This startup has a new app to ensure VCs are helpful

Like any venture capitalist, Brian Murray, a partner at Craft Ventures, answers the same question founders ask time and time again: Can you introduce me to potential clients? Do you know of any good candidates for the position I’m trying to fill? Can you retweet this article about us?

For startup founders, figuring out which of their dozens or even hundreds of investors and advisors to turn to for help can be cumbersome. “There’s never been a good way to activate this group,” Murray said.

So Murray and former colleague Fahim Ferdous set out to build a tool to bridge the disconnect between founders and investors. Their new company, called Cabal, has raised $8 million in seed funding, led by Murray’s firm Craft and 776, with funds including Y Combinator, Backstage Capital and Day One Ventures, as well as including Li Jin and Max Mullen of angel investors are involved. 2,600 organizations already use the app, and most of them are looking for the best stakeholders and advisors who can help the most.

“The receipt will be there,” says founder and partner Alexis Ohanian seven seven six. “In some cases, advisors do more work for founders than those who pay to be investors. This transparency is bad for lazy investors, but that’s okay – for others Everyone benefits.”

Cabal was founded in early 2020 by Murray and Ferdous, former colleagues at enterprise social networking company Yammer, as a hobby project they could use for themselves and close colleagues. The app quickly spread among Silicon Valley founders, just in time when the growing number of independent investors and a founder-friendly market led to a surge in the number of shareholders in startups. Last year, the company participated in startup accelerator Y Combinator as an opportunity to connect with hundreds of founders.

Founders can use Cabal’s web app to send regular email updates to investors and leverage their investor network. For example, it connects with Salesforce or other CRM tools so founders can see who in their network is connected to a company in order to provide a warm introduction to a potential business deal or partnership. The app is available through a freemium model — Cabal charges users a subscription fee for the ability to connect to sales tools — and although it only became profitable as of April, it makes little money, Murray said. This week, Cabal launched a mobile app that provides investors and advisors with a dashboard to view all the ways they can help their portfolio companies.

bring one slow down In venture capital, the market shifts away from founder-friendly terms, and Murray said he foresees greater utility for the Cabal. “I think founders should be looking more inward during this time, looking to their compensation scales and their advisors for support,” he said. “They’re still there, and they want to help — especially if they’re less aggressive about making new investments, then you can get them to be more aggressive about contributing to your business.”

Murray and Ferdous also opted to “gamify” the system by creating a leaderboard to track how much help each investor or advisor provided. This can hold VCs accountable, but it can also reward those who are overburdened. Cabal syncs with cap management tools like Carta and Pulley to allow companies to allocate equity to the most helpful advisors or other non-stakeholders (eg, those who defend the company on social media). “Historically, stocks have been a very powerful way to build wealth, but it’s limited to people who are already wealthy like investors,” Murray said. “Now, people can build portfolios and build equity based on their contributions and their real interest and willingness to help companies.”

Ohanian said he’s most excited about Cabal’s potential as it could help usher in a “split of venture capital” that would take power away from the traditionally dominant VC firms. Using the Marvel Cinematic Universe analogy, Ohanian said that in the past, a startup picking a top company was like signing a partnership with the Avengers. “The most seasoned founders can break out of BS and they realize, you might have the Avengers on your payroll, but when Thanos comes along and they send Hawkeye, they’re like ‘why did you send Hawkeye? I need to Thor,'” he said. “Now, the best founders can build a cap table based on the individual superheroes they can attract.”