With the purchase of advertising firm Habu by LiveRamp for \(200 million in January, the venture studio Superset has achieved another milestone in its portfolio. Currently, Superset is augmenting its funds by an additional \)90 million to reinforce its focus on nurturing enterprise startups.
“Since our establishment, many aspects have evolved. We continue to be a hands-on workshop dedicated to fostering businesses rooted in AI and data. Our primary focus is on identifying, nurturing, and advancing new technology startups, particularly in the business sector,” stated founding managing partner Tom Chavez in an interview with TechCrunch.
While the core mission established in 2019 remains unchanged, the industry landscape has undergone significant changes, validating Chavez’s strategic vision. The emphasis on developing “seemingly mundane yet robust products,” as previously highlighted by TechCrunch, has proven to be a wise choice for Superset, resulting in a total funding of $176 million to date.
Among the numerous venture studios, Enhance Ventures credits the origin of the “venture developer phenomenon” to 1996, gaining momentum over the past decade due to substantial funding and a series of successful exits. However, Superset sets itself apart by being led by developers with a proven track record.
While external investors, including family offices and tech investors, support Superset, a portion of the capital comes from Chavez and his co-founding managing partner, Vivek Vaidya. The duo’s past collaboration at Krux, later acquired by Salesforce, and the acquisition of Rapt by Microsoft, where Chavez served as a co-founder and Vaidya as CTO, totaling $1.2 billion, highlights their dedication to Superset.
“Our investors seek assurance of our unwavering commitment to the outcomes and investments we pursue,” affirmed Chavez. “Fortunately, we have a diverse group of Limited Partners (LPs) who provide valuable expertise and ask insightful questions about our initiatives.”
While Superset remains focused on AI, it diverges from traditional investors by prioritizing the practical application of AI, emphasizing what Chavez refers to as the “engineering of AI.”
“The LLM substrate offers a significant opportunity for entities like us interested in developing practical applications utilizing diverse system architectures,” Chavez emphasized, highlighting the increasing demand for innovative approaches to vast language models.
Entrepreneurs, although capable of pursuing their ventures independently, find an alternative path through Superset, bypassing traditional funding avenues like Sand Hill Road to secure investment for untested concepts. “We streamline operations, enabling founders to concentrate solely on product development and customer engagement.”
The Distinctive Approach of Superset in the Venture Studio Landscape
Venture studios encounter challenges in a competitive funding environment, not only due to increased entrepreneurial activity but also the necessity for investors to secure substantial ownership stakes to realize significant returns from successful ventures.
Balancing ownership rights and value proposition is crucial, especially when incremental ownership does not equate to added value. While the venture studio sector encompasses a wide range, Superset’s model, according to Chavez, significantly deviates from conventional practices.
A key distinguishing factor is the level of involvement: with investments in 16 firms, Superset takes a more hands-on approach compared to studios that periodically incubate a few companies. Additionally, the studio intends to decrease its annual company formation rate from four or five to two or three, prioritizing quality over quantity.
Selective pursuit of ideas characterizes Superset’s approach, utilizing a unique tool called the solution memo, similar to a venture capital investment memo, to assess the feasibility of opportunities. This signifies a notable shift from subjective to a more systematic evaluation process compared to 2019, as Chavez pointed out.
Whether considered an art or science, Chavez and Vaidya excel in talent identification, as noted by Alex Bangash, a limited partner at Transpose Platform, an extensive VC portfolio with numerous venture studios. Tom and Vivek not only excel in talent acquisition but also in nurturing potential co-founders, fostering their growth alongside business development.
After validating an idea, Superset pairs it with a co-founder focused on product development, transitioning from intensive hands-on support to lighter mentorship as the venture progresses, diverging from traditional accelerator programs. Early-stage assistance includes team selection, marketing, sales, and fundraising.
The recent move to the entire third floor of San Francisco’s 140 New Montgomery tower, shared with VC firm Greylock, serves as Superset’s new operational hub. While Chavez originally hails from Albuquerque but relocated to San Francisco three decades ago, he remains optimistic about the city, especially amidst the ongoing “AI revolution.” Superset is committed to maintaining this momentum.
