Who We Are

Seed Stage Investor

Seed stage investing sits between angels (who tend to commit $10k to $100k per company) and traditional venture capital ($3-$5M Series A investing along with the occasional Series B-D round).

We view seed stage investing as the space between the two. Seed rounds can range from between $250k up to $2M. There are some traditional venture funds who do seed investing, but we believe it’s a distinctively different form of capital which is more complex than simply tacking it onto an existing investment strategy.

As a class, seed investments are decidedly neither fully baked companies nor are they back of the napkin ideas. Seed stage companies typically have a product or prototype in search of a market. As seed investors, our focus is to help founders find clarity around their product and market in the most cash efficient way possible. This is a critical stage of development and one that can easily be misguided should a company raise too much or too little capital.

At OATV, we believe a seed round should give a company around 18 months of cash runway with no revenue. The larger the seed round, the longer the runway - which is why we tend to favor larger seed rounds between $1M and $2M. We think 18 months of experimentation, while tweaking and testing assumptions, allows entrepreneurs to de-risk their opportunity - putting them in a position to accelerate with a larger round of funding, find an acquisition partner, or achieve profitability and not require any further funding.

This experimentation and optionality is core to our investment strategy and why we believe seed investing is a stand-alone asset class fully distinguishable from angels or other types of more traditional venture capital financing. It’s all we do at OATV.

Theme-Driven

We don't target hot markets or hot companies. If a market is hot, it’s likely comprised of multiple venture-funded companies looking to differentiate themselves along competitive lines defined by marketing spend. Additionally, if a company is hot, it’s likely priced well outside the scope of our investment strategy.

Instead, OATV targets themes gleaned from “watching the alpha geeks”. It’s our belief that the kinds of innovation that create new markets and long term value happen at the edge. At first, many of these technologies appear to be hobbies. They tend to come from people whose idea of fun is hacking away at code or hardware, not the local golf course fairway. They don’t look like the classic charismatic entrepreneur.

We’re interested in upwards of eight themes at any given time, but we’re also open to being surprised. By definition, the most groundbreaking innovations don’t fit nicely into a box or within a predefined investment theme. Here are some of the themes we’re currently interested in exploring:

  • Internet + Big Data=Internet Operating System: So many of the most transformative applications today rely on massive cloud databases - often generated by user participation - with meaning extracted from that data by predictive analytics and powerful machine-learning algorithms. We see the back-ends of many of these applications becoming the functional equivalents of subsystems in a kind of internet-scale operating system driving not just the web but mobile devices. Location, social networks, identity, and personalization are just the tip of the iceberg. There will be countless new types of data coming on stream and new ways to make data useful. If you are building fundamental data utilities and applications, we’re interested in talking with you. We’re interested in new data sources, new technology for scaling data, new algorithms, and new ways of connecting people and devices.

  • Innovative Mobile Interfaces: We see the web fundamentally reinventing itself for new experiences on new devices. The applications that will be best positioned for this emerging environment will harness all that these new devices have to offer. Compasses, GPS sensors, accelerometers, touch interfaces, voice, and image capture all open the door for rich new experiences.

  • Smart Networks of Things: Sensor networks aren’t just for cargo containers anymore. Sensors have found their way into every aspect of our lives - whether it’s the phone in our pocket, the digital photo frames on our desks or the barcodes embedded with information in our local grocery stores. The network of things is growing faster than any other network, social or otherwise. We’ve just begun to scratch the surface on the kinds of applications infrastructure needed to harness its full potential.

  • Sustainability: A funny thing happened at the very first O’Reilly Foo Camp. A camper rented a Toyota Prius and, in the parking lot, dismantled the thing just to see how it worked. More specifically, how the car regenerated energy from braking. Since before that Foo Camp and after, we’ve seen a keen curiosity for sustainable solutions to some of the world’s most pressing human challenges. Clean water, local food, renewable energy and bioengineered fuels are fertile territory for exploration.

  • Quantified-Self: You cannot improve what you cannot measure and these days you can measure just about everything—from heart rate to pace to distances covered and from blood glucose levels to sleep patterns. Alpha geeks have been hacking together solutions to track various types of personal data for years, but with the advent of open source hardware, cheap sensors and smart mobile applications, we believe that there will be a new class of applications unlocking the value of this data. And, in doing so, they will reshape the understanding of our own health and the health care industry as we know it.

  • The Next Industrial Revolution: Makers are enthusiasts who hack and modify the world around them in interesting and whimsical ways. Tools and services that used to be inaccessible to all but large manufacturers are now available to everyone. Foreign factories that were impenetrable before are now an email away. Design software costing thousands of dollars per seat is freely available. Hackers are mixing all of these elements together and re-imagining entire industries from the ground up. As with technology movements before it, the Maker movement has laid the groundwork for what will be the next industrial revolution based around personalized fabrication at scale.

Deep Reserve Model

Many angels and seed investors are optimized for only investing in an initial round of funding. This model allows them to be very active in the early stages of your business and progressively become less involved as they take dilution in subsequent rounds of financing. Often, these investors are not able to provide additional capital if a larger follow-on round never materializes.

At OATV, we prefer a deep reserve model for our companies. As a general rule, we reserve $3 for every $1 of initial investment. This not only allows us to fully participate through the C round of funding, but also to provide follow-on capital if there are bumps along the way that prevent a company from raising their next round of funding. From the outset, we are tuned to partner with founders to build their companies for the long term and our reserve model supports that.

Network-Centric

We’re interested in finding and funding the very best companies that originate in our network. That network centers around the relationships and events of O’Reilly Media. We have never funded a company more than one person removed from our network. We value the context and connectedness this network provides. We think it gives us an edge in both spotting investments and in being able to size up the people behind them quickly.

So who is in that network? First and foremost, people with a direct connection to Tim O’Reilly, Mark Jacobsen, or Bryce Roberts. Also, O’Reilly editors, authors and Radar team members at O’Reilly Media. We also include Foo Camp attendees and individuals who’ve spoken at O’Reilly Conferences. If you can’t answer to the affirmative on any of the above, getting an introduction from someone who is otherwise connected to us is the best way to make it onto our collective radars.

Innovation Starts with Enthusiasts

Most people think that innovation starts with entrepreneurs and the venture capitalists who support them. Part of OATV’s strategy for early stage investing involves going even earlier in the innovation funnel - to find people who are exploring technology for the love of it. Like the members of the Homebrew Computer Club who just wanted to build their own personal computers or the early pioneers of the World Wide Web - they are so early that they are just beginning to see the commercial potential in an area that they have been pursuing just because it’s so fricking cool! Quantified Self and the Maker Movement are two of the areas that we’re following that are just beginning to make the transition from enthusiasm to entrepreneurship.