Counterpart Ventures Fund II

It is March 2020, the COVID-19 pandemic is upon us and like almost all our VC peers we decided to go remote. Joe headed back to Japan, Mikey to Australia and Patrick remained in San Francisco. We figured it wouldn’t last long and we would all be back in the office within 3 to 4 months. The challenge was to raise Fund II, our first multi-LP fund, as a remote team across three separate time zones while continuing to invest and support our existing portfolio.

Today we are thrilled to announce that we have closed Fund II with over $110M raised to invest in founders and entrepreneurs who are just like us: ambitious and relentless.

While we launched Counterpart Ventures in early 2018 we thought best to defer any announcement until we had something meaningful to share. So after a period of prolonged anonymity, we are out in the wild and with a . Let’s roll back the tape and explain how we got here…

Hello, Newman… (we have a penchant for Seinfeld & Curb Your Enthusiasm gifs)

It is rare to see two former corporate venture capitalists (CVC) raise an independent and purely financial VC fund of meaningful size. Few have the track record or risk tolerance to leave the comfort zone of CVC. Previously we embraced an innovative model at both Qualcomm Ventures and Recruit Strategic Partners. We elevated both funds to think and act like a real VC: financially-driven mandate with a differentiated strategic edge. This meant actively investing at early stages, leading and pricing rounds, taking board seats, adopting portfolio construction and building sustainable franchises. Investors are ultimately judged by track record. And we were fortunate enough to invest in some pretty amazing companies such as Zoom, Cruise, Matterport, Noom, Palo Alto Networks and DocuSign to name just a few. We hope that we blaze a path for other CVC alumni to follow in the future and raise similar funds.

Our Founding GPs

Patrick is the former Managing Director at Qualcomm Ventures (QCV) and Joe is the former Managing Director at Recruit Strategic Partners (RSP). Patrick built his VC career spending 12+ years at QCV. There he achieved many firsts: first associate with check-writing ability, founded the Early Stage Fund which was the first of its kind in CVC, launched their Bay Area practice and then led the US team to operate like a traditional VC. Joe cut his teeth in venture investments first at Hitachi and then at Recruit Strategic Partners where he led their US team for six years in the Bay Area. As one of the largest internet media companies in Japan with $100B+ market cap, Joe was tasked with preparing Recruit for future technological disruption by identifying and investing in new innovative businesses.

The Importance of CVC & Counter Club

CVC has become a critical source of capital in the venture ecosystem, now participating in over ¼ of all VC backed deals (source: Pitchbook). Exits of CVC-backed companies were up 95% YoY in H1 2021, reaching a half year record of 438 (source: CB Insights). Many new CVC models now capitalize on the value of a major corporation without the bureaucratic baggage. Historically CVCs have been plagued by the “dumb money” stereotype, but today many are getting into some of the best deals and investing with renewed vigor.

The CVC community still lacks leadership from an impartial source. One that isn’t living on borrowed knowledge but actually lived the pain and understands the opportunity.

Two decades combined in CVC led to authentic relationships with hundreds of CVC funds around the world. At times as co-investors and occasionally as a sounding board when others set out to establish their first CVC fund. When we launched Counterpart Ventures we activated these relationships in the form of potential partnership or customer introductions for our portfolio companies. Having collected primary information on investment preferences such as sectors or technologies, stages, check sizes and more — we also understand the “sweet spot” of many CVCs . Over the past 3 years we advised and hosted private events for the CVC community via our Counter Club. Counter Club is now the most active and engaged community of CVCs run by an independent VC fund. It boasts over 200 member funds and offers counsel (and therapy sessions!) to nascent CVCs in partnership with our friends from Silicon Valley Bank, Pitchbook, Aduro Advisors and Lowenstein Sandler.

We recently concluded the largest benchmarking survey of the industry to-date with SVB.

The Counter Club has become a leading independent community where investors connect with one another and find answers to some of their toughest questions in a “no judgment” zone. All our events are high energy and shun party line, a non-corporate approach to corporate investing.

Fund II

When we started Counterpart Ventures in 2018 our strategy was to invest in sectors and technologies of familiarity. Maintain hyper focus on B2B SaaS, marketplace and mobility with discipline avoiding shiny object syndrome or the latest trends. We hired from Australia, our Senior Associate & Head of Operations to help create the Counterpart brand, work the top of funnel and define what we would best be known for. He would focus on value-add, supporting the portfolio post-investment which complimented our ambitions with Counter Club. We promised our founders we would invest with complete conviction. Our flexible, innovative funding model would consider the needs of founders when leading early stage rounds, taking board seats, respecting founder dilution and playing an active role in company building.

We feel that too many early stage investors sit passively on the sidelines, confusing hands-off style with founder-friendly. Today it is in vogue to raise a $12–$20M Series A on premature growth signals. We don’t play this game and believe it is unsustainable. With our creative and flexible funding model our focus remains on old school Series A rounds, specifically $5–8M rounds. We want to run it back to the days of rational check sizes. Check sizes that are sensitive to founder dilution. We don’t celebrate highly dilutive equity finances which could potentially cripple founders and set unrealistic valuation targets. We embrace pragmatic round sizes, setting founders up for success in their next round.

The “tweener” round, before Series A and Series B, is an overlooked opportunity in which our creative model and check size aligns nicely with founders. While we avoid insider “bridges” as a new investor, we are receptive to pricing and leading interim rounds which align founders, existing investors and new investors. We do not subscribe to the traditional VC playbook, in which your next financing round needs to be double the size. Too much of this VC thinking is entrenched in dogma from several decades ago. We aim to inject optimal capital, considerate of founder dilution to hit meaningful milestones.

We continued to invest throughout the pandemic and some of our most recent investments include:

Want to join us at Counterpart Ventures?

We’re now also on the hunt for our fourth team member who will help us identify maniacal, dogged founders to invest in. The position is currently open and more information can be found . We’re so excited for what the future holds and look forward to the next generation at Counterpart Ventures.

Patrick, Joe & Mikey.

Stage agnostic Venture Capital firm based in San Francisco investing with unrivaled conviction to create unique and memorable stories.