Basis Set Ventures Launches $165M Fund - Venture Capital & Software

Basis Set Ventures: Combining Venture Capital with Software Innovation

Xuezhao Lan founded Basis Set Ventures with a distinct objective: to enhance venture capital investing through the strategic application of technology.

From its inception, the firm prioritized technological advancements alongside financial investments and advisory roles. Lan’s initial hires – former TechCrunch reporter John Mannes, data scientist Rachel Wong, ex-Upfront Ventures partner Chang Xu, and Opendoor’s former VP of growth, Sheila Vashee – underscored this dual focus.

A Product-Driven Approach

Basis Set’s decisions are firmly rooted in the technical expertise of its team, guided by Niniane Wang, the firm’s Chief Technology Officer and a former advisor. Product development is not merely acknowledged but actively pursued.

The partnership reports that the firm consistently releases approximately three updates to its comprehensive suite of internal and external products each week.

This commitment to product development has contributed to the firm’s lean structure and resulted in a two-times oversubscription during the recent fundraising for its $165 million second fund.

Fund Size and Investment Strategy

Although comparable in size to the previously raised $136 million, Lan believes this new fund represents an optimal scale for achieving her primary goal: delivering substantial returns to limited partners.

Internal technological tools, such as the Pascal system, have enabled Basis Set to analyze around 9,000 software companies aligned with its core investment thesis – artificial intelligence-powered software as a service and business-to-business solutions.

Anticipated Returns and Geographic Reach

Lan anticipates that the firm’s technology services will soon yield positive results, with several portfolio companies poised for initial public offerings in the near future.

The software infrastructure employed by Basis Set extends its reach beyond traditional venture capital hubs. “Pascal is a significant advantage in identifying companies located outside of the Bay Area,” Lan stated.

Supporting Portfolio Companies

Once companies are integrated into the portfolio, they gain access to HyperGrowth, a platform connecting them with Bay Area mentors to facilitate scaling and growth. This exemplifies Basis Set’s product-centric methodology, according to Lan.

“Initially, our team, being technically proficient, received frequent inquiries regarding growth strategies, sales techniques, technical implementation, initial hiring practices, customer introductions, and advisor connections,” Lan explained. “Recognizing this consistent need, we systematically expanded our support, starting with manual introductions, then hosting events, and eventually incorporating a growth partner, Sheila. This led to the development of a tool connecting hundreds of advisors with our portfolio companies.”

Talent Recruitment and Nurturing

Basis Set currently operates at least three programs dedicated to attracting and developing talent often overlooked by conventional Bay Area firms.

These include the Persistence platform, designed to foster networking and collaboration among women developers and founders; and Founder Superpowers, a service assisting entrepreneurs in identifying and enhancing their strengths while addressing areas for improvement.

“We established a data science team early on and began automating numerous processes. The programs highlighted here represent the culmination of those efforts. Our operational approach emphasizes continuous iteration,” Lan noted.

Diversity and Inclusivity

A key objective for the firm is to identify founders from diverse backgrounds, diverging from the typical Silicon Valley profile, Mannes emphasized.

“We frequently discuss strategies for discovering founders beyond the Bay Area – those not constantly present at establishments like Blue Bottle,” Mannes said. The Persistence platform, Founder Superpowers tool, and collaborations with Dev Color, an organization supporting underrepresented tech community members, all reflect this commitment, according to Mannes and Lan.

Portfolio Companies

Current portfolio companies include Ergeon, which streamlines staffing for the construction industry; FarmWise, an agtech startup focused on autonomous weed removal and crop dusting; and Quince, positioned as an alternative to Amazon with its direct-to-factory sales model.

Furthermore, companies such as Rasa (conversational machine learning), DataGrail (privacy and compliance automation), Workstream (workflow automation for deskless workers), and Assembled (tech infrastructure support) have all secured substantial follow-on funding.

Collaboration and Innovation

These investments are underpinned by the technical team’s work and close collaboration with investors, the firm underscored.

“We maintain a strong alignment on our development needs and are consistently delivering updates daily,” Vashee stated. “This represents a best-in-class approach, and it’s what we strive for. It’s akin to an Iron Man suit – our aim is to automate every feasible aspect of the process while maintaining empathy with our founders.”