The Increasingly Specialized State of Primary

Many years back, I had breakfast with the founder of a name-brand multistage firm as he was going through a major reckoning. He saw that his partnership had become bloated and ineffective. In the quarter before our meeting he had blown it up, firing nearly half of them. The new religion he found as he sought to elevate his firm’s brand and give it a reason to win when competing for deals was specialization. His partners who had focused on specific sectors - building networks that drove unique deal flow and a powerful ability to read the market and support portfolio companies - thrived and went on to great success there. The ones who had tried to boil the ocean and be generalists of the old school VC variety were shown the door.

I might have felt a lump in my throat listening to his very sound read of what wins in VC. I myself was a major generalist at that time, investing across SaaS, health, fintech—an autonomous submarine startup here, a live events business there.

This was because Ben Sun and I founded Primary with the hypothesis that building the strongest network in NYC would introduce us to all its best founders. That proved to be a great approach for us in the early years, with us dividing the world very simply into consumer businesses, which Ben worked on, and b2b businesses, where I spent my time. The rapidfire context switching required to serve all the founders within either of those generously defined buckets was intellectually invigorating, but as people who want to show up in a next-level way for founders, as we matured, we realized we too needed to apply much more specialization to our approach.

Now that we’re eight years and four funds into Primary’s life, we’re in a position to show up in a far more specialized way, a transition I’m massively proud of our team for navigating. With the recent addition of Emily Man and years’ worth of team evolutions, our partnership is now truly specialized.

In an increasingly professionalized early stage market, specialization wins

Our competitive advantage to date has largely been our Impact team, which outnumbers investors 2:1 and features truly senior operators spending thousands of hours with early stage founders. A few years ago, when the strength of our local networks and the power of our Impact team had succeeded in establishing us as NYC's leading seed firm, we turned to thinking about how to get even stronger. Where did we feel we were competitively weakest? And the answer was specialization – with highly sector-focused investors and an Impact team that provided outrageously effective operational support, we loved our odds in any competitive situation.

When we reflect on the firms and partners who’ve joined our portfolio company cap tables in later rounds, we often see specialized investors add the most value. This has certainly been the case with Alloy, as just one unicorn example. At each stage after our seed round we’ve strengthened the cap table with deep fintech expertise—sometimes an individual sector lead at a great generalist firm (Bessemer and LIghtspeed), and other times with a deeply focused fintech firm (Canapi). Each of these have been fantastic partners to the business because they spend all day every day thinking about and building networks and expertise in fintech.

That was also why I took notice when Alloy cofounders Tommy Nicholas and Laura Spiekerman told us we should meet Emily Man, who a year later we would invite into our partnership. Without even being an investor in Alloy, Emily built credibility as a trusted source to the co-founders for insights on the fintech market. “We work with a number of top fintech investors,” Laura says, “and over time came to especially notice how voraciously Emily leans in to proactively help with an especially keen perspective on where the market is headed and how founders can meet it.” High praise, given the strength of Laura’s cap table.

Who the specialized team now is

We’re thrilled that Emily left a great seat in the Bay Area to return to New York and join us as an early stage investor. I’m equally proud that many of our experts are home grown. Cassie Young alchemized her SaaS GTM background into a real investing edge in B2B SaaS, working alongside myself and supported by Zach Fredericks. Sam Toole spent years in the trenches of healthtech’s complicated commercial functions, then honed his healthcare domain expertise as an investor, now joined by Marisa Bass. Brian Schechter—first a Primary portfolio founder—started his checkwriting here as a generalist, but developed an affinity for infrastructure and dev tools, and has built a cult following around the market insights newsletter he writes with Tobias Citron. Jason Shuman, whom I met as a coinvestor of publicly-traded proptech company Latch, is focused on “Built World”—proptech, construction, and real estate as well as consumer and SMB—with support from Gabi Monico. Ben continues to reign over consumer; Lisa Lewin, while serving as CEO-in-Residence, spends her time thinking about edtech and the future of work, drawing on her experience at the intersection of those themes while CEO at General Assembly.

Fund IV means throwing our full weight behind founders

Last fall we announced Primary Fund IV, a $275 million seed fund, plus a $150 million Select fund, bringing our total assets under management to $1 billion. We feel deeply fortunate to have a group of LPs who enabled us to quickly secure this new pool of capital despite an increasingly challenging fundraising environment.

While many firms are needing to slow down, we are privileged to be accelerating. Primary's deal activity in the last 90 days  has been at a pace not seen in over 18 months, with four signed term sheets, and we look forward to hitting the gas even more in the months to come. With that, we’re also exploring a wider range of early stage checks, continuing to accelerate our incubation practice while also moving into larger checks that might look more like a Series A than those we’ve done in the past.

And as of this week we’re doing it from a new home

We’ll be doing this from our new office on Park Avenue and 27th Street, which with 5x the square footage allows us to house our expanding team while also bringing our community together more frequently, all part of expanding our commitment to the city.

Our team can’t wait to celebrate at the NYC Summit next week with 2,000 of the world’s top investors and the city’s top founders, complete with billboards at the NYSE and VIP parties at some of the city’s most sought out addresses—we will see you there!