"I said, 'When he's ready, we're gonna pounce": Huddle's Andy McLoughlin joins SoftTech VC as a venture partner
SoftTech VC, the pioneering micro-VC firm synonymous with its founder Jeff Clavier, is adding to its investment team. Huddle co-founder Andy McLoughlin will join SoftTech as a venture partner beginning in April and will focus on SaaS and B2B businesses.
In conjunction with the new hire, current partner Charles Hudson, an In-Q-Tel and Google alum who joined SoftTech first as a venture partner in 2010 and became a full partner in 2013, is stepping back from his full-time role at the firm to focus on pre-Seed state investments through an independent vehicle. Hudson will remain in a part-time support role at SoftTech, according to the firm.
The identity of venture capital firms are often indistinguishable from the identity of their founding partners. This is particularly true for the small early stage firms that emerge out of angel investing portfolios. Clavier among the first super angels anywhere, and as such has been making Seed stage investments in Silicon Valley as long as anyone. That he added some institutional capital and a brand to his practice was more a matter of quiet evolution than a major departure.
It’s not surprising that Clavier has moved slowly to add additional partners. SoftTech couldn’t be more tied up in Clavier’s identity if it had his name on the logo. (I even find myself reading the firm’s website in Jeff’s French accent). But beginning last summer, when SoftTech’s grew nearly doubled the size of its capital pool, raising an $85 million fourth fund, he began thinking about adding enterprise expertise. While this was around the same time he and Hudson began discussing a change in his role, the timing of these two events is purely coincidental, according to Clavier.
“I had this profile in mind. I wanted a SaaS founder who had been through all the stages of growth, from $0 to $1 million, to $10 million, to $100 million in ARR,” Clavier says. “And I wanted someone with angel investing experience, because I think you learn a lot by risking your own money the way I did early.”
It turns out McLoughlin fits that profile to a tee, and he has also been good friends with Hudson for a number of years. Hudson and Clavier said to themselves early on that when he decides to look beyond Huddle, they would pounce, Clavier tells me.
That time came in early Winter as McLoughlin realized that Huddle was approaching auto-pilot and began to feel that he could add more value outside the organization, he says.
“Early stage is where my heart is,” McLoughlin says. “It’s where I’m comfortable. As a founder and angel, I can deliver lots of value.”
The relevant reference checks ensued, in both directions, with Clavier contacting McLoughlin’s angel investments and McLoughlin speaking to SoftTech’s portfolio CEOs. The pair say they heard one another described the way they’d hope their own investments would talk about them, clearing the way for the partnership that has unfolded.
McLoughlin will spend approximately one day per week at the Huddle offices for the foreseeable future and will remain on the company’s board of directors.
I asked Clavier whether he would have brought McLoughlin aboard if Hudson’s role had not changed. The firm already has a principal in Stephanie Palmeri, and $85 million is not a huge sum to spread across four full-time investment professionals.
“We don't think of in that way, in terms of dollars per partner,” Clavier syas. “We have three investment professionals, all of which source deals and all of which have an equal vote. We will end up with 3.5 investment professionals, with Charles now in more of a supporting role.”
McLoughlin has assembled an impressive angel portfolio, making more than 35 early bets including those in companies like Postmates (which later became a SotfTech company), Buffer, Pipedrive, and Beep, among others. SoftTech has made 160 investments since its formation in 2004, with standouts that include Mint (Intuit), WildFire (Google), Bleacher Report (Turner), Gnip (Twitter), Brightroll, Eventbrite, ZEFR, Poshmark, and Postmates.
A lot has changed since Clavier launched SoftTech more than a decade ago. One thing that’s affecting the entire ecosystem is a change in the average size of rounds and in the competitiveness facing seed-funded companies looking to raise a subsequent A round. Clavier told me last summer:
“When we evaluate deals, we need to think not only are these great founders, building an awesome product, in a large market, but also, what’s the fundability of the company going forward – what milestones do they need to hit in the next 12 to 18 months to raise that next round and do we believe they can get there? Venture capital in French literally translates into ‘risk capital,’ but VCs today are looking for more data than ever before.”This means, of course, that selecting the best companies early on is more important than ever. But just as crucial is helping these nascent businesses grow and mature, making them more attractive to downstream investors. In that sense, McLoughlin’s recent experiences in the startup trenches, navigating these operational and fundraising challenges first hand, make his addition to the firm particularly attractive.
“I see Andy giving us an even stronger reason for founders in these sectors to come to us,” Clavier says. I was already pleased with the deal flow we see, but Andy will only help that – especially with European founders. But it’s not just that. As the non-CEO Founder, he has filled a number of different roles in building of Huddle. We expect him to add a massive amount of value to our founders.”
(Image via decodedpathways)
[Disclosure: Michael Carney has accepted a position as an associate at Upfront Ventures that begins in April. To the best of Pando’s knowledge, the companies in this post and their competitors have no affiliation with Upfront. This post went through Pando’s usual editorial process.]