01 Advisors, founded by former Twitter CEO Dick Costolo and COO Adam Bain, along with Facebook veteran David Fischer, has secured $395 million for its third fund. Contrary to expectations, the firm’s primary focus lies on Series B-stage startups in the business software and fintech sectors. This shift in approach has yielded substantial returns, with key investments in platforms like Tipalti, SpotOn, HoneyBook, and Linear.
- Unique Investment Strategy:
- 01 Advisors deviates from the norm by concentrating on Series B-stage startups, a departure from the expected focus on emerging social networks.
- Noteworthy investments in finance automation (Tipalti), restaurant payment processing (SpotOn), project management (Linear), and small business management (HoneyBook) have significantly bolstered the firm’s portfolio.
- David Fischer’s Impact:
- The addition of David Fischer, an industry veteran with an extensive network from his tenure at Facebook, has undoubtedly bolstered 01 Advisors’ efforts.
- Fischer, now a third general partner, has played a pivotal role in securing capital commitments and expanding the firm’s reach.
- Board Seat Philosophy:
- 01 Advisors adopts a unique approach by refraining from taking board seats in their invested companies. This strategy aligns with Bill Campbell’s philosophy, emphasizing the importance of having an external perspective.
- Collaborative Team Dynamics:
- The founders’ longstanding professional relationships and collaborative history have been instrumental in the success of 01 Advisors. Their ability to work as a cohesive unit has been a driving force behind the firm’s achievements.
- Selective Investments and Risk Management:
- 01 Advisors maintains a concentrated portfolio, backing around 20 companies per fund. This selectivity allows for a more hands-on approach, ensuring a higher level of involvement in each investment.
- The firm has not engaged in secondary share sales, demonstrating a commitment to long-term partnerships with the companies they invest in.
- Views on Elon Musk’s Twitter Stewardship:
- The team acknowledges the challenges Elon Musk faces in managing Twitter. They highlight the unique position they are in to assist companies dealing with crises, given their collective experience.
- Perspective on the “Everything App” Concept:
- While recognizing the potential of an all-in-one application, the team remains somewhat skeptical, citing historical attempts and the complexity of executing such a vision.
Conclusion: 01 Advisors’ shift towards Series B-stage startups in business software and fintech has proven to be a successful venture. With a collaborative and focused approach, the firm has secured substantial funding, demonstrating the strength of their investment strategy. The addition of David Fischer and their unique board seat philosophy further distinguishes 01 Advisors in the competitive world of venture capital. This evolution in focus reaffirms the team’s ability to adapt and thrive in dynamic market landscapes.