Alexis Ohanian, co-founder of Reddit, and Garry Tan, a partner at Y Combinator, are an odd couple of venture capitalists who want to do things differently. They’ve come together to launch Initialized Capital and are now actively looking for entrepreneurs from all walks of life – from established startups to pre-seed concepts. With Initialized Capital’s investment funds, these two want to foster ideas with the potential for explosive growth and success.
At Initialized Capital, Alexis and Garry don’t just write checks; they bring entrepreneurial spirit and savvy insight into the room. Alexis brings his innovative leadership experience with tech giants like Reddit and Hipmunk, while Garry brings his technical background in open source programming including RailsBot and Instapaper respectively. In addition, both have tangible expertise in private capital and operations management and a wealth of knowledge regarding early-stage investments.
To kick start their unique approach to venture capitalist activities at Initialized Capital venture fund portfolio initiatives were established with such investments as Coinbase Ventures, Cloudflare Ventures and Glidera Ventures—all focused on helping startups break new ground in their respective industries.
The independent polymaths behind these strategic investments are what ties their projects together: they know how important it is for them not just to provide financial backing but also be there when those first steps don’t go quite right; offering useful guidance on hard problems or introducing the right people to maximize the value of the project itself—something often overlooked by traditional venture capitalists who usually just write big checks upfront with no strings attached.
Background
Alexis Ohanian and Garry Tan are two successful entrepreneurs and investors who have come together to form Initialized Capital. This venture capital firm looks to do venture capital differently from the traditional way.
Before we dive into how they are doing venture capital differently, let’s look at their backgrounds and see how they arrived at this innovative approach.
Alexis Ohanian and Garry Tan’s background
Alexis Ohanian and Garry Tan met while working at Y Combinator in early 2012. Ohanian is best known as the co-founder of the Reddit social network, one of the most widely visited websites in the world. Tan had started a technology and design studio, Posterous, and built a mobile browser, PuffinBrowser, before joining Y Combinator as a partner in 2009.
Realizing that their two backgrounds and perspectives could be an effective combination for investing in startups, Ohanian and Tan joined forces as partners at Initialized Capital, with Tan becoming its managing partner. Despite coming from different professional backgrounds that featured different skill sets, their mutual understanding extended well beyond venture capital to technological disruption and creating meaningful impact – something they have been passionate about throughout their careers.
The duo has managed to convince other investors of their unique approach towards venture capital by staying focused on making investments with potential long-term payoff rather than chasing short-term gains. Over the last three years, they have invested tens of millions of dollars into startups like Cruise Automation (now acquired by GM), Skillshare and Cruise Robotics – examples that validate this approach to venture capital investing over trying to pick winning stocks on any given day or quarter or year.
The founding of Initialized Capital
In 2011, two tech entrepreneurs, Alexis Ohanian and Garry Tan, decided to take a unique venture capital (VC) approach when they co-founded Initialized Capital. Instead of the traditional VC model that relied upon the expertise and decision-making of the few, they gave seasoned entrepreneurs the funds they needed to make their companies successful.
Ohanian and Tan realized that most VC firms were simply investing money without doing much else for the companies after providing initial investments. However, with Initialized Capital, founders received mentoring from experienced founders. At every step in their startup’s journey—from early stage seed funding to exit strategies—Initialized Capital would be there with experienced advice from their partners.
By 2015, Ohanian and Tan had assembled a team of investors designed around their belief that “the odds are always against pioneers’ ‘—investors who believed in a non-traditional approach to venture capital backed by years of experience. In addition, because the team understood first-hand what it took to launch a successful business into hyper growth mode, they could better relate with and advise companies looking for funds within Initialized Capital’s portfolio.
This proven combination of experience and dedication has made Initialized Capital an extremely attractive option for venture capital investments. By taking a unique approach and pairing industry veterans with passionate innovators, Ohanian and Tan have created an encouraging environment where budding startups can realize their full potential with support from an investor’s point of view.
At Initialized Capital, Odd Couple Alexis Ohanian And Garry Tan Look To Do VC Differently
Alexis Ohanian and Garry Tan, the two founding partners at Initialized Capital, have a unique approach to venture capital. By combining their diverse backgrounds and leveraging their strengths, the duo has created an innovative approach to venture capital that sets them apart.
Let’s take a closer look at what makes Initialized Capital so unique.
Unique approach to venture capital
At Initialized Capital, co-founders Alexis Ohanian and Garry Tan take a unique approach to venture capital. Ohanian, who gained notoriety as the co-founder of Reddit, and Tan, Y Combinator’s first user experience lead, have come together to create a venture capital firm that thinks outside the box.
Their vision for Initialized Capital is to invest in pre-seed and seed stage startups with disruptive ideas to impact the world. They have built a portfolio of founders and companies they believe can build across multiple industries.
Along with their unique approach to venture capital, they take a different approach to educating their companies and entrepreneurs. Initialized Capital’s unique educational resources provide advice on common topics such as fundraising tips, hiring best practices and product development tips. They have also created weekly resources including summarization of articles relevant to their portfolio companies and providing feedback on progress or when needed assistance or troubleshooting any issues along the way. With this combination of advisory services and resources available to entrepreneurs within their network, Ohanian and Tan want to change the venture capital landscape in America.
In addition to building an environment that encourages individuals from different backgrounds to create forward thinking products or services, Initialized Capital has further pursued how technology will shape the future through investments in new technologies such as blockchain technology which is expected become one of next wave significant technological advancements as seen in industries like UBER & AirBnB where innovators were able make an impact with speed by leveraging these technologies.
Furthermore Ohanian & Tan look towards inspiring entrepreneurship among students by providing them opportunities funded by their firm such as providing grants for tech research projects via hackathons & meetups which offer real incentives like cash prizes & internships at big tech names such as Microsoft & Amazon Web Services giving them considerable exposure benefits early on thus potentially creating more breakthrough inventions within the next decade or two due focus & support provided by this company alone in hopes further innovations will arise.
Focusing on early-stage startups
At Initialized Capital, early-stage founders get extra access and support that many large venture capital firms cannot provide. Unlike the traditional VC approach which requires startups to meet the criteria of their pre-defined stages, Alexis Ohanian and Garry Tan focus on helping early-stage startups reach success with a disruptive, lean methodology.
Since launching in 2011, Initialized Capital has invested in more than 140 portfolio companies across various sectors including transportation and logistics (like Convoy), consumer products (like Brandless), healthcare (like Bright Health), and financial services (like Credible). This is due to the firm’s unique product development process combining consumer behavior data insights with hard tech innovation.
Beyond the much needed capital infusion received by early founders, Initialized Capital also offers several resources to help startups scale like its in-house team of product designers and engineers that work directly with their portfolio companies on UX/UI design consultation and software development. They also pair founders with an experienced network of advisors who provide valuable industry connections and expertise tailored to each company’s needs.
Additionally, they recently launched a Recruitment Network program to connect venture partners reaching out to some of the top engineering or product management talent available—which is invaluable at an early stage startup.
Through their unique approach to venture capital investing, Alexis Ohanian and Garry Tan continue to make waves in the tech industry through their commitment to backing bold ideas from today’s creators.
Investing in founders who have a vision
At Initialized Capital, Alexis Ohanian and Garry Tan look to invest in founders who have a vision and challenge them to build something with impact. Unlike many venture capitalists, they are not looking to exit investments quickly but looking for long-term gains that benefit the company and society.
Ohanian and Tan think differently than traditional VCs, ensuring their interests align directly with the founders’ vision. Instead of taking a hands-off approach, they provide counsel and feedback based on their experiences as successful entrepreneurs while giving founders the freedom to focus on what matters most – building an innovative product.
Their portfolio of investments consists primarily of tech startups like Coinbase, Opendoor and Instacart but also includes non-tech ventures like The Wing and Sous Vide Cooking. They recognize that not every venture will make it to IPO status but still invest in these early-stage companies because the return on capital is not a ‘quick exit’ but rather having an impact transforming the startup into a successful business without taking too much risk.
In addition to investing in startups at their pre-seed or seed stage, Initialized Capital periodically makes follow-on investments under certain conditions such as when an existing portfolio company is looking for growth capital or when another idea warrants further investigation despite rejection from other investors. This infrastructure ensures enough runway for founders to focus on success with less distraction caused by fundraising hurdles.
At Initialized Capital, Alexis Ohanian and Garry Tan take risks by braving unknown waters while balancing sound judgment with long term thinking. They prioritize outcomes over exits – because great products can change lives – which has enabled countless startups achieve lasting success despite the uncertainties of early stage ventures.
Notable investments
Initialized Capital, founded by Alexis Ohanian and Garry Tan, has made some notable investments.
Over the years, Initialized has backed many companies, including Instacart, Cruise Automation, Opendoor, and Coinbase.
This section will cover the details of these investments and explain why they are significant.
Coinbase
Coinbase is an American digital asset broker headquartered in San Francisco, California. It operates exchanges of Bitcoin, Ethereum, and other digital assets with fiat currencies in 32 countries and bitcoin transactions and storage in 190 countries worldwide.
Alexis Ohanian and Garry Tan’s venture capital firm Initialized Capital led the first funding round for Coinbase, investing $25 million along with a few other investors including Andreessen Horowitz. The deal also marked one of the largest early-stage investments ever made in a bitcoin company at that time.
At Initialized Capital, they were known for their unique approach to venture capital investments: Being unafraid to invest early on—often even before products existed—and focusing on teams rather than ideas or business models. With Coinbase, they saw the potential of a financial service that could simplify consumer interaction with cryptocurrency exchange and create real change in how people view digital currencies and blockchain technology through broad accessibility.
Their strategy paid off—Coinbase went public on Nasdaq in April 2021 at an initial share price of $381, valuing it at over $90 billion. The investment from Initialized Capital helped propel them to this amazing success today.
Instacart
Instacart is a notable venture capital investment made by Alexis Ohanian and Garry Tan’s Initialized Capital. In 2012, Instacart launched as an on-demand grocery delivery service with an ongoing mission to make grocery shopping fast and easy. Since then, the company has grown tenfold and today Instacart is actively serving over 500 cities across the U.S. with its online grocery delivery services.
With an initial investment of $44 million in Instacart in 2016, Alexis Ohanian and Garry Tan have successfully achieved significant returns on their early funding. In addition, the pair have consistently demonstrated their ability to identify investee opportunities that align well with their mission at Initialized Capital — enabling entrepreneurs to solve real-world problems through technology– while delivering impressive returns to investors. Instacart’s current valuation is about $4 billion since taking additional investments from major firms such as DST Global, Kleiner Perkins, First Round Capital and Andressen Horowitz over the past few years.
Cruise Automation
Cruise Automation, an autonomous vehicle technology company, is one of the most successful investments for Initialized Capital. Cruise Automation was founded in 2013 by Kyle Vogt and Dan Kan to transform how people get around cities. Alexis Ohanian and Garry Tan, who together form the “odd couple” of Initialized Capital, were two of the earliest investors in Cruise Automation, investing a seed round of $3.1M in 2014.
That early stake gave Initialized Capital an 11 percent ownership when General Motors acquired Cruise Automation at an estimated value of more than $1 billion. A significant financial windfall for its founders and investors like Ohanian and Tan.
Between their initial investment in 2014 and acquisition by GM in 2016 Cruise Automation quickly ramped up their business and achieved impressive milestones such as becoming the first company to receive government approval for testing self-driving cars on public roads and partnering with GM to offer testing drives with autonomous vehicles. In addition to expanding their fleet, they established relationships with multiple cities across North America including San Francisco, Scottsdale (Arizona) and Ann Arbor (Michigan).
Conclusion
Alexis Ohanian and Garry Tan, the unusual venture capital duo at Initialized Capital, are leading the way in an exciting new venture capital movement. Their unique blending of skills and perspectives has proven invaluable to the success of their venture capital firm.
By combining traditional methods with creative solutions, Ohanian and Tan have managed to succeed by taking risks others are unwilling to take. While the approach may not work for everyone, it is clear that for Alexis Ohanian and Garry Tan, their bold ideas have created a formula for success in venture capital.