Redesign Health - Up and Coming Fund?

Their business model is just a larger-scale or more formal version of a phenomenon that's been pretty successful the latter half of this past decade. 

At the earliest stage, the lines are very blurry between the work a 'founder' and an 'investor' does. The biggest differentiator is concentration of time. Let's use an example.

A guy has an idea. He used to work at Dropbox, and since he was an early employee, was involved in the hiring process for hundreds of employees as the team scaled. He decides there's a more efficient way to track your interactions with a candidate before they actually apply (and are tracked in your ATS like Greenhouse or Lever).

He talks to 150-250 other people who are either hiring managers, recruiters, or frequent interviewers to validate the idea: learn their pain points, understand their existing workflow (do they track conversations in Excel, is there a shared Trello board inside the company, did they build internal software, whatever), and gauge their receptiveness as a customer. He decides to incorporate, buys subscriptions to all the basic software (let's not lie, he builds the first guts of every damn thing on Notion), and starts chatting up former coworkers, friends, classmates, any people he thinks are smart and scrappy and will be useful as early team members. He hacks together an MVP, shows it to all those potential customers he spoke with in his discovery exercise, and tries to get his first clients. 

That's a founder. (And the company is called Gem.)

Now, what does the first investor (let's say a $500k check) do? Turns out ... all the same shit. Only instead of spending 60+ hours a week on all that, it might be 5 or 10, because there's four other companies that person wrote a check to who all have the same needs and require time.

What I'm trying to illustrate is that the work you do as a 'supportive' investor in the first inning is really analogous to the work the company team is doing. 

This is why 'seed' as a stage developed. I've said it before on this site. Josh at First Round was one of the original first-check people. Roger at IA (who just "retired" last week) too. By people I mean they weren't a firm. Firms did Series A and onward, which is why that round is titled that. It signified the first time an institutional investor got involved. 

Because it was personal money, the "don't let it flame out" instinct was way stronger, which translated into spending more time helping the recipient of the check.

Eventually Josh, Roger, and at roughly the same time, a few other guys doing the same type of thing chose to (you could say the market dragged them to) build their own firms around that specifically: the 'we help you in the trenches' investing. 

All of that is less than 20 years old. (First Round I and II were 2004 and 2006 vintages, I believe.) Nothing is set in stone, there's no single 'right' way to do it. People are still experimenting with the smartest way to structure having financial and time exposure to a portfolio of young businesses.

• Some people raise a fund and do generic VC: invest in great people with promising ideas.

• Some people raise a fund and incubate companies out of it. That can take different forms. One model is where the fund receives common stock in the company in addition to the preferred stock it receives in the funding round. Another is where the fund invests at an advantageous price relative to what 'market' terms would be. Both of these can include members of the fund taking permanent or semi-permanent roles that are full-time or part-time at the company. This is where the EIR role originated. People who sell a company for a comfortable but not life-changing sum, or tried a startup and failed, or were early team members at a successful company - these are all great people to keep around the office. You can stick them in as a founder or management of an incubated startup.

• Some people raise a fund, start companies that they as individuals own the cap table of as founders, and invest dollars from the fund they are GP of into those companies. 

• Some people raise money from funds as a company that will build other companies. 

Betaworks is the oldest I can think of (pre-crisis for sure, 2007 I believe). Expa is 2014/15. Human Ventures is of similar age. Atomic (got a ton of attention when Hims and Hers did a SPAC deal) and Juxtapose are younger. Redesign Health has smart people involved and seems to have a promising start, but everything that I'm aware of is just paper marks from other investors doing rounds in the spinouts. Fractal Software is another but is way less public. Thrive (Kushner's fund) has done the whole gamut of what I wrote above. 

If you're coming from a finance background, you're probably going to be in either a finops type role (managing financial and accounting systems) or a general bizops role (blocking and tackling on core processes or internal systems that are the glue of the company). 

If you're in banking and interested in a tech role, any of the names I listed are a great entry point.

If you're already in private equity, the comp hit is going to feel pretty rough and it may feel like you're farther from the action (product; and why would they take a two-and-two guy for product when they could go get a product person from any of a hundred venture-backed startups).

If you're in VC, the comp is probably comparable and you'd be moving to an operating role (depending on your background and abilities, maybe even product).

This was a riff, I hope it's helpful. 

My general take is that the studio or holdco model is great for the people who set it up. It's good for the first batch of hires (at the topco), but since it's a thing where you can reach critical mass (at some point, you have enough bodies to support all the teams working on projects or subsidiaries), those seats are limited. And joining one of the spinco startups is exactly like joining any other.