What’s on Asymmetric’s Mind in Spring 2023

Despite ongoing market tumult we remain squarely focused on our strategy: backing exceptional founders at the earliest stages. We believe that the next few years will lead to a generational venture vintage due to the intersection of AI, reasonable valuations, and unprecedented talent availability for new ventures. Check out Rob’s recent quote in this Crunchbase article to this effect:

We’re excited to play a leading role for early stage founders in the ecosystems we’ve selected. A handful of data points in the recent quarter give us further conviction that we’re on the right track: 

First, our founder NPS-centric strategy continues to bear fruit, with an exciting deal completed in March (in stealth, but we’re looking forward to eventually share more!) via introduction from the CTO of an existing portfolio company. Recommendations from friends and colleagues matter in all industries but particularly in a complex commodity industry where short conversations become decade-long relationships. We are very excited about this one and grateful to Dre at Miga for the early alert!

Second, we continue to be pleased with the growth of our High Value Referrer (HVR, “hover”) strategy and its consequential output, the Advisor Partner (AP) program. Year to date, we have made contact with over 150 HVRs, which has led to 75+ first meetings and 23 new Advisor Partners. We currently have 45 in the program, and they range from emerging leaders at unicorns of consequence like Scale, PathAI, Databricks, Stripe, and Plaid to senior executives and officers of established public tech companies such as Palantir and Wayfair. As discussed, their mandate with Asymmetric is to both source new deal opportunities as well as advise the existing portfolio. In certain instances we have also invested directly in the companies of our APs (Upsmith, CommandBar). We have also found that those targeted as HVRs are unsurprisingly also likely to found companies themselves; indeed, some of the most interesting deal leads we are pursuing this quarter began as HVR targets initially only to quickly become deal leads themselves.

Finally, we continue to lean aggressively into our portfolio. We have been thrilled to see improved financial performance at a handful of companies where we have been very hands-on. We conducted a thorough review of internal time allocation this spring and feel as if the majority of portfolio-focused time is being deployed in needle-moving ways. Early stage companies need a lot of help, and we are there to provide it.

Portfolio Update

We continue to see strong performance across our portfolio, an accomplishment given the ongoing instability of financial markets and continued softness in the tech sales market. We've been impressed on the whole by our founders' personal and commercial resilience as they adapt to a market that's much less forgiving than prior years without a clear line of sight to more favorable conditions.

In aggregate, our Core portfolio companies saw generally strong topline growth in Q1 2023. As mentioned in our previous update, the Asymmetric team has been deeply embedded at a number of portfolio companies. Recent initiatives include bolstering a leadership team by helping the founding team to bring in a new CEO, supporting a number of efforts to extend runway, and partnering on fundraising strategies for our founders who have had to raise in a challenging macro environment. 

Funding Events

We've been excited to celebrate recent funding events at several of our Core portfolio companies. We believe these rounds validate our focus on building meaningful companies that generate value for their customers, and can charge accordingly.

Appex raised a $7.5 million round led by Tectonic Ventures. EvolutionIQ raised a $7 million Series B led by Brewer Lane Ventures. Lastly, another Core portfolio company raised a $15.6 million Series B that has not yet been publicized.

In addition, three companies in our Discovery (fka Scout - more on this below) portfolio recently completed fundraising rounds, including Adonis ($17 million Series A led by General Catalyst), Kindred ($15 million Series A led by NEA), and Firstbase ($50 million Series B led by Kleiner Perkins). We continue to see follow-on investments from top firms as evidence of our ability to select assets.

New Investments

In late March, we were thrilled to lead the Pre-Seed round for a new stealth B2B software company, as mentioned above. While we can’t share more now, we’ll definitely let you know when we’re ready to shout about this one to the world.

We have also continued expanding our Discovery portfolio with five new non-lead investments. We recently renamed this effort from “Scout” to “Discovery” to first and foremost eliminate market confusion with the traditional sense of the word scout, in which outsiders (e.g. advisors) make those investment decisions. This is never the case at Asymmetric, where our team makes 100% of investment decisions. We also feel “Discovery” better represents the intent of trying to discover new lead check opportunities through these investments, either by preempting a follow-on or by a referral from one of the Discovery founders. These five investments again represent many of our key focus areas of horizontal and vertical software, fintech, and marketplaces. 

As of this letter’s date, we have invested just over half of the fund into 18 Core and 43 Discovery investments. Including anticipated reserves, we estimate that the fund is approximately 65-70% committed. 

Spring Offsite

At our most recent quarterly offsite in April, our internal team spent three days discussing a variety of core fund and firm strategy topics. We’ve included a brief summary of selected takeaways and follow-up deliverables to give a sense of where we are most focused strategically:

• Redoubling Our Sourcing Efforts - With Data!: Our team unanimously agreed the time was right for a full re-underwrite of how we source investments across channels, and we are midstream in completing that work. We’ve incorporated a variety of data sources, from founder preference polling data to historical qualified leads and conversion rates by channel, to inform this work. We’ve also paired this exercise with a more proactive approach to allocating our team’s time across work streams to more faithfully match effort with how we believe value is created at our firm. Nothing is more important for us than meeting the next great entrepreneur(s) building the enduring companies of tomorrow, and we believe this exercise will help bring us even more success in this endeavor.
• Refining Our Approach To Portfolio Management: While we still believe that an at-will approach to portfolio engagement best aligns with the desire of elite (top 1%) founders to partner with VCs who trust their judgment, over time we’ve observed that early engagement post-investment can let our new portfolio companies benefit from the lessons we’ve learned across our portfolio work to date, applying best practices across key work streams like early hiring, design partner program formulation and partner selection, and early GTM tactics. While we continue to respect our founders’ preferences around engagement, effectively all have been enthusiastic proponents of this style of early engagement given the benefits available to their respective companies.
• Focusing On Relationships Of Depth: As we’ve reflected on how the most valuable wins we’ve experienced as a firm have come about, it has become clear to us that relationships of depth are in a class of their own as a driver of value for our firm. As such, we’ve begun to hold ourselves more accountable for focusing on relationships that are or have a good chance to grow into ones of genuine depth. As a happy outcome of this reflection, we intend to double down on these genuine relationships across both portfolio founders and APs as we continue to optimize how we spend our time in service of building a successful firm.
  

Conclusion

Please do not hesitate to be in touch on deal leads (the earlier stage, the better!), potential portfolio company hires, high value referrers we should meet, and any thoughts on firm strategy. We are lucky to have a wildly thoughtful and experienced community around us and intend to get the most possible out of it!

Best,

Rob, Nancy, Michele, Sam, Sarah, and Matty

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