Afore Capital, a firm that claims to be the largest dedicated pre-seed investor, was founded on the idea that the first check into a new startup should be larger than what most accelerators and early-stage investors were offering. When Afore raised its third $150 million fund in 2022, the firm wrote checks ranging from $1 million to $2 million, which general partners Anamitra Banerji and Gaurav Jain argued helped companies grow faster.
The firm’s strategy worked. Today, its 200-company portfolio has a collective valuation of over $13.5 billion, and over the last year, Afore claims it has returned $47 million (1x its first fund) to its limited partners. Since the firm was founded in 2017, Afore has invested in startups like Modern Health, BenchSci, Neo Financial, New Lantern, and Hightouch, which closed an $80 million round at a $1.2 billion valuation this week.
Despite Afore’s early success, Banerji and Jain say that not all young startups need as much capital as the firm has been offering. On Thursday, Afore is unveiling its fourth $185 million fund and a new strategy, which the firm is calling pre-seed 2.0. The partners describe the refined investment approach with one word: flexibility.
“We can write a small check, we can write a bigger check, but the idea is, we want to help you get the business off the ground,” Banerji said.
For the founders who already know what they want to build, the firm will still consider investments up to $2 million. However, Afore also wants to take a bet on aspiring entrepreneurs who have yet to come up with a concrete startup idea. Those people may not need as much funding because, in many cases, they have yet to leave their jobs or are still university students.
Afore has launched an eight-week Founders-in-Residence (FIR) program for the founders still in their ideation stage. The firm claims that FIR is very different from an accelerator like YC. Each cohort consists of only five to eight founders who are given an opportunity to explore startup ideas. “The goal is to invent. The goal is to build. The goal is not to fundraise,” Jain said.
Unlike YC, which offers standard terms to each company, Afore tries to customize each investment for its FIR founders, depending on the startup’s needs.
“We’re the polar opposite of an accelerator. Or we’re not trying to accelerate anything. We are trying to invent a product alongside our founders,” Banerji said, adding that the firm wants to give startups a chance to pivot or iterate without time pressure.
From its fourth fund, Afore will invest in approximately 35 to 40 pre-seed companies and 50 to 75 founders that go through its FIR program.