When Eric Tarczynski first created Contrary Capital, he noticed the absence of entrepreneurial venture capital firms within universities. Thus, he launched a first fund of $ 2.2 million to exclusively support the best talents in the world, or student entrepreneurs who bring out ambitious ideas from their universities.
Years later, every investor wants to support the founders earlier than their friends and foes. Contrary believes she retained her competitive edge by supporting the early founders with her secret: The company has a community of 350 entrepreneurship students at colleges across the country who help it manage transactions. About 45% of the cohort identifies as female and 65% identifies as non-white. This gives the company the opportunity to learn about talented people even before they partner with entrepreneurship.
“There are a lot of funds out there where most of what they do is basically exchange transaction flows,” he said. “I don’t think we’ve ever supported a business other than just by finding and discovering it ourselves or through our community.
Sixty-five investments later, Contrary Capital announced today that it has raised its second fund, a $ 20 million investment vehicle that will reduce checks between $ 100,000 and $ 2 million to pre-seed founders. Although the size of the check is larger than Tarczynski’s initial estimate, the total fund is lower than Contrary’s initial target of $ 35 million, a decision he said was made “deliberately, intentional and methodical ”to grow the portfolio in a“ slow and stable manner ”.
But, does it work slowly and steadily in a world of $ 500 million in seed money?
“We really don’t find ourselves competing,” he said. “The prices have definitely gone up overall for sure, but we’re not going to compete with those kinds of groups because we’re just swimming in a different pool.” Some might argue that reality is an argument for community-centric and community-first businesses.
Tarczynski’s ability to attract notable investors for his business may show that he is not alone in his vision. Investors in Contrary Capital include Gokul Rajaram, Director of DoorDash, Chris Cox, CPO of Facebook, Erica Brescia, COO of GitHub, a16z GP Vineeta Agarwala and CTO of Twitter Parag Agrawal.
The company targets between 5% and 10% stake in each transaction it concludes. Its investment history includes Lightyear, Brightland, Aryeo, Chums, Anduril and Ramp.
“Unlike our secret hiring weapon. They have built a remarkably unique business and are easily one of our most valuable partners, ”said Karim Atiyeh, co-founder and CTO of Ramp, a fintech company recently valued at $ 3.9 billion.
The next tech mafia
Last year, Contrary announced Contrary Talent, a new arm of the fund that will invest and support young people and early career students to develop their technological ambitions. Contrary Talent, which now has hundreds of members, recruits the best engineers, designers and managers from the best tech companies and matches them with the best tech operators for mentoring and employment counseling. It’s giving startup employees access to great minds before they have a pitch deck, or even know how to make one.
“As time went on and we spent more time in the field at tech campuses, we realized that not only the number of young founders was increasing, but also the number of engineers, designers and Senior product managers interested in working in technology. ”said Tarczynski in announcing Talent.
The arm will become an increasingly important part of Contrary Capital over time, making it more of a venture capital franchise than a single vertical focus.
Even if star employees don’t create their own funds, Talent acquires a database of a few useful potential hires that their portfolio companies can poach. Tarczynski estimates that five of the first 50 employees and interns at Ramp, one of its unicorn holding companies, were affiliated with Contrary Capital.
Karim Atiyeh, co-founder and CTO of Ramp, described Contrary as one of their most valuable partners, calling the company a “secret hiring weapon”.
One thing that has changed for Contrary is that they no longer hold demo days for founders who follow their summer acceleration program.
“We realized that specifically in this environment, doing things programmatically and annually is not the choice,” said the investor. “I think the idea of telling the founders that ‘oh, this is the time you should raise for your business’ when their timelines may be totally different, didn’t make a lot of sense.”
Contrary’s second closing and expansion so far clearly builds confidence in the eight-person team. SEC documents show that Contrary Capital is already raising its third fund.