Andreessen Horowitz, Ron Conway and others launch Data Elite, a big-data VC fund

If I told you four of Silicon Valley’s most influential tech investors were joining forces in a new specialty fund, you’d probably want to know more, right?

So check it out: That fund, appropriately called Data Elite, comes out of stealth mode Thursday with an all-star cast of backers. There’s Andreessen Horowitz, which has made a pile of cash though investments in Instagram, Skype and (on paper, for now) Airbnb. There’s Ron Conway, who’s put early money into everything from Napster to Twitter. There’s Formation 8, brainchild of Palantir co-founder Joe Lonsdale. And there’s The Social + Capital Partnership, which since being launched two years ago by early Facebook executive Chamath Palihapitiya has invested in such buzz-laden startups as Gyft, Simplee and Yammer.

Why are all these smart people pooling their money? To back other smart people, of course. Specifically, the two co-founders of Data Elite and a team of advisors that includes the top data scientists at companies like Netflix, Zynga and LinkedIn. That team, in turn, will scout out and advise up-and-coming startups in the big-data space for an intensive, three-month incubation period.

Think of it as Y Combinator on steroids.

“We don’t feel compelled to invest in the Nth daily deals site,” said Mamoon Hamid, a general partner at Social+Capital. “They approached us with this idea of backing serious computer scientists to go after big-data problems.”

“They” are Tasso Argyros, who founded a company called Aster Data and sold it a few years back for $300 million, and Stamos Venios, a mergers and acquisitions veteran who’s worked in Europe and Israel. And while the size of the new fund isn’t being disclosed, Hamid told me Social+Capital is the biggest investor, having ponied up more than $1 million.

Venios said he and Argyros looked closely at successful startup accelerators like TechStars and Y Combinator (in which both Conway and Andreessen Horowitz are investors). But, he said, those programs are generally geared toward consumer technology and mobile apps, not enterprise software and big data.

“If the head of engineering at Google decides to start his own company next week, raising money won’t be a problem for him,” Venios said. “What might be tough is getting high-end engineers to advise him. We managed to get 12 of the top data scientists in the valley.”

The advisors, who include Facebook analytics chief Ken Rudin and Stanford computer science professor Anand Rajaraman, have signed agreements to consult a certain number of hours each week with Data Elite’s startups; in exchange, they’ll get an ownership stake in those companies.

Venios, who’ll be managing director of Data Elite, said four startup teams already have been tapped for the first class, which will include about 10 companies in all. (Their names will be disclosed at the end of December, right before the program gets underway.) In exchange for a 6 percent slice of their equity, the startups will receive a minimum investment of $150,000. Y Combinator, by contrast, currently invests $80,000 in its startups, having concluded last year that bigger dollars were too distracting.

The new “venture lab,” as Venios and Argyros are calling it in lieu of the already shopworn “accelerator,” also will provide office space in San Francisco’s South of Market Area. And after the program ends, “We’re not kicking them out of the office,” Venios said. “The three-month period’s more to test the water and help them get ready to build a product within a year or so.” (Fresh-faced founders who are barely old enough to drink need not apply; the Data Elitists require at least five years experience in the field, “or at least an exit,” Venios said.)

Although the new venture will focus on seed-stage companies, nothing in the arrangement prevents the limited partners from doing their own seed investments in other big-data startups. “We’ve made investments in the cloud and big data, but with Stamos, we’ll do it better,” said Conway, whose SV Angel fund has skewed largely toward consumer companies.

He’s putting several hundred thousand of his own dollars into Data Elite, and Argyros’ track record was a big reason why. “Aster Data was a very disruptive company in the big data space,” Conway told me, “and after they sold it I said, “Whatever you do next, I certainly want a piece of the action.”

Hamid, for his part, said backing Data Elite will provide an early look at technologies that Social+Capital portfolio companies can use. “We’re trusting Tasso and Stamos to find some of the best computer scientists,” he said.

As to whether the advisors — including Argyros, who works at the company that bought Aster Data — will really be able to devote much time to the new project given their demanding day jobs, Hamid thinks a little healthy peer pressure will help.

“We’re keeping it a tight group that has a lot of respect for each other,” he said. “We’ve tried to choose this super-select group of people who want to work together.”

 

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  • David Pettit

    How does one contact them? A website address or an email to send business plans would be much appreciated.

 
 
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