Precursor Ventures Has Closed On Its 2nd Fund, $31 Million For Pre-Seed-Stage Startups

Precursor Ventures Has Closed On Its 2nd Fund, $31 Million For Pre-Seed-Stage Startups

SAN FRANCISCO, CA – SEPTEMBER 18: Precursor Ventures Managing Partner Charles Hudson judges the Startup Battlefield Competition during TechCrunch Disrupt SF 2017 at Pier 48 on September 18, 2017 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch) *** Local Caption *** Charles Hudson

The world of U.S. venture capital is overwhelmingly white and
investors are sometimes reluctant to invest in pre-seed-stage companies, so venture capitalist Charles Hudson is solving for multiple unmet needs or gaps.

Hudson is the founder and managing partner at San Francisco-based Precursor Ventures, and partner at Uncork Capital (formerly SoftTech VC), both seed-stage venture firms.

Precursor Ventures has raised $31 million for its second fund, according to an SEC filing. The early-stage venture firm focuses on pre-seed investments in the San Francisco, New York, Toronto and Los Angeles metropolitan regions.

Precursor Ventures may not be a big name in venture capital, but it has a big mission: to make sure more startup founders from diverse backgrounds get an equal chance for venture capital investment.

With $31 million in capital commitments, Precursor’s second fund is almost double what it raised in its 2017 debut effort. The firm has made 76 investments, including $4.7 million in Elroy Air on Feb 14.

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Tech firms in the Precursor portfolio include:

In the first Precursor funding round, some investors were reluctant to invest in early-stage companies, Hudson said in a Tech Crunch interview. That changed with the second round.

“I think people who last time around didn’t necessarily believe in pre-seed deals, who thought that it felt like adverse selection and involved too many companies and too little ownership, have changed their thinking,” Hudson said. “Now, most realize that seed investing is a continuum … They see the value of being the first money into a startup.”

Hudson said the majority of founders he meets aren’t famous yet, but have a good idea and need $500,000 to $1 million to make enough progress for the bigger seed funds to pay attention. “Someone has to fill the gap,” he said.

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“The air is pretty thin in pre-seed — but with a $30 million fund, ownership of 5 percent is plenty,” Hudson told Tech Crunch. “We’re sensitive to the dynamics of seed funding, wherein seed investors want (a bigger ownership percentage); if we’re taking 10 percent and they’re taking another 25 percent, that’s already well above the ownership level that a founder should (be left with).”