FirstMark Capital, the New York-based VC firm whose portfolio includes Shopify, Riot Games, Pinterest, Airbnb, InVision and more, has today announced the close of its two newest investment vehicles.
FirstMark V is a $380 million early-stage fund focused on seed and Series A investments, while FirstMark Opportunity III is a $270 million vehicle dedicated to follow-on investment in portfolio companies and select growth-stage investments. The total assets under management across all FirstMark vehicles is $2.2 billion.
The investment team at FirstMark is made up of five partners: Rick Heitzmann, Amish Jani, Matt Turck, Beth Ferreira and Adam Nelson.
While FirstMark doesn't focus exclusively on the New York ecosystem; at least half of its deals are done on the East Coast, with a particular focus on tech hubs along the East Coast, such as NYC, Boston, Toronto, Ottawa, Philadelphia and Washington, D.C.
The firm made several early bets in industries that have been significantly accelerated by the coronavirus pandemic, including healthcare (Kinsa, Parsley Health), gaming (Discord, Riot Games), enterprise workflow (InVision, JustWorks, Pendo, Guru) and automation (Ada, nextmv, Hyperscience).
FirstMark will continue to look for opportunities in these spaces, with particular focus on health tech and gaming.
While gaming represents a huge opportunity, it can be a challenging sector to break into, with such concentrated power at the platform and publisher level. Still, partner Amish Jani sees the industry disaggregating as we speak.
"Think about the world prior to Unreal or Unity, where you had to build the whole thing including the game engine," said Jani. "Eventually that pulled out. Think about gaming infrastructure servers for streaming. That's gotten pulled out. When we think about communications, Discord has become a huge part of an overlay messaging framework in gaming. That's kind of gotten pulled out into its own layer. So I think what you're seeing is a lot of the pieces of gaming are getting pulled apart as the market has swelled and become so large, and we're certainly huge believers in the picks and shovels."
The firm has also had some big wins in D2C, including Brooklinen, Airbnb and Ro.
"In general, D2C tends to be a game of either scale or niches," he said. "You have to find the narrow pathway where you have some degree of supply chain differentiation and a really unique brand that creates organic virality. A lot of times, it's a heavy organization of community around that concept of commerce experience. It's not just buying something but buying into the lifestyle and experience of a brand and a community around that."
In some cases, he added, it involves regulatory change, like in the case of Airbnb.
FirstMark goes beyond simply writing checks to take a holistic approach to fostering and growing its portfolio companies with the FirstMark Platform, which is made up of its Talent, Corporate and Expert Networks.
The Expert Network is made up of 100+ events led by CEOs, CTOs, CROs and CMOs from companies like GitHub, Grubhub, Looker, Cloudera, Twilio, Zendesk, Cloudflare, Mailchimp, PagerDuty and more. The Talent Network is organically interwoven with the Expert Network, with several experts who have come in as speakers and ended up joining a portfolio company as a CXO, an independent board member or even entering the FirstMark portfolio as a founder.
The Corporate Network, meanwhile, focuses on helping portfolio companies strike deals with larger corporations.
As part of FirstMark's Platform strategy, it also runs several public event series around Data, Design and Engineering.
The firm is also on a mission to diversify its pipeline and portfolio in the wake of the George Floyd protests and the broader Black Lives Matter movement. Starting in 2019, half of FirstMark deals have been with founders who aren't white males, such as female founders and founders of color. However, underestimated founders make up about 3.5% of FirstMark's portfolio — of 85 companies, just three are founded by Black or Latinx founders.
Jani explained to TechCrunch that true diversification within the portfolio starts with measurement at the pipeline level, and not just by looking at the number of diverse founders funded, or the dollar amount invested in those founders. This echoes sentiments from BLCK VC’s Sydney Sykes, who recently spoke to TechCrunch about specific actions firms can take to be more inclusive, saying that VC firms have to measure to the top of the funnel to break the cycle of network effects that allow VCs to fund founders that look like them.
The firm has put together a standing weekly task force meeting to address issues of systemic racism in VC and adjust the firm to think more deeply about how founders get in the door, which startups cross their desk and, ultimately, grow that 1% figure.
Jani also said that, after some deliberation, the firm has decided not to take Juneteenth as a holiday but rather to make it a day of service, where the firm's employees will volunteer, mentor or give back to the community in some way.