Everyone has their “Achilles heel,” if you will.
And that’s why former Foursquare president Steven Rosenblatt told me he has become disenchanted with the “hero founder,” as he describes them, the individual who has trouble setting aside a big ego to build a company that will last beyond them.
“The world doesn't need this hero founder that becomes the next Netflix special,” Rosenblatt tells me in an interview. That’s why he and his business partners—Joshua Rahn, who helped set up Facebook's New York office; and Glenn Handler, who had worked in recruiting for Morgan Stanley, Google, and Facebook—say they’re committed to investing in teams, or solo founders who are committed to handing over a significant chunk of equity to someone who has strengths where they don’t.
Rosenblatt stepped down from Foursquare five years ago to start working with startups alongside Rahn and Handler. The three of them, all from New York, formed a firm called Oceans with two managing partners and did consulting work for founders in exchange for cash and equity. In late 2020, they took the next step and launched their first fund, a small $11 million vehicle for seed and pre-seed investments.
The team now has six people, and it has closed a second $31 million fund from primarily founders and executives, including Carolyn Everson, the ex-vice president of global business at Facebook; Sarah Personette, ex-Chief Customer Officer at Twitter; and Barry Schuler, general partner at DFJ Growth. With the new capital, Oceans is leading and co-leading deals, rather than just co-investing. So far, Oceans has led deals into Streamline, a legal intake platform started by founders that worked at DoorDash and Google; as well as Trace, a data automation company built by a duo from Rent the Runway and Uber. Oceans co-led a round in food industry payments company Zitti with Serena Ventures.
Rosenblatt says Oceans has intentionally chosen to keep the funds tight. For one, the team didn’t want founders to work with them because they could write a big check. But also valuations were really high when they were raising their first fund, and it made them uncomfortable to deploy too much capital at the time, he says. They also didn’t want Oceans to be dependent on management fees.
“There's just too many firms living on management fees, and not aligned with the outcome,” Rosenblatt says.
It’s still early to see how Fund 1 will shake out (performance can be all over the place the first three years of a fund, so it isn’t indicative of a whole lot). But Rosenblatt says there have already been three exits for the portfolio: Riot Games acquired Kanga, Reddit acquired Spiketrap, and Ro bought Kit. Oceans is tracking a 1.6x multiple for Fund 1 to-date, he said. More than half of their portfolio is New York-based.
Rosenblatt says Oceans is after founders who want to build multi-generational companies with other people—with a team. So naturally, he thinks those founders will also want to work with a team, and he hopes they pick the one they’ve built at Oceans.
Meet the parents…Just under a year ago, Anne Sraders and I were waltzing about Stanford University’s campus, trying to track down Barbara Fried and Allan Joseph Bankman, FTX founder Sam Bankman-Fried’s parents (to our disappointment, they weren’t home when we knocked on the door, though we did ask about them around campus). This week, the two of them are center-stage in the latest developments of the FTX scandal. The bankruptcy estate has sued the couple over allegedly siphoning millions of dollars. The lawsuit claims that Bankman arranged a $1 million annual salary for himself and complained when he only received around $17,000 a month. It also says that Bankman played a key role in the FTX operation and in “perpetuating this culture of misrepresentations and gross management.” Stanford says it is returning at least $5.5 million Bankman had allegedly directed to the university. (Regarding the lawsuit, Bankman and Fried’s attorneys say “this is a dangerous attempt to intimidate Joe and Barbara and undermine the jury process just days before their child’s trial begins. These claims are completely false.”)
Last week, Bloomberg Businessweek published an investigation into the two professors who were so highly regarded on Stanford’s campus and their closer-than-disclosed ties to Sequoia Capital-backed FTX. Grab a snack and have a read here.
Insta-up…As unicorn CEOs held their breath, Instacart shares hit the Nasdaq yesterday at nearly 1pm E.T. with a nice “pop,” immediately rising to more than $40 per share. By market close, shares had settled down to $33.70, though still up 12.3% from the IPO, where shares were priced at $30 a piece. Who’s next? Oh yes–Klaviyo.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Joe Abrams curated the deals section of today’s newsletter.
