When South Park Commons (SPC), a community of dozens of engineers in San Francisco’s South Park neighborhood, came together, it mostly flew under the radar, with the exception of a New York Times profile. in 2017, one year after its creation.
Founded by Facebook’s first female engineer, Ruchi Sanghvi, she explained at the time that her ambition with SPC was to create a technological response to the Bloomsbury Set or Benjamin Franklin’s Junto Club, where people could discuss their respective experiences. and shared and hopefully form new ideas at the same time. the path.
Fast forward and SPC – which raised a $ 55 million venture capital fund in 2018 to support projects born by community members – says the experiment is working. It now has 450 members in the Bay Area and around the world. He just closed a new $ 150 million fund with tech luminaries, as well as institutional investors.
He says he also has a valuable portfolio. In fact, says Sanghvi, SPC’s first fund has already returned its capital – and then some – to investors through Compound Labs, an open source decentralized lending platform whose tokens have been distributed in part to the first shareholders.
Sanghvi says that SPC also has 10 to 12 other so-called unicorns in its wallet.
We chatted earlier today with Sanghvi and her husband and business partner, Aditya Agarwal, who was also one of Facebook’s early engineers before co-founding with Sanghvi a startup they sold to Dropbox in 2012 in the part of a talent acquisition. (Sanghvi stayed for two years as the VP of Operations of Dropbox; Agarwal, who joined as VP of Engineering of Dropbox, was promoted to CTO in 2016 and left in 2018, joining Sanghvi at South Park Commons.)
We’ve talked at length about how the SPC community has evolved from one that started in a physical space to largely become a very structured virtual society during the pandemic, but still very much focused on bringing people together in real life.
Indeed, Sanghvi and Agarwal believe in the power of offline interactions so much that in addition to their San Francisco hub, a location in New York is currently in the works and they suggest other locations could follow, notably in Seattle and even. in Southeast Asia.
As for this membership, about 70% of the SPC members are “technical,” says Sanghvi, although she adds that the remaining 30% are “experts in the field or have operational expertise or are even academics.” This composition is quite on purpose. “The funny thing is, when you chat with a great entrepreneur and ask them if they want to date another entrepreneur, the answer is always ‘no’,” Sanghvi says with a laugh. “They want to spend time with the expert who beat the Stanford team on an AI algorithm, so having those operational experts mixed in with the community is very valuable.”
Connections lead to more than friendship and new ideas, apparently. According to Agarwal, more than 50% of the organization’s members find their co-founders or founding employees within the community, which underscores another way South Park Commons sees itself as distinctive. Unlike a Y Combinator, which meets fledgling teams or VCs who keep an eye on the operational leaders of large companies, SPC says it focuses on capturing people who are obviously talented and likely in high demand but who, although they have left their last concert, are not immediately sure of their next move and above all just want a little time to understand it.
He seeks to capture people whose next move is simply to freely explore ideas, however spongy they may sound. “We’re really like a learning community that helps people in the ‘negative zero phase’ get to the point where they can start a business,” Agarwal explains, “and if any startups come out of that process, the fund invests. “
Other Things to Know: Members tend to work closely together within the community for nine months before ‘graduating’, which means they’ve either raised over $ 1 million for a new concept. startup, have more than four full-time employees, or have taken a job. (Exploring ideas doesn’t always lead to business creation.)
When a community member reaches the fundraising phase, an early deal is to give SPC the right of first refusal to invest. (Each member is also welcome to invest in SPC funds if they wish, and many accept this offer. According to Sanghvi, SPC’s new $ 150 million fund has 100 members as investors.)
As for the form of these investments, it is quite classic. Agarwal says that SPC typically invests between $ 700,000 and $ 2 million for 7-10% of the business. He also suggests that because SPC’s network is so valuable, venture capital firms that tend to make subsequent investments generally leave room for SPC to maintain its percentage stake rather than diluting it for their own benefit. short term.
Certainly the formula seems to be working right now. In addition to Compound Labs, some of the outfits for crossing the halls of South Park Commons (physical and virtual), including The Graph, an indexing protocol for organizing blockchain data that has garnered very public support from the founder of ‘Ethereum, Vitalik Buterin; Pilot, an accounting software maker that is now backed by Sequoia Capital and Index Ventures and valued at $ 1.2 billion; and Unit21, a code-free software startup that helps companies monitor fraudulent activity and in July raised $ 34 million in Series B funding led by Tiger Global.
In addition to Sanghvi and Agarwal, who are the company’s two general partners, SPC includes investors Mitra Lohrasbpour, who previously led revenue analysis and international expansion efforts at Dropbox, and Finn Meeks, who has previously spent two years as chief of staff for Sanghvi.
For what it’s worth, Agarwal says that while SPC’s new fund is three times the size of the previous one, he doesn’t expect the team to invest more aggressively.
“We focus on quality rather than quantity. If the quality comes in quickly, that’s fine, but it’s not the top notch game. “