Yahoo Finance Exclusive: GV’s youngest-ever partner launches her own firm that aims to avoid one of venture capital’s most common pitfalls
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- Take the heat. During Terri Burns' five years at GV, where she was the venture capital firm's youngest-ever partner at 26 and first Black female partner, she saw a common flaw in how deals get done. Venture capitalists wait for signals from other VCs that an investment is worthwhile. No one wants to take a risk without the prodding of competition from other investors—a phenomenon she calls "heat."
"A lot of investors are driven by heat, versus being driven by true innovation," she says. It leads to "poor experiences for founders, who have this 'chicken or egg' fundraising problem," she adds. "They're talking to amazing investors, they're getting some interest, but no one's really willing to take the leap to anchor a deal unless they see that other people are involved. But if everyone [holds out], that creates a really challenging dynamic." The same can happen in reverse; take a phenomenon like crypto and its meme coins—entire categories driven, almost solely, by heat, Burns argues.
Burns is now launching her own firm, Fortune is the first to report. And she wants to do things differently. Type Capital will aim to be the first in and write checks without signals from other investors that it's a good deal. "I want to move quickly and move efficiently and not over-index on heat," she says.
She is in the early stages of building the pre-seed and seed investing firm and hasn't deployed capital yet. Burns, now 30, plans to hire a team and wants to "find founders before other VCs find founders"—and then help those founders find follow-on investors. She's interested in digital consumer companies, tools for developers, and AI, especially from Gen Z founders.
At GV, she was hired for her different perspective and insight into young founders. She led GV to invest in Partiful, the event-planning platform popular with Gen Z. While that deal closed, Burns says it was slower than she would have liked and helped form her "heat" thesis. After GV's investment, Andreessen Horowitz followed; Partiful has raised more than $20 million.
Taking the risk to invest first comes with early ownership and the opportunity to build alongside founders. "Not being super caught up in this ecosystem of heat that is really popular right now is the path to winning," Burns says, "and also the path to more collaboration and respect from founders."
Emma Hinchliffe
emma.hinchliffe@fortune.com
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