Why we invested in Earnest Capital

I always had a vision for Niteo to grow into a factory of sane startups. A combination of internal spin-offs, an accelerator, and a VC fund. But with the emphasis on longevity rather than growth rate and unicorns.

A little over a year ago in Lisbon, I had a very long evening conversation about the same topic with Tyler, a founder who recently sold his SaaS business, and Kevin, a CEO of a successful fund. How to do a VC fund that is not only looking for an exit but values long-term profitably of the project? A fund that supports a good work-life balance for people in the company? A fund that does not push the founder(s) to scale for the sake of scaling, but instead to focus on profitability?

Our debate ended as the wine ran out and the sun started to rise. We each went our own ways, back to our daily worklives. But then I recently noticed that Tyler is trying to make the idea real: to start a “sane” VC fund, called Earnest Capital. We exchanged a few emails and I liked the idea more and more. We soon had a call about applying WooCart, our upcoming project, to the fund. Not because of the money, but because of the fantastic mentors/investors Tyler managed to get on board.

About an hour into the meeting I realized that instead of applying with WooCart, we should apply with Niteo. As investors. Earnest is so well aligned with our values at Niteo that it only makes sense to capitalize (pun intended) on the opportunity and bring the idea of building multiple (SaaS) projects to reality. Years before I had ever hoped to be able to.

We already signed the documents and wired over the cash last week. Let the fun begin!

About the fund: Earnest Capital is an early-stage investment firm providing “funding for bootstrappers”. We invest via a Shared Earnings Agreement (SEAL), an investment structure we developed transparently with the founder community that aligns us with founders who want to build profitable, sustainable businesses. A SEAL entitles the firm to a percentage of Founder Earnings plus a an optional stake to participate in a potential sale or other financing. At Earnest, we provide more than cash. The Earnest Partners base includes 25+ experienced founders and operators, and we are all allocating time as mentors to the portfolio companies. Earnest invests $75k-$250k after a company has early revenue ($500 – $5k MRR) but before the business can afford to pay the founders full-time.