Venture Firm Chapter One Secures Backing for Web3 Focus

Chapter One Ventures Secures $40 Million for Web3 Investments

Jeff Morris Jr., the founder and managing partner of Los Angeles-based venture firm Chapter One, has successfully finalized a $40 million fund dedicated to early-stage investments within the web3 space. Furthermore, a separate $20 million opportunity fund is currently being raised.

A Rapid Rise in the Venture Capital Landscape

This achievement is particularly noteworthy given Morris Jr.’s relatively recent entry into venture capital and his position as a solo general partner. Even within the currently active market for digital assets, these accomplishments stand out.

From Operator to Investor: A Transition Fueled by Hustle and Social Media

Morris Jr.’s journey to establishing Chapter One involved a transition from a product and revenue-focused role at Tinder, a position he held for four years before departing in late 2019. He attributes much of his success to diligent effort, fortunate timing, and a strategic utilization of social media – both for audience building and deal sourcing.

Early Investing Through Syndicates

Like many investors, Morris Jr. initially began investing by making individual contributions alongside his primary employment. Beginning in 2016, leveraging his association with Tinder, he assembled a substantial syndicate on the AngelList platform, ultimately raising capital for 15 special purpose vehicles to support startups.

Notable Portfolio Companies

Several of these startups have experienced significant growth, notably Density, a company specializing in AI-powered people-counting sensors. Density recently secured $125 million in funding, achieving a post-money valuation of $1.05 billion.

Building a Network and Leveraging Twitter

Morris Jr. actively cultivated his network, utilizing Twitter to establish an online presence – currently boasting nearly 106,000 followers. He also proactively contacted individuals involved in other AngelList syndicates.

Expanding into Crypto and a Role with Index Ventures

As Morris Jr. encountered an increasing number of promising crypto deals, he found himself constrained by limited capital. Concurrently, an opportunity arose to work as a scout for Index Ventures, a prominent firm. He invested in seed rounds for companies like Dapper Labs, the creator of the NFT game “NBA Top Shot” (currently valued at $7.6 billion), and Compound Labs, a decentralized finance platform that has generated substantial returns for early investors.

Launching Chapter One

The success of his scout fund with Index Ventures – which saw a markup exceeding 30x – spurred Morris Jr. to launch his own fund. He initially raised $1 million through AngelList and subsequently left Tinder to pursue full-time investing.

Securing Backing from Leading Venture Firms

That initial fund ultimately grew to $10 million, and momentum continued to build. Chapter One’s latest fund has attracted commitments from prominent multistage venture firms seeking exposure to emerging managers and potentially overlooked founders. These include Sequoia Capital, Bessemer Venture Partners, Kleiner Perkins, and Lightspeed Venture Partners.

Strategic Investors and Deal Flow

Marc Andreessen and Chris Dixon of a16z are also investors in Chapter One’s new fund, acting in a personal capacity. Morris Jr. noted that Index Ventures does not directly invest in other managers’ funds.

Maintaining Transparency and Founder Alignment

Having established relationships with major venture firms provides a competitive advantage. Morris Jr. has structured deal flow to ensure “everybody gets the same information at the same time,” while also respecting founder preferences and offering advice based on his understanding of each firm’s investment focus.

Focus on Web3 and Future Support Services

Building on his successes with Dapper Labs and Compound Labs, Chapter One is prioritizing investments in web3 products and platforms. Five investments from the new fund have already been made in areas such as DAO infrastructure, NFT experiences, and learn-to-earn games.

Building a Web3 Ecosystem

Chapter One plans to expand its support services in 2022, including a media division dedicated to web3 education and resources for developers focused on token usability, governance, and equitable digital asset creation.

Networking in the Web3 Space

Morris Jr. emphasizes the importance of social media and active participation in online communities, particularly Discord groups, as crucial networking tools. He describes these communities as akin to attending valuable conferences.