The fund is part of investment firm SDVenturesRead more...
The Farm Ventures is a Stanford alumni venture fund investing in Stanford alum-led companies
Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh how times have changed. While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
As an entrepreneur, de Baubigny has launched two private venture funds for individual family offices and founded a wine-related logistics company. As an investor, he backed leading-edge Internet companies, including Songza (sold to Google, now GooglePlay), Trulia (IPO, sold to Zillow), Dash (sold to RIM), Oodle (sold to QVC), and Dataminr.
de Baubigny co-founded Deep Fork Capital in 2008 as a Managing Partner of Fund I investing directly for an ultra-high net worth family. In 2003, he co-founded Vintrust, a wine management business with over $300 million in wine assets generating over $10 million in revenue (sold in 2009). Prior to Vintrust, he managed a $500 million venture fund for French industrialist and billionaire, Bernard Arnault.
In 1998, he joined Morgan Stanley & Co. to run its global Internet banking practice, working directly with Mary Meeker. Before that, he founded the Internet banking practice at Robertson Stephens in 1996 and developed Robertson’s unique approach to research coverage for the Internet. Earlier, he was a securities lawyer with Brown & Wood (now Sidley Austin) in both their New York and San Francisco offices.
Andre received his MBA from Stanford University Graduate School of Business in 1995. He also earned his JD at Boston University School of Law in 1989, where he served as a managing editor of the Annual Review of Banking Law. In addition, he received a BA in Economics from Trinity College in Hartford, CT, in 1986.
VatorNews: What is your investment philosophy or methodology?
Andre de Baubigny: First and foremost, The Farm Ventures (TFV) looks for investments with a Stanford University connection (as founder,CEO, Board Member or VC/investor). Beyond that, the most critical attribute we look at is the team.
Founders and management teams are essential in successful investments (this applies to my investments to date and any that we will make with TFV). The team is so critical in driving the direction of the company. As much as any VC or board member can give advice, it is up to the the management. They are living the company every day, know it better than anyone else, and have the ability to evaluate what’s going on and make the needed changes.
A great board member or VC can help identify problems and take the blinders off an entrepreneur. But in the end, it comes down to the entrepreneurs themselves to stay objective while being extremely passionate. It’s not an easy balance for an early stage company to find as they strive to identify the right model, market, etc. A great team has the ability to be focused but also self-aware and open to new ideas and directions. Couple that with perseverance, and that makes a good investment.
A great example of this is Trulia—an online real estate company I backed—that survived a very difficult macroeconomic shift. We closed in February/March 2008, which was soon followed by an implosion of Wall Street and the real estate and mortgage industries throughout the rest of the year. Thanks to the management team, they figured out how to stay alive through a terrible couple of years. Not only did they stay in business until the market shifted, but then they reached great success-- going public in 2012 then selling for $3B to a competitor in 2014.
VN: What do you like to invest in? What are your categories of interest?
AdB: While TFV is sector agnostic, I am particularly interested in where tech sectors cross-over, such as data and Artificial Intelligence (AI). The crossover of various subsectors within tech is a really interesting place to invest. For example, bringing together two different technologies, platforms, or different movements, can yield really unique companies and ideas.
I am focused on companies with valuable IP. If a company can’t figure out the market or can’t execute, BUT there is value in what they’ve created, then that’s a hedge against the investment we’re making. Ultimately, we will find a return if we invest in companies with valuable IP.
VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?
AdB: There are two deals that stand out in my mind: Trulia and Dataminr. Both succeeded because of the team.
With Trulia, not only am I proud of the success of the investment but of the fact that we had to compete hard to get into the deal. Despite being part of a lesser-known firm, we were able to get in on the deal thanks to the relationship I was able to build with the founders.
With Dataminr, the relationship building element was also imperative. I met the CEO when he was under the impression that I could help with strategic relationships. He wasn’t looking for a VC and in fact had avoided investments from VCs. After a productive conversation regarding support and engagement, we ended up investing in Dataminr. Since then, we’ve seen a valuation increased by 20x where we first came in, and Fidelity valued its last deal at $1.5B. Of note, it’s a crossover between data analytics and social media - a sweet spot for me.
While I can’t share any details yet, I am also very excited about some of TFV investments that we will announce soon.
VN: What do you look for in companies that you put money in? What are the most important qualities?
AdB: As I’ve previously shared, team and technology are the most critical. We look for strong management and valuable underlying technology that supports the value of the company.
VN: What kind of traction do you look for in your startups? And can you be specific? Are you looking for a number of customers or order volume?
AdB: TFV is stage agnostic, so we expect different companies to be at different stages in their life cycle.
For some general background, we look for stats that show product/market fit, and if the company is poised to adjust to any disconnections. Stats might be around a cost or quality standpoint and vary from customer usage, number of customers, growth in customers, erosion in customers over time, customer engagement and growth (as volume increases). Also, we look at how the company reacts from product-market fit and a pricing/financial model standpoint.
VN: How long does it take before you meet a startup and make an investment? How do you conduct your due diligence?
AdB: We only invest when there’s a strong lead--which means terms are negotiated and established. We don’t lead rounds, set valuations, or take Board seats.
When we take a serious look at a company, our deal team will write an independent report, and then the company presents to our Investment Committee. That group is composed of 10 to 15 experienced business leaders (generally alums) with long careers in investment and entrepreneurial ventures.
It’s a fairly transparent and streamlined process, so the transaction takes place quickly -- weeks instead of months.
VN: These days a seed round is yesterday's Series A, meaning today a company raises a $3M seed and no one blinks. But 10 years ago, $3M was a Series A. How has that changed where a company need to be to get their Series A round?
AdB: These terms are used differently across industries, firms, and geographies. We evaluate stages as less about the money than about development. So seed rounds are a time when a company is still figuring out their business. The company/team is in the early stages of identifying a problem and a solution and is just getting the solution off the ground. Series A rounds are when a company is transitioning into growth phase, starting to think about scaling the business. This is usually where professional institutional investors get involved.
A company also has to have pretty deep market data on product fit by Series A. From my recent experiences in talking with Sandhill Road VCs, Series A-qualified companies need a lot of data that they didn’t need several years ago when check sizes were smaller.
For a bit more context around the changing industry, it’s worth pointing to the late 1990s. I did IPOs as an investment banker in late 90s when IPOs were $3OM for companies with three quarters of profitability-- that’s like a Series C now. A lot has changed.
VN: Tell me a bit about your background. Where did you go to school? What led you to the venture capital world?
AdB: Somewhere between college (Trinity College) and law school (Boston University School of Law), a good family friend and well-known VC, Dick Kramlich, co-founder of New Enterprise Associates, shared a lot about his job as a VC and what he did for a living. I couldn’t believe someone got paid to do what he did--meet with entrepreneurs and decide what ideas were strong and exciting enough to deserve the capital that would help grow and support their aspiring companies.
I didn’t know how I was going to get there, but I was determined to follow his path.
Shortly after, I left my seven-year law career to go to Stanford Business School. This move would get me closer to Silicon Valley, allow me to learn more about technology and venture capital, and earn my MBA. I wanted to be thought of as a VC and businessman instead of a lawyer.
After business school, I joined a boutique investment bank, Robertsons Stephens. I knew it was the best way to learn as much as I could about several technologies and simultaneously create a network of people in the venture industry and entrepreneurial communities.
Following my roles at Robertsons Stephens and Morgan Stanley, I got the opportunity as a VC for a short period of time and quickly learned that I didn’t know enough about what it was like to guide a company. It is very different than giving advice as an investment banker.
So from there, I started and ran a company for five years. In doing so, I had the opportunity to sit in the entrepreneur’s seat where I could really understand the excitement and fears associated with running a company. It ultimately made me a better investor and VC, and I could truly understand how to connect with an entrepreneur.
My role with TFV leverages everything I’ve done in my career: networking as an investment banker, working closely with entrepreneurs and winning their respect and confidence, as well as having the skillsets and experience of looking at companies in upcycles and down cycles. I’m now doing exactly what I love.
VN: What do you like best about being a VC? What makes you excited?
AdB: Right now is an incredibly exciting time to be in VC. I am particularly excited about the fact that technology is so much broader, relevant and life changing, and that there are so many interesting sub-sectors within tech.
Sometimes when I talk to investors, they ask if we’re in a bubble and what is going to happen. My answer is this -- there might be bubble aspects of different subsectors, but they are so broad and diverse that other than a major macroeconomic change happening, I’m not concerned. I think we will see some sectors do incredibly well and some bubbles burst. But there is so much entrepreneurial activity, in such a diversified way, it gives me the confidence to be excited.
I’ve spent a lot of time recently on the Stanford campus with various students; some who are running the undergrad accelerator (Cardinal Ventures), some involved in the Venture Studio at the GSB and others in Mike Lyons' Entrepreneurship Class at the Engineering School. It’s as if I’m listening to 30+-year-old VCs and entrepreneurs. They are incredibly impressive - the amount of interest, focus, and maturity around wanting to create new things. With these new minds at the helm of entrepreneurialism and innovation, it is hard to imagine that if a bubble bursts, it will last and have a dramatic impact. There’s a heck of a lot more excitement than there is fear in a world and industry where there are plenty of reasons to be scared.
VN: What is the size of your current fund?
AdB: We’re still in fundraising mode, but The Farm Ventures is targeting to be a $10 million fund.
VN: What is the investment range?
AdB: The Farm Ventures will invest between $250,000 and $750,000 per company as an initial investment.
VN: Is there a typical percent that you want of a round? For instance, do you need to get 20% or 30% of a round?
AdB: We don’t look at percentage. It’s all about funding great companies and investing in them at a compelling price.
We consider the valuation of a company and the state of its progress. So many venture funds limit themselves by ownership amount. It’s liberating to just invest in great companies and not worry about the percentages.
VN: Where is the firm in the investing cycle of its current fund?
AdB: We’ve made a couple of investments that aren’t public yet, but we’re still very early in the investment phase, aiming for a portfolio of 15-25 companies.
VN: What percentage of your fund is set aside for follow-on capital?
AdB: We typically set aside about 15 percent of the fund for follow-on investments.
VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?
AdB: We invest in all rounds. We are stage (along with geography and sector) agnostic. Our focus is IP and great teams.
VN: In a typical year how many startups do you invest in?
AdB: We invest in about 15 to 20 deals per year.
VN: Is there anything else that you think I should know about you or the firm?
AdB: At our core, we are a Stanford University alumni venture fund investing in Stanford University alum-led companies. The fund was created to enable Stanford alums to invest together in a diversified venture capital portfolio. There are some very unique characteristics and benefits to our model:
- Alumni have an easy way to acquire ownership of a diversified venture portfolio—most individuals don't have access to these kinds of investment opportunities.
- It allows investors to “pay it forward.” Investors become part of something larger, helping support Stanford's entrepreneurial ecosystem and the next generation of Stanford entrepreneurs.
- The power of our model is the huge community we’re building to source deals, refer investors and entrepreneurs, and socialize the fund.
It’s also important to note that The Farm Ventures is not affiliated with or officially sanctioned by Stanford University. We are private and for profit, but very friendly with the school. We try to benefit the entrepreneurial ecosystem overall and support alums or professors teaching about entrepreneurism.
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Joined Vator on
The Farm Ventures is a community of Stanford University alums: investors, entrepreneurs and innovation enthusiasts with a connection to our alma mater. At our core, we are a Stanford alumni venture capital firm. We raise capital from Stanford alums and invest that capital in seed, growth and later-stage companies with connection to the Farm.
Annually we invest in 15-20 companies across various industries, stages and geographies. The fund co-invests alongside top-tier venture capital funds and private equity lead investors. We are private, for profit, and not part of (but friendly with) Stanford.
We are bringing the University’s remarkable entrepreneurial DNA to our global, engaged community of alums. By joining thousands of other alums, you will receive monthly updates on our investments, information on events, and other content related to The Farm Ventures.
As Managing Partner, I am responsible for building the Farm’s team, portfolio, and supporting the Stanford entrepreneurial community, while serving as the primary contact point for all investors.
The Farm Ventures is a private, for profit entity that is not affiliated with nor officially sanctioned by any school.
You can sign up at our website at www.thefarm-ventures.com.
Joined Vator onAndre is an experienced investor, investment banker, entrepreneur, and Stanford alum (GSB '95). As an entrepreneur, Andre has launched two private venture funds and founded a wine-related logistics company.