Foundation Capital’s Operational Edge Gets Even Better

Foundation Capital is keen to set themselves apart from other Silicon Valley venture capital firms. As a cross between company accelerator and capital committer, they are entrepreneurs who have left successful careers to come together and help tech startups realize their full potential.

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Established in 1995 by Bill Elmore, Kathryn Gould, and Jim Anderson, Foundation Capital has endured through the crash, recessions, industry uncertainties and all manner of tech industry missteps. Gould, who passed away in 2015, was a scrappy physicist-turned-engineer-turned-venture capitalist and one of Silicon Valley’s first women. Starting Foundation Capital was not her original plan.

“I loved the business, couldn’t stop,” Gould said about working on California’s tech-focused coast. It was the mid-1990s when she found herself in the enviable position where she could retire early and live comfortably - but wasn’t convinced that’s what she wanted to do. “I went boogie boarding where I do my best thinking.”

“I loved starting my own firm, doing it my own way,” she recalled of her decision to go back to into business. “So, I started Foundation Capital in 1995. We brought in all operating guys - all had done startups, all had technical backgrounds. In 5 years, we were one of the top firms in the Valley by any measure. I had found my obsession.”

Today, Foundation Capital has made almost 500 capital contributions across the tech sector, including notable investments in tech giants Uber, Netflix and the Lending Club. They have raised a total of $3.1 billion dollars with their latest funding round Foundation IX opening in August 2018 with a $350 million target. As an investment firm, they pride themselves on taking an active partnership role with their portfolio companies.

One of the ways they do this is through their Entrepreneur-in-Residence (EIR) program that helps emerging innovators grow their promising ideas without the necessity of living in a garage. While six months of a cushy office space and a regular stipend makes this a highly coveted situation for startups-to-be, Foundation Capital has much to gain from the arrangement as well.

“The EIR takes out some of the risk because they are known quantities,” Adam Grosser, a partner at Foundation Capital, said in a 2010 interview. “They have a track record of success and a proven ability to disrupt a market with their ideas.”

EIRs aren’t a new concept for VC’s looking for an edge in a competitive Silicon Valley market. For a relatively small investment, Foundation Capital gets to play wait-and-see while their resident genius incubates their golden-idea-eggs. After a set period of time, they get first dibs on becoming fabulously wealthy off any profitable hatchlings that have come from that program.

They also founded an innovative Youth Entrepreneur Program which is designed to offer MBA hopefuls an opportunity to cultivate skills with identifying investment opportunities and pitching their potential companies to Foundation Capital. In turn, the venture capital firm has fleets of students across the country prowling their campuses for future tech startups that Foundation can investigate before the competition even knows what’s happening.

Currently, Foundation Capital is involved with over 60 high-growth investments in the fields of consumer, information technology, software, digital energy, financial technology and marketing technology. The look for opportunities with seed funding, early stage, late stage, private equity and debt.