Afore Capital, recognized as one of the largest dedicated pre-seed investors, was established with the notion that the initial investment in a new startup should surpass the typical amounts offered by most accelerators and early-stage investors. In 2022, the firm secured its third $150 million fund, making investments between $1 million and $2 million. General partners Anamitra Banerji and Gaurav Jain advocated that these larger contributions helped companies accelerate their growth.
The firm’s strategy has proven effective, with its 200-company portfolio now collectively valued at over $13.5 billion. Over the past year, Afore has reportedly returned $47 million (1x its first fund) to its limited partners. Since its inception in 2017, Afore has invested in startups such as Modern Health, BenchSci, Neo Financial, New Lantern, and Hightouch, the latter of which recently concluded an $80 million funding round at a $1.2 billion valuation.
Despite Afore’s initial success, partners Banerji and Jain acknowledged that not all startups require the substantial capital their firm has traditionally provided. On Thursday, Afore announced its fourth $185 million fund alongside a new strategy termed pre-seed 2.0. This revised approach emphasizes flexibility in investment.
“We can write a small check, we can write a bigger check, but the idea is, we want to help you get the business off the ground,” Banerji explained.
For established founders who are certain of their business direction, Afore will continue considering investments up to $2 million. However, the firm also aims to support aspiring entrepreneurs who have yet to finalize their startup concepts. These individuals might not require significant funding due to circumstances such as maintaining a current job or still being in university.
Afore has initiated an eight-week Founders-in-Residence (FIR) program for those in the idea development phase. The company distinguishes FIR from accelerators like Y Combinator (YC), as each cohort comprises only five to eight founders who are provided a platform to explore potential startup ideas. “The goal is to invent. The goal is to build. The goal is not to fundraise,” stated Jain.
Instead of offering uniform terms as YC does, Afore aims to tailor each investment to the specific needs of startups in its FIR program.
“We’re the polar opposite of an accelerator. Or we’re not trying to accelerate anything. We are trying to invent a product alongside our founders,” Banerji said, noting the firm’s desire to give startups the opportunity to pivot or iterate without the constraint of time pressure.
From its fourth fund, Afore plans to invest in approximately 35 to 40 pre-seed companies and support 50 to 75 founders participating in its FIR program.
