Freestyle Capital raises $90M, promotes Jenny Lefcourt

Lefcourt, who joined in 2014, is now an equal partner with founders Dave Samuel and Josh Felser

It's no secret that venture capital is overwhelmingly male. A study from CrunchBase last year found that, among the top 100 VC firms, only 54 out of 755 partners were women (In this case a "partner" meant someone who was able to directly invest), equaling just 7 percent. Only a little over a third of those firms had one partner who was a woman. 

That's not to say that there aren't plenty of female VCs out there blazing the trail for equality. One of them is Jenny Lefcourt from early stage venture capital firm Freestyle Capital. On Monday, it was announced that she has been given a promotion to general partner, as the firm has raised it's largest fund yet. 

"Freestyle is delighted to announce that we have closed our 4th venture capital fund and added Jenny Lefcourt as a full and equal partner. We now have a fresh $90M to invest in all of you high-flying founders. Let it rain," Josh Felser, Founding Partner at Freestyle Capital, wrote in a short post on Medium.

Freestyle was founded in 2009 by Felser and Dave Samuel, both serial entrepreneurs. They financed roughly 27 companies, including Byliner, Get Satisfaction, CrowdFlower, Typekit, About.me, BackType, and Co-Tweet, before raising their first $27 million fund in September 2011.

That was followed by a $40 million fund in September 2013, and a $60 million fund in April 2015. This latest fund gives the firm around $227 million under management. 

Lefcourt joined Freestyle in 2014. She is also a serial entrepreneurs, having founded WeddingChannel.com, a gift registry aggregator that was bought by XOXO, as well as Bella Pictures, which was bought by CPI. She was also previously a Partner at Periscope Advisors.

In an interview, Lefcourt made sure to point out that this promotion did not mean she is taking on a new role at Freestyle, and that she will be investing the same way she had previously. Instead, she called it, "less of a title switch and more of an economic switch." 

What that mean is that, now that she's an equal partner, Lefcourt, Felser and Samuel will all be paid the same in carry fees. That, she said, "is a big statement about us as partners."

"What ends up happening is that it affects power dynamics. It was important to me that we have a partnership where we're all on equal footing. If someone is getting extra points, that makes a difference in how decisions get made, and who's voices are the loudest. The three of us are in it together, and now our voices will be heard equally. There's no hierarchy," said Lefcourt.

"For me, the firms I hold in the highest regard operate this way and it makes for much healthier partnership. This is something that I think is smart long-term move, as it affects the dynamics of decision making, and I'm glad Josh and Dave felt the same way too."

The timing for this promotion was right, she said, because she has now been with the firm for three years, having been made partner two years ago. That was enough time for the other partners to evaluate her performance and see how her investments have matured.

"I made two investments out of Fund II, and I got to see good things happen, but it was such early days. They had enough to see to want me to be a partner when we raised Fund III, but I don't think they had enough to say I should be equal. I didn't ask for it, because the timing wasn't right," said Lefcourt.

"Now, two years later, they can see all of my investments and a lot of it has been up and to the right. They've seen me in action. I'm comfortable being equal now that there's enough data."

Being made an equal partner is a big step for her Lefcourt personally, of course, but it is also a signal of the shifting winds in the venture capital industry. Being a woman who is an equal partner in such a male dominated field is an important step forward for equality.

"I've been a woman my whole life, but I never cared about gender at all until the last three years. I don't wallow in it, and I've never feel bad for myself. I've been blessed in my career, but the numbers are embarrassing and abysmal," she told me.

"A couple of years ago, I had a woman, who I was not yet friends with, take me aside and give me some education on the importance of getting to be an equal partner. It wasn't on my radar to aspire to that, but she explained why it was important in order to help me. She had nothing to gain herself, but she did it to help our gender base. The more successful each of us are, the more successful we as a group."

Therefore, when Lefcourt was negotiating to be an equal partner, she said she felt like she was negotiating "for my whole gender, as we’re changing the landscape of venture capital."

"I really feel the difference with women in venture right now. The more of us there are, the more power we feel like we have. We have each other's backs, and we share wisdom. That friend who gave me advice wouldn't have done that for a junior male partner," she said.

"Now there are enough of us to have a network that matters, where we can join in and have a voice. The more powerful we become, and as firms want more diversity, maybe they will also want someone in their firm who is a part of this network."

Due to the larger fund size, and the trend of larger seed rounds, Freestyle will invest $1 million to $1.5 million out of this new fund, up from $500,000 to $1 million in initial checks that it was making out of Fund III. The plan is to make investments in roughly 30 companies over the next two years.

It will also continue to be a generalist fund, though there are specific areas of interest. Lefcourt, for example, likes investing in companies that enable others to keep up with Amazon, such as Narvar, which assists with the post-purchase experience, as well as marketplaces.

One thing that sets Freestyle apart, she said, is that all three partners are serial entrepreneurs.

"I honestly believe that makes a big different in how we select, and how we work with, companies. There's nothing like having done that job. There are a lot of people who can give guidance, but we have a very empathetic approach in regard to the counsel we give. We understand founders need strategic help and also sometimes a therapy session. That's our job."

Venture capital raised in Q1

There was $7.8 billion raised across 58 funds, according to a report by PitchBook-NVCA Venture Monitor, released last week. While that was the lowest number of funds raised since the third quarter of 2015.

On a quarterly basis, the amount raised rose by over 9 percent, while the number of funds fell 12 percent. On a year-to-year basis, Funding fell over 23 percent, the number of funds dropped 17 percent.

This is the seventh straight quarter of funding going down year-to-year.

(Image source: freestyle.vc)