional VC model with founder-led investments.

The Experiment

Powerset’s model resembles a decentralized venture fund—no imposed timelines for capital deployment and no managing partners that can interfere with decisions. Instead, founders keep 15% of any profits generated from their investments. This approach mimics angel investing, yet Powerset participants use funds that are not their own, allowing for a more focused investment strategy without the personal monetary risk.

Cohort alumni include innovators like Paul Copplestone, co-founder of developer platform Supabase, and Wes McKinney, the creator of the popular Python data analysis library, Pandas. Applications for the third cohort recently opened, signaling the program’s upward momentum and interest in its experimental investment style.

A Unique Approach

Zeller articulates Powerset’s philosophy, stating that many founders are already incredibly busy managing their startups, leading to selective investment behaviors. “There are some founders who are so busy that they don’t invest at all,” he noted. Conversely, others evolve into prolific investors overnight. This dynamic underlines the flexible and organic nature of investing through Powerset, as commitments are made at the discretion of each founder’s availability and interest.

“Oftentimes, it’s the best founders who are building the best companies and are going to make for the best investors.” — Jake Zeller

Furthermore, Powerset is not merely about funding; it’s about fostering relationships. The participating founders are encouraged to mentor the companies they invest in, creating an ecosystem of shared knowledge and support. This could potentially help these startups navigate the treacherous waters of their early phases with guidance from those who have faced similar challenges.

Selection Criteria

Powerset’s application process is less about formal qualifications and more about immersion in the tech ecosystem. Zeller commented, “Hopefully your company is getting to a scale where you kind of get some organic connectivity,” meaning that applicants should ideally have existing recognition from peers.

However, Zeller set a strict criterion regarding candidates’ intentions. He is not looking for those who view Powerset as an escape plan to venture capitalism. “Those people are going to perform terribly,” he asserted, emphasizing that the most successful participants are those who are committed to their entrepreneurial journeys for the long term.

Connecting with fellow founders can yield fruitful outcomes.

Zeller argues that if a founder is obsessed with their project, they won’t readily invest in marginal startups that fail to excite. This indicates a high bar for the quality of startups that can benefit from Powerset’s investments, aiming to lift the startups that are not only viable but also crucial in their fields.

Conclusion

As Powerset continues to promote entrepreneurship-driven investments, it serves as a beacon for innovative funding models. By allowing the creative minds behind tomorrow’s technology to invest in their peers, Powerset could be setting a precedent for how future generations of startups secure growth funding.

With the momentum building around their innovative approach and a growing pool of applicants, it will be fascinating to observe how these founder-driven investments shape the startup landscape in the years to come. The experiment presents the exciting possibility that the best insights on investments may not come from seasoned VCs, but from those who live and breathe the startup hustle every single day.

For those interested in learning more about investment strategies or startup mentorship, check out relevant resources on platforms like AngelList and follow the movement of Powerset as it challenges the norms within the venture capital industry.