By Hope King
Initialized Capital on Tuesday said it closed a $225 million fund ー its fourth and the largest since the VC firm's founding in 2011.
Alexis Ohanian and Garry Tan, former Y Combinator partners, launched the company to focus on early-stage start-ups. With the new money, Initialized now oversees more than half a billion in committed capital, more than 70 times the size of its first fund of $7 million.
"When we first started, we'd buy less than 1 percent of a company," Tan told Cheddar in an interview Tuesday morning. "What we realize now is we can buy 10 to 20 percent of companies. From there we want to be the best investors ー helping them week to week on every aspect of the [business]."
Those aspects? Tan listed design, product management, operations, sales, marketing, legal, and finance as examples.
"Before, you’d have to bring those skills across a syndicate, and not all of them would be responsive," Tan said. "We can do the entire round, and on the flip side a company doesn’t have to worry about missing out [or] building out a complete syndicate."
Early stage companies, particularly those rooted in software, are Initialized Capital's sweet spot.
"Engineers just want to get back to building a product," said Tan.
Tan understands that mentality given his own background.
Before Initialized and Y Combinator, Tan was an engineer at Palantir, a secretive data-mining start-up founded by Peter Thiel. He was that company's tenth employee. Ohanian, meanwhile, famously co-founded Reddit with his college friend Steve Huffman.
"We're builders ourselves," said Tan.
One goal for Initialized ー not unlike many other venture capital firms ー is to discover the "Next Big Thing".
“The most valuable thing is to invest in the thing that will become the future before anyone thinks it is," Tan said, referring back to his experience working with Peter Thiel.
"You have to be contrarian and right," he continued. "Consensus thinking just results in infinite competition."
Initialized has already seen a lot of success with its portfolio companies: six are worth more than $1 billion.
One of those is Instacart, which Tan said Initialized jumped on when the app was still in TestFlight status. The other is Coinbase, founded by Brian Armstrong who had just left Airbnb. The former is now worth more than $4 billion, while the later is said to be worth about $8 billion.