Tandem Capital announced that it’s raising its third fund today that will support a portfolio of “habit-forming businesses,” or those that could become an integral part of daily life. The firm filed with the SEC revealing its intent to raise $100 million.
Tandem Capital is an accelerator program that puts “muscle capital” into mobile startups. The firm invests $200,000 in participating companies and provides mentoring, advice, and work space for six months. It emphasizes its hands-on approach and works closely with startups to function like an extended team.
Six months of partnership and $200,000 is more than most other accelerator programs, like Y Combinator, 500 Startups, and Tech Stars, offer. Tandem invests more money and time in a smaller number of companies, and this approach has proven successful — Tandem has a remarkable 90 percent success rate when it comes to launching startups.
“We’ve kept our process very selective and the number of teams very low,” said cofounder Doug Renert to VentureBeat. “We invest more money over a fewer number of teams. The difference is like being part of a team rather than having a mentor or advisor — it’s like going to a small liberal arts college versus a big university.”
Renert said Tandem takes the opposite strategy to “spray-and-pray investing,” where investors and firms invest smaller amounts in a wider array of companies. By working closely with entrepreneur and focusing on their growth, Tandem aims to have a smaller amount of bigger wins. Developing mobile technology involves a unique set of challenges. Tandem works with around six startups at a time to refine their strategy, hire a team, get a “minimum viable product” to market quickly, consult on design and technical architecture, collect, analyze, and use data to make product and business decisions, marketing and customer acquisition, and monetization.
Tandem has selected three startups to participate in Tandem Habit Fund III. Shoptimize is an Indian startup that helps Indian merchants set up mobile-first e-commerce platforms. Shoptimize puts their product catalogs online, processes payments, and assist with SEO, marketing, and social media. It is “built in India for India” and factors in regional circumstances like low network speeds. AcceptPay is a “cash-on delivery” platform that supports e-commerce in countries where most transactions are done with cash. The third company PacketZoom connects mobile apps to the cloud to improve app performance.
In a statement issued this morning, Tandem said that its startups Bash Gaming and PlayHaven are cumulatively generating well over $100 million in annual revenue. Another portfolio company Tile has raised $2.68 million through a crowd funding campaign on its site, from nearly 50,000 backers.
Tandem last closed a $32 million fund in June 2012. It is based in Burlingame, Calif.