Former investment banker Khaled Jalanbo was working with emerging artists when he encountered an entrepreneur who pointed out the similarities between working with artists and startup founders.
“When you get picked up by a good institution or a good leader, or represented by a good gallery, all of a sudden there’s more demand for people to support you or get behind you,” Jalanbo said.
It turned out that the entrepreneur was raising money and Jalanbo was intrigued. So he set up an SPV (special purpose vehicle) to invest in the company. After raising several SPVs, Jalanbo realized it would be more efficient to have a fund of his own.
“I didn’t have that many connections when it came to the VC industry,” Jalanbo recalls. “So I decided I would do something a little bit different.”
For his first fund, he agreed to forego carried interests. This means Jalanbo told potential investors that he’d take zero carry, and just a management fee, to be able to operate the fund and “prove that this is something we can do.”
The strategy worked and Jalanbo ended up raising $5 million for its first fund, Valia Ventures, in 2018. At the same time, he set up a co-investment fund to be able to do follow-on investments.
“We’d write $100,000 and $200,000 checks into companies, send a note to LPs, and often they’d say ‘if you can get more allocation, we’ll double down,’” recalls Jalanbo, the firm’s managing partner. “So we activated this co-investment fund and it was actually a great way to build a firm.”
That first fund proved so successful -- it ranked in the top 5% of its vintage, according to data from Cambridge Associates -- that Jalanbo managed to attract one of the largest investment firms in the world as an LP for his second fund -- Tiger Global.
He was introduced to Tiger through one of Valia’s portfolio companies, Selfbook, after both Valia and Tiger backed the hotel payment software company. That startup closed on a $25 million funding round last October.
And today, Valia is announcing that it has closed on $50 million in capital for that second fund, Valia Ventures II. With over $100 million in assets under management (AUM) -- including its co-investment program, Valia has emerged as a formidable player in the pre-seed and seed-stage investing space.
Besides Tiger, LPs include a strategic group, including “experienced startup founders, leading technology executives, international family offices and reputable institutional investors,” according to Valia.
Valia Ventures II initially will be investing up to $1 million at the pre-seed and seed stages, while reserving 50% of its capital for follow-on rounds. It also will continue to operate an active co-investment program to support existing portfolio companies, as they have more capital needs, Jalanbo said. That program will invest $2 million to $10 million in growth-stage rounds of its existing portfolio companies and in “select” new opportunities.
He describes Valia as a generalist firm.
“We think the best companies of tomorrow will defy categorization,” Jalanbo told TechCrunch. “We’re looking for ambitious founders who are tackling global dilemmas like climate change. We’ve been actively investing in founders who are building in spaces such as healthcare and fintech, particularly when it comes to help increase access to financial services.”
As such, he said the firm is able to “look horizontally across sectors.”
“We don’t have a pre-prescribed view of what every company should look like and we’re eager to meet founders who are breaking the mold,” said Jalanbo, who was born in London to Syrian immigrant parents.
As an example of that, he points to Valia’s investment in Humane, a software and hardware company founded by Apple alums Bethany Bongiorno and Imran Chaudhri. Valia was the first firm to write a check into that company, Jalanbo said. The startup last September closed on a $100 million round of funding.
Valia has no diversity quota but Jalanbo said it tends to gravitate toward founders with “interesting and equally diverse backgrounds” as the team. Notably, its top four best-performing investments to date are either women-founded and led, black-founded and led or immigrant-founded and led. The majority of its investments have been in women or BIPOC/AAPI-founded companies. Besides Humane and Selfbook, Valia has also invested in Legacy, System and Relativity Space, among others.
Overall, the four investments Valia Ventures II has made to date have so far raised over $150 million in follow-on funding from the likes of Bond Capital, Forerunner Ventures, Sam Altman, SoftBank Group and Tiger Global. The firm invests out of San Francisco, London and New York.
Interestingly, Tiger Global earlier this year said it was allocating $1 billion for early-stage tech funds. It has also backed firms such as Better Tomorrow Ventures, which raised a $225 million fund, Moxie Ventures, which landed $85 million for Fund II, and Chapter One Ventures, which recently launched an accelerator program off a $40 million fund raise.