Powerset: $1 Million for Founders to Invest in Startups

Powerset: A Novel Investment Approach

Established in late 2022, Powerset represents a unique investment program built on the premise that the most effective investors may not be traditional venture capitalists. Instead, the program focuses on empowering founders to invest while simultaneously managing their own companies.

The Program's Structure

Founded by Jake Zeller, an AngelList alumnus, and Jonathan Swanson, founder of the coaching firm Athena, Powerset allocates $1 million to between five and ten founders annually. These founders then utilize these funds to invest in other startups, with the potential to earn significantly more through successful investments.

Previous participants have included prominent figures such as Paul Copplestone, co-founder of Supabase, Jordan Tigani, co-founder of MotherDuck, and Wes McKinney, the creator of the Python pandas project. Applications for the third cohort are now being accepted.

Decentralized Investment

Zeller characterizes Powerset as a decentralized venture fund. Unlike conventional models, there is no formal training on investment strategies, no strict deadlines for capital deployment, and no managing partners with veto power over deals.

Founders participating in the program retain 15% of the profits generated by any successful investment they make. This structure incentivizes careful consideration and strategic decision-making.

A Hybrid Model

Powerset’s approach is experimental, existing in a space between traditional angel investing – where founders aren’t utilizing their personal funds – and older VC scout programs. In those programs, VCs would leverage individuals, including founders, to identify potential investment opportunities.

Cohort members are also encouraged to provide mentorship and guidance to the companies within their portfolio, functioning as active investors.

Founder Discretion and Performance

Investments are made entirely based on the judgment of founders who are already heavily committed to their own ventures. Zeller notes that some founders may choose not to invest at all due to time constraints or selectivity.

Conversely, others may quickly become highly active investors. Despite these variations, Zeller maintains confidence in the program’s potential for substantial returns.

Why Founders Make Good Investors

The core belief driving Powerset is that successful founders possess a unique understanding of the challenges and opportunities inherent in building a startup. They are also constantly evaluating talent within their respective fields.

“A founder with a genius-level technical skill set building a remarkable company is unlikely to be a poor investor,” Zeller stated. Their experience provides valuable insight into assessing the viability of other ventures.

Eligibility and Ideal Participants

There are no rigid criteria for participation, beyond actively building a company and being engaged within the technology ecosystem. Ideally, applicants will have reached a stage where their company is attracting attention and fostering connections with other founders.

However, there is one key disqualifier: Powerset is not seeking individuals who view the program as a stepping stone to a full-time career in venture capital. Zeller believes such individuals will underperform.

Long-Term Commitment

The most successful Powerset participants are those who are committed to building their own companies for the next five to ten years. A strong dedication to one’s own venture ensures that investments are made thoughtfully and strategically.

“Investing in a marginal company isn’t justifiable if you’re focused on building something truly significant,” Zeller explained. “The effort required doesn’t align with the potential reward.”