South Park Commons Gains Momentum - Anti-Incubator for Engineers

South Park Commons: Cultivating Innovation Through Community

South Park Commons (SPC), a collective of engineers situated in San Francisco’s South Park district, initially gained recognition through a 2017 New York Times feature, a year following its establishment. The group largely operated discreetly prior to this exposure.

The Genesis of an Idea Exchange

Ruchi Sanghvi, Facebook’s inaugural female engineer and the founder of SPC, articulated her vision as creating a technological equivalent to historical intellectual circles like the Bloomsbury Set or Benjamin Franklin’s Junto. The aim was to foster discussion of shared experiences and inspire novel concepts.

Growth and Expansion

SPC has demonstrably evolved since its inception. Having secured a $55 million venture fund in 2018 to support projects originating within its membership, the organization now boasts 450 members spanning the Bay Area and international locations.

Recently, SPC finalized a new $150 million fund, drawing investment from prominent figures in the tech industry and established institutional investors.

Portfolio Success and Returns

The organization reports a robust portfolio performance. Sanghvi indicates that the initial fund has already yielded returns exceeding its capital investment, largely due to Compound Labs.

Compound Labs, an open-source platform for decentralized lending, distributed tokens to early investors. Furthermore, Sanghvi states that SPC’s portfolio includes 10 to 12 additional companies considered “unicorns.”

Insights from the Founders

We recently spoke with Sanghvi and her husband and partner, Aditya Agarwal, also a former early Facebook engineer. Agarwal co-founded a startup with Sanghvi that was later acquired by Dropbox in 2012 as a talent acquisition.

Sanghvi subsequently served as Dropbox’s VP of Operations for two years, while Agarwal progressed to CTO before joining Sanghvi at South Park Commons in 2018.

The Evolution of Community Interaction

The SPC community initially thrived in a physical setting, but transitioned to a highly structured virtual model during the pandemic. However, maintaining in-person connections remains a central focus.

Sanghvi and Agarwal strongly advocate for the benefits of offline interactions. Consequently, alongside their San Francisco hub, a New York location is under development, with potential expansion to cities like Seattle and regions in Southeast Asia.

Membership Composition and Value

Approximately 70% of SPC members possess technical expertise, while the remaining 30% comprise domain specialists, operational experts, and academics. This deliberate composition is key to the community’s success.

“Entrepreneurs generally prefer interacting with experts in specialized fields, like those who excel in AI, rather than other entrepreneurs,” Sanghvi explains.

Fostering Collaboration and Co-founding

Agarwal notes that over half of SPC members discover their co-founders or initial employees within the community. This highlights SPC’s unique role in facilitating team formation.

Unlike accelerators like Y Combinator or venture capitalists focused on established companies, SPC concentrates on identifying and supporting highly skilled individuals who are exploring their next career move.

Supporting Early-Stage Exploration

SPC aims to assist individuals in the initial stages of ideation. “We function as a learning community, guiding people through the ‘negative one to zero phase’ until they are prepared to launch a company,” Agarwal states. “The fund then invests in promising startups that emerge from this process.”

Community Progression and Graduation

Members typically engage closely within the community for nine months before “graduating.” Graduation is achieved by securing over $1 million in funding, reaching four or more full-time employees, or obtaining employment.

Investment Rights and Member Participation

SPC retains the right of first refusal for investments in ventures launched by its members. Members are also invited to invest in SPC funds, with many choosing to participate. The new $150 million fund includes 100 members as investors.

Investment Structure

SPC typically invests between $700,000 and $2 million for a 7% to 10% equity stake. The organization’s strong network often allows it to maintain its ownership percentage in subsequent funding rounds.

Notable Portfolio Companies

Successful ventures originating from South Park Commons include The Graph, an indexing protocol for blockchain data endorsed by Ethereum founder Vitalik Buterin; Pilot, a bookkeeping software company valued at $1.2 billion and backed by Sequoia Capital and Index Ventures; and Unit21, a no-code fraud monitoring startup that secured $34 million in Series B funding.

Leadership and Investment Team

Alongside Sanghvi and Agarwal, who serve as general partners, SPC’s investment team includes Mitra Lohrasbpour, formerly of Dropbox, and Finn Meeks, who previously served as Sanghvi’s chief of staff.

Future Outlook

Despite the increased size of its new fund, Agarwal emphasizes that SPC will not necessarily invest more aggressively. “Our priority remains quality over quantity,” he asserts. “Rapid growth is welcome, but it is not the primary objective.”