At Human Ventures, the white, male founders of the PayPal Mafia–the nickname for a group of all-male PayPal alumni that includes Peter Thiel and Elon Musk–don’t serve as the sole prototype for a successful entrepreneur. But the New York-based startup studio does believe in the collective power of finding–or creating–your own “mafia.”
“It wasn’t that the PayPal mafia was uniquely different than most people, but they had a very tight, strong network that really committed to helping everyone rise,” says Human Ventures founding partner and CEO Heather Hartnett. “And I think that the studio model is analogous to that.”
As a startup studio, Human Ventures is somewhere between an incubator and traditional venture capital outfit. Hartnett’s team bets on founders–the eponymous humans–and helps bring their ideas to fruition. Over its 100-day workshop, Human Ventures can take founders from the early stages of ideation to, say, polling a focus group and determining product-market fit. When founders “graduate” from the workshop stage, they get the green light to build their company and receive a cash infusion. Hartnett also guides founders as they seek subsequent rounds of funding, connecting them with early stage investors in her network and offering insight on their investment record.
“We bring in founders early and build teams around them,” Hartnett says. “We help be their cofounder, essentially, in the beginning.” The studio only puts money behind a founder when an idea is fully fleshed out (usually somewhere in the range of $500,000, depending on the startup’s needs). “We’re really not taking venture capital dollars until we know we have the fundamentals of a business in place,” Hartnett adds. “So we feel that we’re producing more valuable companies, and that’s what the ecosystem needs: more rigor up front, not fake growth.”
Since 2015, Human Ventures has bet on 22 founders whose companies have a combined value of $150 million. That includes restaurant reservation platform Reserve, which was recently scooped up by Resy, and multiple companies that are now raising series A funding rounds. The studio counts amongst its backers prominent figures such as Beth Comstock, the former vice chair of General Electric, and investors like Chris Sacca and First Round Capital’s Howard Morgan.
It was partly the portfolio’s success with fundraising that led Hartnett and founding partner Joe Marchese to introduce a debut fund. Human Ventures will use the $50 million fund to invest in new founders in its portfolio and outside companies, as well as provide follow-on funding for its existing roster of founders. The fund’s investments will span from seed capital to series A funding and back anywhere from 12 to 18 companies. Hartnett points out that working so closely with founders has better equipped her team to evaluate outside investment opportunities. “Building the companies and setting really clear metrics and targets for how we have to scale makes us better investors,” Hartnett says.
Building a community and curbing risk
Since Human Ventures focuses on founders, not sector, its portfolio companies are an eclectic bunch. There’s Hugo, a startup rethinking school transportation. Clark is a software platform that empowers educators to manage their tutoring business. Baby food company Tiny Organics was partly inspired by the Finnish baby box that cradled one of its cofounders and emerged from a workshop process at Human Ventures. Nick Taranto, the founder of Plated, is building a tech-enabled social house for baby boomers.
As a repeat founder who has been through the fundraising and building process, Taranto can see how founders benefit from the increased support in Human Ventures’s studio model. “That zero-to-one process gets romanticized a lot,” he says of starting a company. “It’s hard both intellectually, but even more so emotionally, to ride the psychological roller coaster of thinking one day, ‘I’ve got the next billion dollar idea,’” he explains, “And oftentimes even within the same day thinking, ‘I’m just the stupidest person on earth.’”
A partner like Human Ventures also helps mitigate some of the risks for both a founder and investor. “What I feel like I learned in the course of a business career was that need to have a studio model, where you are incubating things, and you are bringing in some kind of residence or coaches who are able to help you think through things because they’ve had experience,” Comstock tells me. “So you’re kind of battle testing the idea to make sure it’s sturdy,” she says.
As multiple founders mention, the Human Ventures community acts as a sounding board and resource for each founder. Clark founder and CEO Megan O’Connor, for example, recruited some of her employees through the other founders at Human Ventures, while Tiny Organics founders Betsy Fore and Sofia Laurell turned to Human Ventures’s in-house team for their legal and accounting needs. And since each company is so different, none of them are direct competitors. “It’s just nice to work with other smart, good people who can help share the emotional burden of starting an early stage company,” Taranto says.
Human Ventures is itself a rare breed, as a venture capital firm helmed by a woman. But between its leadership and structure, Human Ventures has also attracted a more diverse pool of founders. More than half of Human Ventures’s founders are women, and building a more inclusive “mafia,” if you will, has been a priority for Hartnett from the jump.
Hartnett tells me Human Ventures hired a head of diversity and inclusion early on, in an effort to bring in a wider array of founders. “I wanted to create messaging that resonated with a broader population,” she says, “and really have somebody who was thinking through how we could attract pools of talent that aren’t normally tapped.”
One way the studio does that is by presenting a number of “personas” that describe the types of founders Human Ventures wants to draw. There’s the “repeat founder,” of course, but Hartnett knows serial entrepreneurs are more likely to be men. So their personas also include the “PhD in life” for folks from a nontraditional background and the “person behind the person”–an apt descriptor for a founder like O’Connor, who was previously the “number two” at education nonprofit Pencils of Promise.
In fact, O’Connor is an example of how the Human Ventures model is well-positioned to boost and support underrepresented founders, including those who don’t necessarily see themselves as entrepreneurs. “I was approached by [Hartnett and Marchese,] and they essentially said, ‘You would be a really great founder in the education space,’” O’Connor says. “I had always been like the ‘number two’ person previously, and quite honestly, I had never had someone say, ‘You should be the founder.’” Hearing that was a “big boost of confidence,” O’Connor says, and the structure of Human Ventures made starting a company feel like a less risky proposition. “I had to take a huge leap,” she adds. “I’m a single woman who worked in nonprofit beforehand, so this was a big gamble to take, and certainly not one I could have bankrolled.”
As Morgan notes, the studio model gives even solo founders the opportunity to bounce ideas off other founders and the team at Human Ventures in the same way you would with a cofounder. “And I think that’s something underrepresented founders don’t get very often,” he says.
For a founding team like Fore and Laurell–both of whom are women–the emphasis on building a community that could foster and elevate underrepresented talent was one of Human Ventures’s biggest selling points. “I think Human recognizes there’s founder talent everywhere,” Laurell says. “A lot of people say it, but you can actually see it here when you look around the room. They really mean what they say.”