As discussed last week, the cat is out of the bag in terms of the rise of the Los Angeles startup ecosystem. With it has come the arrival of a number of new early stage investment funds and investors looking to capitalize on the growth wave. Unlike many newcomers, however, the latest fund to formally announce its presence is not simply hopping on the bandwagon. Rather, TenOneTen Capital has deep LA roots and serious credibility among its founders.
TenOneTen is the creation of former Applied Semantics founder and current Factual founder and CEO Gil Elbaz in partnership with former SpotRunner, PeoplePC, and Firefly Network co-founder David Waxman. Together the two have several decades of success, both in founding and in angel investing in technology ventures. They also share a strong belief in the opportunity that exists in the LA tech ecosystem and a commitment to forwarding its development.
This local pride is incorporated into the TenOneTen name, which is a reference to the I-10 and I-110 freeways that chart the course between Elbaz’s alma mater, Pasadena’s CalTech, and the burgeoning startup scene in and around Santa Monica.
“It’s also binary, which we like in a nerdy sort of way,” Waxman confesses.
Waxman and Elbaz are peeling back the curtain on their new venture firm today, but the pair have been making formal investments since the beginning of the new year. The company has already written checks to Ranker, DivShot, SRCH2, Vurb, and Weotta, as well as a self-described Hail Mary outside their area of expertise in Cambrian Genomics. Both founders are deeply interested in the area of big data, as is apparent in their early portfolio, as well as their current and past entrepreneurial endeavors.
As the CEO of Factual, a company backed by $27 million in venture capital, Elbaz won’t be focused on TenOneTen day-to-day. Rather, Waxman will be the operating partner and the pair will meet several times per week to make investment decisions.
While LA still could use more capital at the later stages – Series A and even more so Series B and beyond – the Seed stage is relatively well represented. This means competition for TenOneTen, but given their pedigrees and existing networks, dealflow should be a non-issue for Waxman and Elbaz. Managing a growing portfolio with one full time partner, on the other hand, could prove challenging.
The plan is to write checks between $50,000 to $250,000 meaning that TenOneTen will likely be investing as part of a syndicate in most deals, be they Seed stage or Series A. Board seats will be few and far between, Waxman says. TenOneTen is funded entirely by Elbaz and Waxman, meaning there is no official fund size, but the pair plan to make 15 to 20 investments per year. Both founders have existing angel portfolios, Elbaz having been more prolific than Waxman.
TenOneTen is entering the market at a time when LA looks to be hockey sticking. That said, there’s always the risk that the firm could get swept up in the frothy Seed stage conditions or see its portfolio fall prey to the Series A crunch. As much as any other early stage fund, Waxman and Elbaz should be able to offer founders an attractive combination of past and current, in-the-trenches, experience, as well as a ton of credibility in the data community. Soon enough, we’ll see whether the two can parlay these advantages into venture caliber returns.