Kindred Ventures Closes $100M Second Fund

Kindred Ventures Secures $100 Million for Second Fund

San Francisco-based venture capital firm, Kindred Ventures, has successfully finalized its second fund, amassing $100 million in capital commitments. This follows the launch of their initial $56 million fund two years prior. The firm was established by Steve Jang and Kanyi Maqubela.

Founders with Entrepreneurial Backgrounds

Steve Jang brings a unique perspective to investing, having previously been a founder himself. He was instrumental in the creation of Bitski, a cryptocurrency wallet platform. Prior to that, he founded Schematic Labs, a social music application acquired by Rhapsody in 2014, and co-created the streaming service imeem, whose assets were later obtained by MySpace.

Jang’s early investment acumen is demonstrated by his advisory role and investment in Uber. He also made individual investments in companies like Postmates, a delivery service; Zymergen, a synthetic biology firm; Tonal, a fitness company; and Coinbase, a cryptocurrency exchange.

Kanyi Maqubela also possesses a dual background as both a founder and investor. Before partnering with Jang, he spent six years as an investor at Collaborative Fund, a seed and early-stage venture firm. He also co-founded Heartbeat Health, a remote care platform for individuals at risk of heart disease and other chronic conditions.

A Generalist Approach in a Specialized Landscape

Kindred Ventures distinguishes itself by not concentrating on specific technology sectors. This is noteworthy given the current venture capital environment, where investors often favor seed-stage funds with a defined sector focus. Such specialization allows limited partners to diversify their portfolios and avoid redundant investments.

Securing commitments from major university endowments, foundations, fund-of-funds, and strategic investors as a generalist firm represents a significant accomplishment for Jang and Maqubela.

“High Concentration, High Conviction” Investment Strategy

Investor confidence is attributed to the firm’s successful prior investments, such as Coinbase. However, Kindred Ventures’ “high concentration, high conviction” approach also resonated with investors. They establish direct communication channels, like Signal or Slack groups, immediately after investing in a team, fostering a collaborative relationship.

The firm maintains consistent engagement with founders, scheduling weekly one-on-one meetings until a product launch date is established. Following the launch, meetings become less frequent, reflecting a “programmatic and designed” approach, as described by Jang.

Formation Investing and Early-Stage Support

Kindred Ventures actively seeks opportunities to engage at the concept stage, even assisting in the formation of startups. Heartbeat Health and Bitski are examples of companies they helped incubate and launch. Otto, a payments company, also emerged from their “formation investing” strategy, with more ventures anticipated.

In some instances, they initiate the company and assemble the founding team. Alternatively, they support new founders in progressing from concept to prototype and securing a suitable co-founder. In return, Kindred Ventures typically acquires an ownership stake ranging from 5% to 20%, averaging 11%, with this percentage expected to increase as the firm grows.

Deal Sourcing and Emerging Themes

The firm sources deals through introductions from portfolio companies, proactive outreach based on compelling ideas, and referrals from employees of past portfolio companies.

While their investments span diverse areas, certain themes are emerging, notably in digital health. Beyond Heartbeat Health and Tonal, they have invested in Color, a company offering at-home hereditary cancer and COVID-19 risk assessments.

Kindred Ventures also demonstrates interest in community-focused ventures, such as the audio social network Clubhouse, and security companies like Anjuna Security, which focuses on data encryption.

Finance is another key area of focus, exemplified by their investments in Coinbase and dYdX, an open trading platform for crypto assets.

A Commitment to Continuous Learning

Addressing concerns about their broad investment scope, Maqubela noted that investors frequently questioned their ability to cover such extensive ground. However, they attribute their success to their inherent curiosity and willingness to rapidly acquire knowledge when encountering a promising founder.

“It ultimately comes down to who Kanyi is and who I am,” Jang stated, emphasizing their shared passion for learning as a driving force. Both acknowledge being “absolutely novices” in certain areas, but view this as an opportunity rather than a limitation.

Jang added, “If we’re inspired by the founder, their intellect, their dedication to a problem and why they’re doing what they’re doing, we’re happy to go learn as quickly as possible. We’re very dutiful students.”