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From writing $1k checks to running a $1m rolling fund

We’re thrilled to announce this week’s exclusive with Ben Tossell, Founder of Makerpad and GP of Makerpad Fund!

Previously serving as Community Lead at Product Hunt helping makers launch their companies, Ben’s early exposure to launching products accidentally led him to no-code by way of building websites and software. Since going ‘all in’ on this industry, he’s built the #1 no-code education community in Makerpad and in parallel, has invested in no-code companies like Supabase and Circle through Makerpad Fund. With deep domain expertise within the red hot no-code space, so we sat down to discuss all thing cap tabled related, including:

Ben Tossell

TCT: You’re largely considered “the” no-code person, running Makerpad (CEO), as well as Makerpad Fund (GP). How did you get into the no-code space, and where do you see the biggest opportunity for no-code investors in 2021?

I got into no-code by accident really and it wasn't really called that then. I was working at Product Hunt and was seeing thousands of people building and launching projects large and small. I just wanted to do the same but didn't have engineering knowledge to do so. I saw companies like Zapier, Carrd and Typeform which let me put them all together to make things that looked/worked like a 'real' product. So, I started building simple sites over and over and they got more complex each time. I wanted to be able to realise my ideas in a weekend rather than spending months and months learning to code. People started following me and showing a lot of interest in what I'd built but mostly of HOW I'd built those things. 

I think the biggest opportunity for no-code investors is in the bridging of the gap/the grey area of no-code to code. But also there's a huge opportunity in B2B applications.

You launched Makerpad Fund in October of 2020, investing in early stage companies building in the no-code/low-code space through a $1m+ a year rolling fund. How did you transition from personal investing to raising your own fund? 

I'd submitted a $1k investment here and there on AngelList and/or Republic but was never really an “angel” investor. I looked at launching a fund in March 2020 which is when the pandemic really kicked off globally so it was bad timing. We focused on Makerpad rather than get semi-distracted with raising a traditional fund. Later that summer, Rolling Funds were being launched properly so I got in touch with AngelList to talk about setting one up. I had a bunch of LPs already interested from our first time thinking about it and we could obviously talk about it publicly to get more LP commits. 

In summary, I’d say that it was a combination of people that believed in the no-code space and wanted to invest as well as luck and timing (like most things in life!) after seeing the successful Rolling Funds launched in 2020.

You have an impressive list of investors at Makerpad as well as LP’s in Makerpad Fund, including folks like Earnest Capital, Andrew Wilkinson (Tiny), Sahil Lavingia (Founder of Gumroad), Balaji Srinivasan (ex CTO Coinbase & a16z), and many others. How did you go about building this network? 

Surprisingly, I've never intentionally built my network. But what I will say is, I’ve just been obsessed with something specific (building with no-code) and had timing on my side by being one of the earliest voices in the market. Beating the drum of this space brought the network to me which made it very easy to connect with these awesome folks. My time at Product Hunt definitely helped me get a leg up on Twitter followers and emailing tech folks but the majority of my followers etc came from after my time there. Being a subject matter expert in a niche space and creating value helps drive organic interest from others.

You note that after investing, you help founders with advice on how to build, engage and grow a community, help with potential customer introductions, fundraise, and anything else along the way of building a company. In your experience, what do founders need the most help with at the early stages of building a company? 

We're likely one of the smaller checks in any round so we don't pretend that we're going to be most involved. We'll get involved as much as our portfolio company wants us to. My experience has been in building communities and it's a huge advantage to a company to have an engaged community - I think the wider startup space is really seeing a focus on community building especially since the pandemic.

How often do you evaluate fund performance? At what point do you start thinking about increasing your quarterly or annual commits for your rolling fund?

The fund's relatively new, so we can't really look at performance in such a small time frame. However, the indicator for the fund will be in years to come - obviously portfolio companies raising further. Larger rounds will be a great signal as well, as we’ve seen happen in the last few quarters.

We have 4 quarters commitment required right now and I'd like to look back at the end of the first year to see if we're going to change that at all.

What’s been the biggest surprise of running a fund thus far?

There's just so many companies to chat with. 

The strange dynamic of a rolling fund is that you have allocated capital to deploy each quarter, so you have you think about who you're committing to, when, when the quarter is coming up and whether your timeline fits with founders fundraising too

How do you stay organized with your investments (managing notes and SAFEs pipeline, etc)? What does your tech stack look like?

As you can imagine, no-code is sprinkled in throughout our tech stack!

AngelList manages all of our back-office, which is key because we couldn't do that with just me running the fund alongside Makerpad. We also use a simple combo of Airtable, Notion, Zapier and email to actually run day to day. 

Can you tell us about a competitive round that you were able to get into, and how you won over the founder(s)?

Supabase was a large competitive round and I got chatting to the founders early - they knew my work at Makerpad. I introduced them to Coatue who ended up leading the round. 

Circle was also a large competitive round. I'd been an early Circle customer and they are a Makerpad partner. I'd been chatting with Sid over the last year, sharing feedback, ideas etc and we were able to get an allocation.

The takeaway here is that building relationships really do matter and the more genuine connections you can make, the better spot you’ll be in for future opportunities.

You’re an operator and investor. What’s your secret for staying balanced and how do you divide up your time and effort each week?

It varies each week but honestly, the crossover of what I do at Makerpad and the fund is huge. Meeting founders working on products in the space is something that's needed for both Makerpad and the fund. Since I’ve chosen to go all-in on no-code, there’s no major opportunity cost of switching from being a “CEO” vs. “Investor”, so to speak, since I’m actively building a company and have an idea of what needs to be done to scale and grow.

What advice would you give to first time angel investors? 

I'm not really qualified to give advice on this at the moment - I won't know if I'm an ok or great one until 10+ years most likely (on average, most exits are 7-10+ years out, or something close to this)

However, what I would say is that the biggest hurdle is, you've got to actually see the deals. Deal flow takes time and comes through various outlets including your networks, building a reputation, etc.

What’s your secret for getting on the cap table?

By being laser-focused on one thing: no-code. 

Being a loud voice in the space and building a brand around that means that we're top of mind when other investors see deals in this space. We need to make sure that they want us to be involved.

Based on your experience so far, what cautions or advice would you give to other first time fund managers?"

I think it's important to figure out the frameworks you want to follow early on to guide your investments. This framework can evolve over time but staying aligned with the thesis of the fund, how you want to work with companies, your responsibility to LPs and the types of companies you want to back.

What are you passionate about outside of work?

Tennis and cooking! 

They're two things that when I'm doing them I'm not actually thinking of anything else. That kind of activity is needed when almost everything online is related to your work in one way or another.

What’s the state of no-code infrastructure  in 2030?

I hope 'no-code' isn't a thing... 

I hope software development is just seen as the development of software. The “how” could be drag and drop, low-code or line by line code but I hope it's all part of the same conversation.

There are no sides here, no-code is the first rung on the ladder - programming is the top. We're all on the same team and trying to create software. There's no future world in which people are going to want to have to write more lines of code.

Follow Ben (@bentossell) for more insights into no-code, startups, and investing!

Deal News 2/22-2/26

Seed

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Series B

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Series D

Series E

Sources: Crunchbase, Twitter, LinkedIn

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