Is closing a fund newsworthy?
Like a fundraise for our founders, it isn’t an end-goal, but a milestone on a longer journey.
As we reflected on the recent close of Kindred Fund III, we wondered what value there might be for others in us writing a post about it.
Our conclusion? Let’s celebrate the exceptional humans who enabled us to get this far, and recruit those we’d love to have with us on the next phase of the journey.
Tribute to the Kindred Collective.
The Kindred Collective constitutes everyone who contributes to the success of the community, from our founders and their teams to our advisors, co-investors and LPs.
Over the first two Kindred funds, we have worked with some of the fiercest, most visionary founders, tackling some of the most audacious technical and societal problems.
From fintech to fertility, cell and gene therapy to SaaS pricing, robots to retirement communities, it’s genuinely inspiring to see the work our founders and their teams do to build massively ambitious and meaningful businesses. We feel lucky and proud to partner with you on your journey as founders and leaders. Keep pushing us to improve and raise expectations of ourselves: we promise to keep doing the same for you.
In turn, we’re grateful that so many of our existing LPs reupped from Fund II to III, with many increasing their cheque size. We closed Fund III at $130M, which was oversubscribed at our hard cap. A special shout out to our returning partners at University of Chicago, British Patient Capital, Isomer, Industry Ventures, Legal & General and a huge thanks to all of our investors (including exited/scaled founders and even founders who we passed on) for continuing to hold us to the highest of standards, and for your renewed commitment to our team and strategy.
To Great Founders We Hope to Back Going Forward.
We are not for everyone, and not everyone is for us. We say this not out of arrogance, but out of mutual interest: we’re both looking for the right fit, and, depending on who you are, where you are, what you’re building, the best investor for you might not be us.
Differentiating between funds before you’ve actually worked with them is hard. So, below, we’ll try to help you figure out if you want to be part of Kindred’s Fund III journey.
High standards, deep commitment.
You won’t see us on lists of ‘most active early stage investors’ because we have a high conviction, high concentration model. It’s about selectivity over activity, high conviction over high volume. It’s part of what enables us to fight so fiercely for our founders and our firm.
That means we only lead or co-lead, writing $200k-$3m cheques in about 25–30 companies per fund. We don’t invest larger amounts up-front because we want to reserve significant funds for follow-on investments as our companies grow and scale.
For us, we stay laser-focused on the early stage pre-seed and seed rounds, and therefore each investment we make is meaningful for our fund. We’ve all been ex-operators, and we enjoy the uncertainty and ambiguity of the early stage company building. We are never investing as an option ticket for a future round, or as one of many ‘bets’ in a wider portfolio. Our strategy is to invest our money and time in fewer teams and really spend our time serving and enabling them. Once you’ve gone from absolute chaos to a more predictable business that scales, there is no shortage of incredible capital out there for you, which we can help connect you to (in Europe or the US). And because we’re laser focused on leading pre-seed and seed rounds, we’ll never compete to lead your Series As and beyond. Like you, we want to bring in the best possible partner — globally — for those stages, and we work tirelessly to help you get exactly that.
Focused, but not blinkered.
We are a partner-led firm in a relationships-based business so focus is key to success. Since Fund I, we have expanded our reach to founders not just in the UK, but also across Europe and Israel. We have also built real density in what we call ‘infrastructure companies’.
What do we mean by infrastructure in this context? The ‘picks and shovels’ or tools and services that power industries — the API, orchestration, and data layers that have sustainable differentiation. We have invested in Saas infrastructure companies such as M3ter and Paddle, Techbio infrastructure companies like LabGenius, Cradle Bio and Scarlet Comply, Fintech infrastructure in companies like Fung Money, Flagstone, and Pave, Future of Work infrastructure like Vault, Hofy, and Natter, and Automation infrastructure through Five AI, RobCo and Dexory.
It doesn’t mean we categorically rule out different spaces: we are founder-driven, and find that founders always find the best opportunities first and bring you into new spaces. We have plenty of examples that didn’t fit the infrastructure mould. We invested in companies like Gaia, Gravity Sketch, Lottie, Farewill, Mojo, and Polywork, because those founders were truly exceptional and convinced us on why the time is now for their businesses.
We are often asked which qualities we look for in founding teams. What marks someone as exceptional, and gives them a higher probability of achieving outsized ambitions?
It would be gratifying to everyone to share a secret formula for success here, but, as the journalist H.L. Mencken said: “for every complex problem there is an answer that is clear, simple, and wrong”. No two founders are alike, and even the same traits often present differently from individual to individual.
With that caveat, we can only offer insights from observing the great founders we’ve backed, which is the need to continuously adapt and deploy seemingly antithetical behaviours to achieve their vision. The openness of a beginner’s mind with the expertise of the prepared mind. An ability to manage the altitude sickness from switching between the 30,000-foot view and being firmly rooted to the ground. Obsessing about what you are building whilst not taking yourself too seriously. Fiercely competitive yet consistently kind.
The magnet that brought each person to this firm was the relentless quest to make ourselves, the firm, and the industry better consistently. Ironically venture is an industry that funds the most cutting-edge innovation, yet rarely innovates on itself. And let’s be honest, it’s an industry that can be prone to conformity. Too often, venture is willing to tolerate bad behaviour in exchange for good returns. We know it’s a false dichotomy.
We want to prove that good behaviour and good returns can be mutually beneficial, and are not mutually exclusive. We have structurally set up the firm differently to align those two things. The Kindred Profit Share gives every founder an upside in the fund returns, whether or not their company succeeds. Our equal partnership model allows us to move extremely quickly and avoid any internal politics. Our push for transparency has us publish our term sheet on our website and also contribute to the ecosystem at large be it ESG best practices or driving diversity woefully underrepresented in the sector. We pay for executive coaching for every founder we invest in, and offer management training to their teams. We have 10x the typical GP commit. All of these initiatives aim to drive alignment between behaviour and returns.
We also try to hold ourselves accountable and to the highest of standards when working with founders, even those we may only take a single meeting with. We have tracked anonymous passed founder NPS since inception in 2016 and it’s averaged at 8.8/10 and above 9 every year since 2020. We will certainly not get it right every time, but we are trying to show up differently and better, consistently.
But mostly, what any VC says about themselves doesn’t matter. What founders and operators do does. So if you are a prospective founder thinking of working with us, we’d suggest you go check out our profile on Landscape VC — an independent review platform with feedback on VCs — or reach out to founders we’ve backed or interacted with.
Fund III will walk out in a markedly different, more challenging and uncertain macroeconomic environment to the one in which Fund I took its first steps.
To earn the right to reach the next milestone, we as a firm (like the startups we back) have to embrace this uncertainty: continuously adapting and learning, staying hungry and pushing ourselves to higher levels of excellence. One thing that is certain, is that our future success is predicated on the people with whom we surround ourselves, and you want to surround yourself with those that push you to be your best, and with whom you can enjoy the ride.
The Kindred Collective are those people, so thank you all again. And looking forward to adding in more great people as we go forward.
If you’re looking for investment, contact firstname.lastname@example.org. The inbox is monitored by a GP.