Riley Newman, a former head of data science at Airbnb, set out in mid-2017 to raise a venture capital fund that would invest in a multitude of tech trends.
But he quickly realized that potential investors were not interested in that kind of fund. Instead, all they wanted to hear about were his former Airbnb colleagues and whether they might start their own companies.
“It was, ‘Yeah, all that stuff is fine, but Airbnb, right?’” Newman, 36, said. “Airbnb was where we had a competitive edge on the market.”
So Newman and his partners at San Francisco’s Wave Capital adjusted their pitch: They said they were creating a fund to invest specifically in Airbnb employees who were planning to leave the company to become entrepreneurs. It worked. He and his partners quickly secured $55 million and now are preparing to make a flood of investments after the $31 billion home rental startup goes public sometime in the next year and employees cash out their shares.
“We know they are planning to start companies,” Newman said of Airbnb employees, adding that in one week alone he had heard from four who left to pursue their entrepreneurial dreams.
Everyone else in Bay Area tech seems to know it, too. As Lyft, Pinterest, Postmates, Slack and Uber — among some of this decade’s most prominent startups — get ready for their stock market listings, investors are preparing to write checks to a new generation of companies created by their workers.
It’s part of Silicon Valley’s often-incestuous circle of life. The startup world projects a meritocratic image, but in reality, it is a small, tight-knit club where success typically hinges on whom you know.
In this model, employees of tech startups frequently leave the companies once they have been enriched by their…