Today we’re announcing that Designer Fund is managing over $20M to invest in startups that combine great design and tech. We’re the first seed fund focusing on startups with designer founders and helping them build great design teams. Exceptional companies like Airbnb, Pinterest, Slack, Snapchat, Instagram, Kickstarter, and YouTube were all co-founded by designers and we believe there will be more in the future. Let’s take a look back at why we started this journey and where we’re headed.
The question and the quest
Ben and I first met through Stanford University back in 2008 while building apps on the Facebook platform for millions of people. As a designer within venture capital firms including Venrock, Facebook Fund, and 500 Startups, I saw the importance of using design at the early stages of a company to better understand what people really need. I helped invest in companies like Lyft (formerly Zimride), Wildfire (acquired by Google), and Behance (acquired by Adobe), which all had a strong design ethos in their DNA. But out of the many companies I evaluated for investments, few had designers on their founding team. I began to wonder why.
Ben’s hypothesis was that designers perceived startups as too risky. That was his experience: it felt like a big leap of faith when he left his design agency (later acquired by eBay) to join Facebook as the fifth product designer at a time when the company was mostly engineers. Ben helped build the first communication design team and successfully launched new products such as Facebook Platform and Facebook Timeline. But he also experienced firsthand the challenges of creating a culture that values design and was frustrated by the shortage of designers who were ready to join startups.
“Most people don’t know that Facebook invested in its design team early on, and that helped contribute to the company’s reach you see today.”
—Soleio Cuervo, former Facebook designer
While on a hike Ben and I discussed the issue further. We asked ourselves, “Why aren’t more designers taking the path of entrepreneurship?” We interviewed more than 50 top designers to ask the same question and, surprisingly, we heard many recurring themes, including:
- There is a lack of capital from investors who understand and value design at the early stages. For example, many investors initially rejected Airbnb and didn’t foresee how the company’s differentiated user experience would ultimately expand the travel market.
- There are too few role models who have started successful companies. Most designer founders are relatively unknown, and this later led us to feature many of them in our free e-book for students.
- Outdated education isn’t preparing designers for the demands of startups. Even today, 86 percent of design students said they acquired their digital skills outside of coursework, according to a recent “DesignIn.Tech” report.
Everyone we spoke with said they’d support us with time and/or resources if we met these challenges, and therein began our mission to encourage more designers to create businesses with meaningful impact.
“I wish something like this existed when I was starting Airbnb.”
—Joe Gebbia, Designer Co-founder of Airbnb
Starting with community
Since the beginning, we’ve been committed to elevating the broader design community by advocating for diversity and increasing access to design education. We’ve actively curated a community of over 200 top designers who come together at regular workshops, dinners, and talks about topics ranging from leadership to product design and future trends. We’ve produced five Women in Design events, shared lessons learned from founders, and published numerous resources such as “A Designer’s Guide to Startups,” which are all free to access. All of our community building helped us deeply understand the challenges designers face in tech.
We saw how hard it was for designers to start companies from scratch, find the right startups to join, and be effective leaders. This led us to create Bridge, our professional development program for experienced designers from companies like Pinterest, Dropbox, and Slack. Nearly 100 designers have participated in Bridge to date, selected from more than 4,000 applicants. With an acceptance rate less than Stanford and over half female participants, Bridge has become one of the most prestigious and diverse design programs, while still being free for designers to participate.
The first design focused seed fund
While consistently providing value to our design community, we organically began to get more referrals and access to unique investment opportunities. After our experience angel investing, we wanted to further improve the experience we were offering to startups and be aligned longer term as partners. So we decided to raise our first fund from primarily successful designers and entrepreneurs in our community. Now we’re managing over $20M to invest in the next generation of startups that combine great design and tech.
Our recent investments include Stripe, Gusto (FKA ZenPayroll), Omada, Shyp, Altschool, Operator, Delighted, Mixmax and more. We invest between $100K and $1M in mission-driven startups that are fundamentally improving the user experience in industries such as financial services, digital health, education, and enterprise tools. For example, we backed Omada after its spin-off from IDEO’s health practice. They’ve since pioneered the design of digital therapeutics by productizing landmark research from the National Institute of Health and are focused on preventing millions of at-risk Americans from getting diabetes. With Omada’s innovative approach, everyone involved in this area of healthcare wins—individuals, employers, and health insurers—and we’d love to see more designers create value like this.
“Since my days at IDEO, I’ve witnessed the power of design to confront fundamental challenges and create new markets. Ben and Enrique have now created the first seed fund with this very tenet as its core investment thesis.”
—Steve Vassallo, General Partner at Foundation Capital, former IDEO Designer
Building great in-house design teams
We believe startups that have great design, engineering, and business skills in their founding and executive teams have a greater chance of creating better-designed products and services. With design as a core in-house competency, these companies can produce design innovation in a more sustainable way, rather than outsourcing it. Investing in design early on is just as essential as investing in engineering resources. Companies that do this are more likely to attract talented designers, build products that address real needs through a human-centered process, speed up iteration cycles, and maintain a differentiated brand.
Therefore, we focus on adding value by helping our companies build and educate their design teams and by contributing at key design inflection points. For example, we helped Stripe hire its head of design, Malthe Sigurdsson, and improve how they manage their design process including briefs, critiques, and team stand ups. We give each of our portfolio companies preferred access to participate in Bridge and any of our community events. As a result, we’ve assisted portfolio and partner companies like Gusto, Omada, and Asana bring on board many talented designers and advised on how to organize their teams. Recently, we’ve helped designers start companies at the earliest stages. We’ve contributed to the launch of new products like Lingo, Framer, Coach, and Wake, and are helping bring more companies to market like Abstract.
“Designer fund is my go-to resource for design insights. They—like few others—viscerally, deeply, and passionately understand how design builds an outsized strategic advantage for a business.”
—Sean Duffy, Co-founder and CEO of Omada
We’re going to continue to focus on serving exceptional designers throughout their careers, whether they’re creating new startups or joining our partner companies. If we can help more designers, engineers, and business leaders collaborate at the earliest stages, we think we can unlock value that benefits everyone.
Ten years from now, we hope we’ve:
- Helped build the next generation of great companies co-founded by designers who have a meaningful and positive impact on our society
- Accelerated the growth of thousands of designers who become great leads, managers, principal ICs, directors, VPs, and founders
- Contributed to fundamental infrastructure for designers to succeed in tech from funding to educational resources
“There’s no playbook on how to scale design and Designer Fund is in a unique position to share this knowledge.”
—Evan Sharp, Designer Co-founder of Pinterest
It takes a village
We can’t do this alone and have grown our team to include Heather Phillips, Katie Topper, and Lisa Anne Logan. Heather was one of the first designers at RelateIQ, helping build their design team through the acquisition by Salesforce. She was also a designer at Yammer, through the company’s exit to Microsoft. After graduating from Stanford University’s product design program and shipping a mobile app with SAP’s design lab, Katie produced our last two Bridge programs which have nearly doubled in size. Lisa Anne was most recently managing a hybrid co-working, events, and accelerator space called Hattery, through its acquisition by 1776. She was previously an entrepreneur, director of marketing at online education startup Craftsy, and a marketing manager at Apple.
We’re honored to be advised by Steve Vassallo, Scott Belsky, Soleio Cuervo, Evan Sharp, Joshua Brewer, Charles Adler, Dave Baggeroer, and Willem Van Lancker. Finally, we’re thankful to all the designers, investors, and partners who’ve supported us along this journey and who continue to believe in our mission.