4 years ago i announced a project of mine at a conference – Running Remote. I mentioned that i wanted to start a fund. Here is what happened, how i approached it, and my learnings.

1. 🏝
I started a VC Fund at
Running Remote 🙀
What happened.
Running Remote 2023 – @andreasklinger
The learnings.
The outcomes.

2. Andreas Klinger
$ whoami
👋😬
@andreasklinger
Hi.
• Previously
• CTO @ On Deck
• Head of Remote @ AngelList
• VPE @ CoinList
• CTO & Founding team @ Product Hunt
• Founder of several startups & companies
• Currently
• angel investing via a small microfund
• www.remote
fi
rstcapital.com 🏝 (<- topic of this talk)
All slides on twitter.com/andreasklinger

3. This talk is not a general endorsement of venture capital
• VCs spend plenty of money on stupid things
• And too many VCs are too full of themselves
• Most companies should not raise risk capital
• Fwiw I always recommend to not raise by default
• The goal of entrepreneurship isn't to raise money,
but provide for you, your family and your team's family
• But… VC frequently enables innovation and progress
• And innovation is what drives humanity forward
• So it's worth understanding how it works.
Disclaimer #1:
Not an endorsement of VC
@andreasklinger
🧐
Look at all the plebes here…

4. I don't claim to be an expert for startups or VC
- Learned to deconstruct a fairly complex industry
My full-time job is leading engineering teams
- I have been investing "on the side"
Disclaimer #2:
Not an expert
@andreasklinger
😶🌫
hot smoke everywhere

5. Let's start at the
beginning…

6. • 2019 I spoke at Running Remote about
engineering management
• In the last 2 minutes I asked if anyone would
be interested in joining a project of mine…
• an investment syndicate to fund remote
work tools
• so many people reached out that i decided
to do a small fund instead
A long time ago
on an island far, far away…
@andreasklinger
How to Manage Remote Engineering Teams for Scale
https://www.youtube.com/watch?v=EKSGhOBnRPw

7. • 100+ LPs
• founders and operators of
remote teams
• early investors in remote
teams
• First fund $2.5M
Remote First
Capital
🏝
100+ calls later 😅
and many more…

8. • Teams that are fully remote?
• That's like investing in teams that are using
standing desks, not a quali
fi
er by itself
• Tools for remote work?
• Yes, but there are only so many zoom's out there…
• Answer: in an overall trend
Now… what to invest in? 💸
@andreasklinger
🏝

9. #1 In every possible future we will work
more digital, more online, or more global
My thesis for RFC I (2019) 🏝
@andreasklinger
#2 All large companies are distributed teams in denial
• Global digital online work will be the norm
• This requires rethinking tools for every job
and allows new global competition unlocking millions of new jobs
• They have multi-city o
ffi
ces, large campuses, etc etc…
• If you work at (eg) Google you are more likely to meet your team in calls than in person
• Tools that work for fully-online teams are needed by larger companies too
• Distributed teams are a great early testing-ground for online collaboration software
#3 Talent exists worldwide, customers are online
• International teams compete for global customers
• This creates new kinds of opportunities

10. • Keep in mind…
• 2019 was a di
ff
erent time
• Remote work was still considered a niche topic
within "the future of work"
• Distributed teams were considered odd and
barely investable, especially if the founders were
not based in the Bay Area
• Investing internationally via zoom only was
considered inconceivable by many investors
• Global Talent considered inferior to SF/Bay Area
talent
A di
ff
erent time…
@andreasklinger
:)

11. I expected i can peacefully deploy for 2-3 into a niche,
not taken serious by major VC
fi
rms…
Started investing…

12. I expected i can peacefully deploy for 2-3 into a niche,
not taken serious by major VC
fi
rms…
Started investing…
online-
fi
rst conferences
global payroll
global equipment
e
ffi
cient online meetings
documents with work
fl
ows
intranet software
incentive programs for rural america
and few more…

13. I expected i can peacefully deploy for 2-3 into a niche,
not taken serious by major VC
fi
rms…
Started investing…
online-
fi
rst conferences
global payroll
global equipment
e
ffi
cient online meetings
documents with work
fl
ows
intranet software
incentive programs for rural america
But then… 🥁
and few more…

14. COVID LOCKDOWNS 🔒🦠
@andreasklinger
Plot-twist… 🙀

15. - crazy levels of revenue growth
@andreasklinger
Tools enabling remote work were in demand
Two things happening at once 👀
Low-interest rates increased valuations a lot
- crazy levels of valuations
=> Large funds investing a lot in remote work tools

16. Lots of investments.
Next months were crazy…

17. @andreasklinger
Investment Focus
Remote Work: Core Infrastructure
remote.com
Global Payroll (
fi
rst-round)
usestable.com
Mailboxes for international
teams (
fi
rst-check)
opalcamera.com
Modern camera equipment

18. kubrio.com
Online-
fi
rst kids education
(
fi
rst-round)
tomorrow.university
Online university for
sustainability (
fi
rst-round)
@andreasklinger
Second degree e
ff
ect: Education
Investment Focus
dawere.us
A
ff
ordable online highschool
education for LATAM

19. heightslabs.com
Fighting money-laundry with
graph-theory
fonoa.com
Real-time global taxes for
businesses
@andreasklinger
Second degree e
ff
ect: Finance
Investment Focus
acquire.com
Global startup acquisition
marketplace (
fi
rst-check)

20. pesto.tech
International Jobs for Indian
Engineers. They 2-4x salaries.
teamrora.com
International career advice
and salary negotiations.
@andreasklinger
Second degree e
ff
ect: Global Careers
Investment Focus
gitstart.com
Work-experience for global
junior developers.

21. rarebase.com
Global research to reuse
drugs for rare diseases. (
fi
rst-
round) @andreasklinger
Second degree e
ff
ect: Much more…
Investment Focus
pawtrip.com
Book
fl
ights for animals. 🐾
(
fi
rst-check)
wise.live
Software for online tutors in
India (
fi
rst-round)

22. Mistakes made 💀 1/76
@andreasklinger
I should have "index-invested"
– To avoid "con
fl
ict of interest" I didn't invest in products going after the same markets.
– There can be multiple winners in large-enough market
– Eg rejected Deel and similar companies
Too product focused
– I am very product-minded
– Frequently projected my own product ideas into other people's companies
Too narrow thesis initially
– Strict thesis-focus limited success
– eg i rejected companies like Supabase (engineering not part of thesis yet) & Vercel (to late stage)

23. @andreasklinger
Don't half-commit
– Stick to one check-size
– Either believe in it… or don't.
– Nothing inbetween, no "half-checks"
Have a decision framework earlier
– Making my mental model for decisions explicit, helped me explaining why i invest or don't
– Link: https://klinger.io/posts/how-i-make-investment-decisions
Let myself talk out of deals
– Over-value feedback from other investors or industry experts
– In reality nobody knows and you should be able to only blame yourself
Mistakes made 💀 2/76

24. - $2.5M – Fully Deployed – 3.5 years old
- TVPI: 7.49x (6.26x net) IRR: 94.6% (83.4% net)
- In total about 50 investments
- Launched before the "VC hype" of 2021
- so lots of this is "paper value"
- tbd how paper-value of "covid-hits" translates to real success
- on the other hand: normally you don't even evaluate VC funds before several years
Fund Performance 📈
@andreasklinger
RFC I:

25. Is this success?
@andreasklinger
My POV
- Who knows what paper-value will translate
- Some might just be overpriced by VC
- Some might just be temporary Covid-hits
- Hard to judge funds early
- Imho you could cut the top 20% of the fund
and still have a crazy returns
Temp(?) COVID19
Market changes
Temp(?) VC
Market changes

26. RFC II 🏝
@andreasklinger
$8.5M Fund
– Started mid 2021
– Raised most of it in two weeks, with one email and no calls 👀
– Almost all LPs were RFC I LPs
– Re-opened to let about 100 new small-check (sub 10k) community LPs in
Learn from mistakes / Continue what worked
– Larger check-size ($100k) and stick with it
– Wider thesis (include engineering tools, open-source, new trends, etc)
– Focus on super early stage (
fi
rst-check and
fi
rst-round were possible)
What then? Of course! A 2nd fund

27. A changed market
VCs sobered up
- harder to close rounds
- lower valuations
Remote work as a topic is oversaturated
- Remote work is no longer a niche
- Tooling space is a bit oversaturated
- We no longer call it remote work, we call it work
- Remote became the default,
co-located became the thing people mention
2nd Plot-twist:

28. Leveling up Remote Work
@andreasklinger
RFC II 🏝
New tools to level up organizations
culturescience.io
Alerts you if mid-managers
burn out your team
shapesxr.com
VR collaboration tools
buildbetter.ai
"What do my customers need
but my product team isn't
doing" AI

29. Rethinking Global Work
@andreasklinger
RFC II 🏝
Remote work is more than just work in front of zoom
meragaonapp.com
Nextdoor for indian rural
communities. (
fi
rst-round)
snaptrude.com
Autocad in a browser,
collaboration-
fi
rst
aidaly.com
Helping at-home caretakers to
get bene
fi
ts (
fi
rst-round)

30. Rethinking Blue Collar online-
fi
rst
@andreasklinger
RFC II 🏝
Everyone is now growing up online and working via the internet
skillbee.com
Improved work conditions for
asian immigrant workers (f-r)
werk.eu
Europe-wide jobs for
construction workers (f-r)
hammr.com
Payroll and HR software for
construction workers (f-r)

31. Overall wider thesis, frequently with a focus on open-source
@andreasklinger
RFC II 🏝
webstudio.is
Open-source web
fl
ow (
fi
rst-
check)
ambient.run
Opensource 3d game-engine that
runs in a browser (
fi
rst-round)
cal.com
Open-source scheduling
software (
fi
rst-round)

32. Double-down on earlier investments
@andreasklinger
RFC II 🏝
Reasonable success with
fi
rst-check and
fi
rst-round investments
Made this now the focus of the second fund.
lumalabs.ai
Photorealistic 3D VFX studio
in a mobile app (
fi
rst-check)
o
ff
siter.com
Full-service O
ff
sites (
fi
rst-
check)

33. - $8.5M in total – $4M still to deploy - 1.5 years old
- TVPI: 1.16x (1.13x net) IRR: 14.4% (11.6% net)
- 40 of 70 investments so far
– Launched during/after the "VC hype" of 2021
- Strong focus on super-early stage (
fi
rst-checks etc)
- Starts to see a lot of markups now
- Personally i believe this one will outperform RFC I but time will tell
Fund Performance 📈
@andreasklinger
RFC II:

34. - "If more people work online then…"
- This is what rethinks whole industries
My Learnings from the last years of investing
@andreasklinger
Remote Work is now a default
Global Work is here to stay
Always look for secondary e
ff
ects
- Every industry competes internationally
- This enables non-exploitative geo-arbitrage
- At short-term risk to create an "international upper class"
Could become a target for resentment, populism and nationalism during the recession
- Remote work is no longer "fringe", it's a normal job of every HR and ops team worldwide
- Dare to look for new not-overrun trends; but which ones… ?

35. - Countries can't rely on Ukraine, China, USA, etc on resources and production
- Outcomes: Micro-powerplants; Micro-factories; Automated resource extraction, etc
Next Big [not yet overrun] Trends (all imho)
@andreasklinger
De-globalization of resource dependence
Opensourcing Enterprise
- Data-compliance laws, self-hosting and customization will favor solutions built open-source
- Outcomes: Global enterprise (eg HR) software winners be open-source; Self-hosting will become common again
Death to Desktop Apps
- The web has won; Desktop and operating-system dependent apps are dead
- The next frontier is local-
fi
rst webgpu-enabled web-apps with hyper-performant backends
Roll Ups
- During the recessions a lot of Micro-PE
fi
rms will acquire companies.
- Smb and blue collar businesses could be especially interesting here (economies of scale)

36. Ok puh… Still energy? 💪⚡
@andreasklinger
Let's switch the side of the table 🔁

37. Deconstructed
Fundraising Advice
6 lessons learned for founders
to raise in this new market

38. #1 No VC wants to be contrarian
Most see investments like a train-station
• Know which trains might be leaving and where to
• Jump on the train as late as possible without
needing to run to the next station
• => Your round is usually very cold and then suddenly
very hot
VCs talk about being contrarian in podcasts or twitter
• They want to be earlier, not contrarian
• => The best way to get one investor interested, is
having two investors interested

39. #2 Fundraising = momentum + narrative
Narrative: Whats a bigger trend you connect to?
• The culturual, technlogical, etc change?
• Easier to bet on trends than companies
Momentum: Important to control
• "Not fundraising but…" until you are ready
to open and close a round
• You can always accept SAFEs
🏁 🏃💨

40. #3 Don't pitch "startup investors"
"Startup investors" are
fl
ooded with pitches
• Usually they don't give actionable advice, only intros
• Instead look for experts with domain knowledge
• Ideally founders
• eg split your business in 4 boxes and look for
experts in each
• Get advice & investment from them
• Then ask for intros from them to "startup investors"
Additionally:
• Have a list of people you want intros to
• Come out of every meeting with multiple intros
food delivery drones
international growth mobile app
Splitting your business in sub-areas
allows you to
fi
nd experts that are non-
competitive

41. #4 "Come back when you have more traction"
When they say they want to see more execution
it just means they don't believe
the innovation and credentials of the deal.
Innovation:
- Similar to things that exist but di
ff
erent or fundamentally new?
Execution:
- 1000B in revenue or not even started?
Credentials:
- Who are the people involved? Which domain expert already invested
To raise: Be strong in two of them.
Frequently it's easier to slightly pivot the innovation or get credible
experts to invest than to impress with unde
fi
ned execution targets.

42. #5 unbounded vs bounded expectations
• For an investor:
• Missing "the one outliar deal" is more expensive than
investing in a few wrong deals (power-law distribution)
• Early-stage it's hard to evaluate if something is better
• Easier to evaluate if it's new
• Easier to bet on something that could go "anywhere"
• Than something that might just perform like existing solutions
• Early stage: you raise on expectations not realities
• Later stage: more and more benchmarks are available

43. #6 Your goal is not to fundraise, nor to create "venture returns"
• If you can… dont raise money
• Focus on building a successful company
• Become rich, provide for your family
• Don't worry about making investors rich
• *You* don't need a 100x "venture return";
only investors do
• VCs don't look for a successful company
• They look for a company as successful as 100
successful companies
• The few outliars have to
fi
nance the long-tail in the
portfolio
RFC portfolio multiple-
distribution 3.5 years in.
Few winners
fi
nance the
whole fund
<-

44. Thanks for your time 😬👍
Sorry for the speedy pacing. Hope this was useful.
Available on twitter for questions via DMs
@andreasklinger