Powerset, an innovative investment initiative launched in late 2022, is upending the conventional venture capital paradigm with a daring premise: What if the most effective investors are not venture capitalists, but rather fellow founders? This groundbreaking approach, established by AngelList alum Jake Zeller and Jonathan Swanson, who founded the coaching firm Athena, empowers accomplished founders to invest in startups they trust—utilizing funds supplied by Powerset, instead of their personal finances.
Every year, Powerset invites five to ten founders to join its program, offering them $1 million to allocate toward promising emerging startups. These founders, many of whom possess extensive knowledge in their particular domains, are given the freedom to invest without the limitations typically imposed by traditional venture capital structures. If the founders generate profitable investments, they can earn a portion of the profits—15% of any earnings derived from a deal.
This decentralized investment framework is designed to function independently of the standard setup of venture capital firms. There is no fixed curriculum or required timeline for spending the capital. Additionally, there are no veto powers from managing partners, making it a genuine experiment in investment driven by founders. In exchange, participants are expected to mentor and advise portfolio companies, reflecting the role of a conventional investor.
Previous cohort members of Powerset have included notable individuals such as Paul Copplestone, co-founder of Supabase, Jordan Tigani, co-founder of MotherDuck, and Wes McKinney, the creator of the widely-used Python pandas library. The Powerset model has shown particular appeal to founders who are deeply integrated into the tech landscape and comprehend the intricacies of startup development. According to Zeller, these individuals tend to be exceptionally prepared to make astute investments, as they are continually engaging with emerging talent and innovative advancements within their fields.
Nonetheless, the Powerset program is not suitable for everyone. Zeller points out that applicants must remain active founders devoted to their own enterprises and should not seek a pathway to full-time venture capital roles. The most effective participants, Zeller notes, are those who prioritize their long-term aspirations of developing impactful companies. “If you’re creating something of great significance, you’re unlikely to invest in an insignificant company,” he stated, stressing that founder-investors must possess the right mindset for success.
Powerset’s approach signifies a thrilling shift in investment dynamics and the way founders connect with one another. With its emphasis on empowering founders as both investors and mentors, Powerset is set to create significant ripples in the startup landscape. As the program expands, its potential to yield substantial returns and foster innovation could transform the future of venture capital.
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