This Startup Has A New App To Make Sure VCs Are Being Helpful
Like any venture capitalist, Craft Ventures partner Brian Murray has been fielding the same questions from founders again and again: Can you introduce me to a prospective customer? Do you know any good candidates for this position I’m looking to fill? Can you retweet this article about us?
For startup founders, it can be cumbersome to figure out which of their dozens or even hundreds of investors and advisers to turn to for help. “There’s never been a good way to activate this group of people,” Murray says.
So Murray and former colleague Fahim Ferdous, a one-time startup founder, set out to build a tool to bridge the founder-investor disconnect. Called Cabal, their new company has raised $8 million in seed funding led by Murray’s firm Craft, with participation from funds like Seven Seven Six, Y Combinator and Backstage Capital, as well as a slew of angel investors including Li Jin and Max Mullen. Already, 2,600 organizations are using the app, most of them companies searching for their best stakeholders and advisers that can provide the greatest help.
“The receipts will be there,” says Alexis Ohanian, founder and partner at Seven Seven Six. “There will be instances of advisers doing more work for founders than folks who paid to be on the cap table as investors. That transparency, it’s bad for lazy investors, but that’s fine—it’s good for everyone else.”
Cabal was started in early 2020 by Murray and Ferdous, former colleagues at corporate social networking company Yammer, as a hobby project they could use for themselves and close colleagues. The app quickly spread among Silicon Valley founders, coming at an opportune time in which a growing number of solo investors and a founder-friendly market had led to a proliferation of shareholders on startups’ cap tables. Last year, the company participated in startup accelerator Y Combinator as an opportunity to network with hundreds of founders from the ground up.
Founders can use Cabal’s web application to send periodic email updates to investors and to tap into the networks of their investors. For example, it connects with Salesforce or other CRM tools so that a founder can see who in their network has connections at a certain company in order to provide a warm introduction for a prospective business deal or partnership. The app is available through a freemium model—Cabal charges users a subscription fee for features to connect to sales tools—though it only began monetizing in April and has so far made close to no revenue, Murray says. This week, Cabal is launching a mobile app that provides a dashboard for investors and advisers to see all the ways they can help their portfolio companies.
With a slowdown in venture investing shifting the market away from founder-friendly terms, Murray says he foresees even more utility for Cabal. “I think that founders should be looking inward a lot during these times, towards their cap table and their advisors for support,” he says. “They’re still there and they want to help—especially if they’re going to be less active in making new investments, then you can have them be more active in contributing to your business.”
Murray and Ferdous also opted to “gamify” the system by creating a leaderboard that tracks how much help each investor or adviser has provided. That can keep VCs accountable, but also reward those who are pulling an oversized load. Cabal syncs with cap table management tools like Carta and Pulley to allow companies to give equity to the most helpful advisers or other non-stakeholding individuals (say, someone who has advocated for the company on social media). “Equity has been, historically, a very powerful way of building wealth, but it’s been pretty limited to people who are already wealthy like investors,” Murray says. “Now, people can build a portfolio and build up equity based on their contributions and their authentic interest and willingness to help with companies.”
Ohanian says he’s most excited about the potential of Cabal to help usher in an “unbundling of venture capital” that will steer power away from the traditionally dominant VC firms. To use an analogy from the Marvel Cinematic Universe, Ohanian says that in the past, a startup picking a top tier firm would be like signing a partnership with the Avengers. “The most sophisticated founders can cut through the BS, and what they realize is, you may have the Avengers on your cap table, but when Thanos shows up and they send Hawkeye, they’re like ‘Why the hell would you send Hawkeye? I need Thor,’” he says. “Now, the best founders can build a cap table based on the individual superheroes they can pull on.”