Chris Sacca recently closed an $8.5 million fund to make seed-stage investments in Internet startups. But that’s not the only fund at his newly opened Lowercase Capital (the two-person shop includes COO Serena Lourie). In fact, the former tech lawyer and Google exec manages five funds, he told us yesterday in a visit to GigaOM for a video interview. One is the one we all know about, that invests in early stage startups. One buys secondary market shares of companies such as Twitter (where Sacca was an angel investor). Two are later stage and jointly run with other investors in New York; they take large public companies private in Hollywood, transportation and wireless.
The fifth fund, which buys founder shares of early stage companies under the Lowercase brand, is particularly interesting. It’s much like the “Series FF” stock pioneered by the Founders Fund, which permits startup founders to take money off the table in later-stage funding rounds (therefore rewarding them for their effort and making them less likely to accept acquisition offers too early). But in this case, Sacca buys stock from founders near the beginning of a company’s life. He said he’s made six of these investments so far, all in existing portfolio companies. The idea is to give recipients something like $150,000 to “eat in restaurants from time to time, have a car, and plan vacations.” Sacca told us in an interview on Wednesday,
“You hear people in the Valley always say ‘I want my entrepreneurs to be hungry.” I agree with that, but think there’s a difference between being panicked and being hungry. And I think too often founders find themselves with negative net worth, credit card bills, etc and they get freaked out.”
Sacca’s $8.5 million early stage fund is already about half spent, he said — in part because he rolled in some of his earlier investments, and as such personally owns 10 percent of the fund. Through the Lowercase early stage fund, Sacca puts $75,000 to $300,000 in traditional startups at $1 million to $4 million valuations. He’s done 39 total investments to date, but he’s not sure if he’ll accelerate or slow down that pace (Sacca mused that perhaps he’ll hire an intern to work out of his Lake Tahoe office and draw up a spreadsheet — someone might want to jump on that opportunity!). Lowercase portfolio companies include Daily Booth, Formspring, Heroku, Simple Geo, Someecards and of course Twitter.
For good measure we talked in the interview about the sustainability of the “super angel” model (something Sacca has been outspoken on) and his financial model for success as an investor, and he walked through a few deal scenarios that may be particularly interesting for startup types. (Please excuse my low audio — unfortunately my mike wasn’t on for the interview — but hey, Sacca’s the one you came to listen to anyway.)