Technology

Spearhead, an investment fund launched by AngelListNaval Ravikant and AccompliceJeff Fagnan, plans to raise roughly $100 million for its third fund to provide founders $1 million each to invest in technology startups of their choosing.

The firm, created in 2017, initially provided founders $200,000 in investment capital sourced from Spearhead I, a $25 million vehicle, followed by Spearhead II, a $35 million vehicle. The group now plans roughly $100 million to give its founders 5x more capital to play with.

Each founder is allotted 15% carry in his or her fund, while Spearhead holds on to 5%. This time around, says SpearheadJeff Fagnan, standout &leads,& or those tapped to deploy capital from the fund, will also have the opportunity to receive another $10 million to invest at the end of the two-year program during a culminating demo day-like event.

Spearhead is designed to train founders, who tend to be well-connected to the tech ecosystem and knowledgeable about startups, to be effective angel investors. Previous Spearhead leads include Shippo co-founder and chief executive officer Laura Behrens Wu, Scale AI founder and CEO Alex Wang and Rippling co-founder and chief technology officer Prasanna Sankar. To date, 35 founders have completed the program.

Applications to join Spearheadthird cohort will become available this week. Those who participate will be encouraged to write checks at the pre-seed stage.

&Therestarting to be gap opening up again at the pre-seed,& Fagnan tells TechCrunch. &Founders are the right way to fill that gap. Founders backing their most talented friends … founders backing founders is the right way for this to go. We need to redefine who thinks of themselves as an angel investor.&

To be eligible to become a Spearhead lead, you must live in San Francisco, Los Angeles, Boston or New York City and run, or very recently have run, a startup. The firm plans to accept around 15 applicants.

&We are trying to build an active community within the leads and we&ve found smaller equals better; fewer people coming together and taking deeper accountability,& Fagnan said.

Spearhead leads can invest their capital in any tech startups, so long as thereno existing equity relationship. Existing Spearhead investments include ZeroDown, Altitude Networks, Scythe, Airgarage, Cloosiv, Height, O.School, PopSQL, Superplastic and Sword Health.

Entrepreneur First (EF), the Greylock-backed &talent investor& that recruits and backs individuals pre-team and pre-idea to enable them to found startups, is pulling out of Hong Kong, TechCrunch has learned.

According to sources, the London-HQ&d company builder has told provisional candidates for its 2020 Hong Kong cohort that they should instead apply to one of its other international outposts, which includes Berlin, Paris, Singapore, Bangalore, London and (most recently) Toronto.

The immediate Hong Kong operations aren&t changing, however, and the current cohort will complete the program and present at JanuaryDemo Day as planned. Hong Kong alumni will also continue to receive investment support as usual.

&We&ve decided not to recruit for further cohorts in Hong Kong after January 2020,& EF co-founder Matt Clifford tells me, confirming the news. &Thereno change to the current cohort and we&ll be running exactly the same program for them as for the previous Hong Kong cohorts. We&ll be in Hong Kong at the end of the month to run our investment process as usual and the companies we back will take part in our Demo Day in January as normal.&

Clifford also confirmed that EF had made a handful of early offers to individuals for the next Hong Kong cohort (originally planned for 2020). &We really rate them all, so we&ve offered to transfer their offer to any other EF site,& he says.

As for why EF is pulling out of Hong Kong, Clifford says that although there have been three &good cohorts& in Hong Kong, the talent pool there hasn&t proven big enough to support two cohorts per year &in the long run.& In the first two Hong Kong cohorts, EF has backed around 100 individuals and 11 companies, many of which have gone on to raise external funding.

&The quality is very high, but we need higher volume to make a site work at scale,& he explains. &We&ve always said to our investors that we&ll deploy capital wherever we see the best long-term opportunities and, while Hong Kong might well have been viable for another cycle or two, we see more sustainable opportunities elsewhere.&

What Clifford doesn&t mention, of course, is the current political unrest in Hong Kong, which continues to see pro-democracy protests and a subsequent police clampdown. This has included lethal force and the use of controversial &emergency powers& by the Hong Kong administration. Clearly any such climate will make it difficult to attract talent to the country, on which a program like EF is reliant.

Meanwhile, Clifford says thereno change to the scale of EFplans, more broadly. The talent investor still plans to back around 1,000 founders globally in 2020. &We&ve obviously got the Toronto expansion we announced recently coming up and some other sites in the pipeline, so the total number of individuals and companies we expect to invest in remains the same,& he says.

I also understand that the four full-time permanent members of the Hong Kong team have been offered roles elsewhere at EF, meaning that there are likely no net job losses.