AppDynamics Founder Partners With HBCUs, Launches $160M Seed-Stage Fund
Jyoti Bansal and John Vrionis teamed up for one of tech’s best outcomes in recent years. Now with a new venture capital firm called Unusual Ventures, they’re looking to do it again – adding some twists to the VC playbook along the way.
Unusual Ventures launched on Tuesday with a debut $160 million fund focusing on seed stage investments primarily in enterprise software and infrastructure. Unusual’s day-to-day operations are led by Vrionis, the firm’s cofounder and managing partner; Bansal is its cofounder, holding a title the firm calls an entrepreneur partner.
Vrionis, a Midas List investor at Lightspeed Venture Partners before leaving to start Unusual, says he and Bansal were united by the shared belief that the seed stage investment market is broken, in part due to the rise of “mega funds” that increasingly invest later in startups’ life cycles, focusing on helping them scale. “What I loved to do was help with the early days,” says Vrionis. “How come none of the firms are set up to do that?”
Vrionis was one of Bansal’s first supporters when Bansal founded AppDynamics. Cisco acquired AppDynamics in January 2017 for $3.7 billion. Vrionis brought AppDynamics into Lightspeed in 2008; partner Ravi Mhatre and Greylock’s Asheem Chandna would lead its Series A round. Approached by Vrionis to participate in a startup education program he was working as a teacher, Bansal realized he wanted to get more involved. “We are very serious aobut changing the game on the services and infrastructure available at the seed stage,” he says.
How Unusual Ventures plans to do that is a two-pronged strategy that is meant to leverage each of its founders’ skills. Bansal, who will continue to run a newer startup called Harness and work on his own startup studio, is building an internal software program called Get Ahead to help the firm’s entrepreneurs pool information and access firm resources. Vrionis, meanwhile, will continue his startup education efforts through a new program called the Unusual Academy. In the Unusual Academy, six to eight selected startups that have raised less than $8 million or so will be selected to participate in a program that includes a $250,000 to $1 million convertible note of funding and six afternoon sessions with industry veteran instructors. Mulesoft CEO Greg Schott, DataStax CEO Billy Bosworth and author Adam Grant are some of the tech luminaries already signed on to teach the sessions, which start in the fall.
Unusual Ventures’ main fund will invest $3 million to $7 million in companies that don’t go through the Academy, to avoid the risk of playing favorites. That amount, says Vrionis, is what founders should typically need to get off the ground. “We feel with our model we are not forced to stuff a bunch of money into companies,” he says.
Unusual Ventures has made four investors so far, including Vault.io in cryptocurrency, two stealth enterprise software companies and a fourth undisclosed deal.
If anything is truly unusual about Unusual Ventures, it’s how Vrionis and Bansal set up the fund to reward those not typically involved in startup success. For its limited partner backers, Vrionis focused on non-profit institutions. Those include Ivy League colleges and a prominent west coast school, but also historically black colleges that he says aren’t often hit up for money by Silicon Valley VCs, including Hampton College and Spelman College, as well as the United Negro College Fund. Unusual’s partners won’t take salaries from their fees on the fund, investing those fully in its operations.
Unusual is also looking to promote diversity with its hiring. Though its founders are both male (one a native of India), three of the six Unusual team members are women, including both its senior investment associates, Haley Daiber and Megan Holston-Alexander. They’re joined by Operations Manager Angi Psaros and a male talent partner, Luan Lam. The goal, says Vrionis, is to maintain a gender ratio of about 50% as the firm grows.
For Bansal, cofounding a venture firm is something of a surprise. Not only does the founder not need the money, following AppDynamics’ multi-billion exit, but he experienced the bumpy side of startup-founder relations, too, as he was asked to step down as CEO in the months before the company’s sale. “I’m not a fan of VCs when they don’t really add the right value to companies,” he says. “I do think this is an opportunity to influence it and change it.”
Though Vrionis and Bansal are far from the only fund-makers looking to capitalize on a seed stage gap left as some firms grow, Vrionis is betting their track record will provide instant credibility to stand out from the crowd. “We hope people say Unusual is raising the bar for what people expect of investors,” he says.
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