The world of venture capital is changing dramatically. And it continues to change more and more quickly. We're on internet time now. Venture capital is an industry that has been fairly stable for the last 50+ years. Now every year we see any number of forces that could dramatically change how capital is allocated to startups.
I've dubbed the people driving those changing forces as "renegades." I laid out some of the characteristics of the renegades of venture capital a few weeks ago. These aren't just solo capitalists or startup funds. Any fund or investor who is disrupting the status quo in venture and realigning their offering to optimize for a founder's needs and odds of success can be a renegade. One of my favorite things is to reflect on the impact these people are having. I'm young enough in my career that I welcome radical change. It shakes up the way startups get funded and how companies get built.
In the past I've written about firms that I see as renegades. Firms like Homebrew, Lowercarbon, and Paradigm. But today I'm digging into another type of renegade in the world of venture capital. Synthesis. The illustrative example? The founder-led round that Synthesis just announced today. I'm proud to be an investor in their round and dig into the way Synthesis is contributing to how venture and innovation will change over the next 10+ years.
The Renegade: Synthesis
Today Synthesis announced a $12M round led by Balaji Srinivasan and Amjad Masad, the CEO of Replit. What Synthesis is doing represents a disruptive force in venture and innovation to me in two ways: (1) Going to like-minded founders to raise capital vs. having to take high-dilution round from a traditional VC, and (2) the community they're building of young innovators as they create the "Ender's Game of education."
Synthesis was born out of the school, Ad Astra, that Synthesis co-founder Josh Dahn started with Elon Musk as part of SpaceX. The first principles of that approach to education was focused on "producing the kind of students who can contribute to solving civilization-scale problems, like getting to Mars or transitioning to sustainable energy."
Synthesis was a piece of the Ad Astra curriculum that was focused on games that teach students collaboration and innovative problem solving. Now they've built a standalone company and have proven the massive demand for a learning experience that prepares kids for a world that is much more complex and fast-moving. Synthesis has seen 5x revenue growth, and is months away from being cash flow positive.
While they had interest from traditional VCs they recognized they'd built a business that was sustainable and serving an intense demand even without VC dollars. As a result they were able to skip the traditional VC game and work directly with founders who had perfect empathy for what Synthesis is building and didn't require 20% of the company to justify a round.
I've written before about the unbundling of venture capital where the power of monolithic firms are giving way to the credibility of individuals. Synthesis raising from two people vs. a traditional firm is a clear example of this.
"There [are] super talented people who may not be the best investor for everyone, but for a specific group they'll be the perfect investor."
And make no mistake. Balaji and Amjad are perfect investors for Synthesis. There is no better person to learn about decentralization from than Balaji. He's talked about the evolution of education in three phases: (v1) in-person classes with paper and pencil, (v2) simply digitizing what we've been doing in-person but do it online, and finally (v3) "rethinking education in an internet first way." The power of the internet allows education to be decentralized and offered in the most effective ways rather than rote generalization. This is just the beginning.
What founders are realizing is that with rapid improvements in SPVs, liquidity from a broad subset of sources whether its companies or crypto—the options for investors to raise from has broadened dramatically. Any venture firm that isn't paying attention to dynamics like this: a world-class company, growing revenue dramatically, effectively profitable, a huge market filled with tailwinds, and no interest in your "ownership thresholds?" There is no clearer sign that the world of venture is changing rapidly.
Ender's Game For Innovators
Synthesis is a perfect example of individual-led financing rounds that have become more and more common in venture. But beyond the simple round construct I see Synthesis as a disruptive force not just in how venture capital is deployed but much more broadly. Synthesis is changing the way people solve problems and that will ultimately change the way they build products and companies in the future.
Chrisman Frank, the CEO of Synthesis often says "come for the games, stay for the network." While the initial Synthesis product experience is a game that inspires innovation there is an opportunity long-term to build a powerful network of kids who have taken to the experience of learning outside the box. When students in Synthesis most effectively collaborate and drive new ways of thinking Synthesis calls them "supercollaborators."
"I love this idea of supercollaborators in Synthesis. It's so exciting to think about what you can build on top of that. What can you empower these kids to go out and do in solving real-world problems? There is no limit when they start from this foundation." (Amjad Masad)
Synthesis' long-term vision is to build a community of the most exceptional kids who are most capable of tackling the world's most complex problems.
"Our goal is to make Synthesis available to every child in the world. But our first commitment is to the top 1% by cognitive ability and commitment. Our current system is cutting off the runway for our most advanced students. We believe in doing the opposite—challenging these students as much as possible so that they build the capabilities to solve big problems for all of us. Education is a positive-sum game."
Another one of the reasons Amjad Masad is a perfect investor for Synthesis? He's building a very similar network by empowering builders at Replit, where he's the CEO. Replit has a highly aligned vision. Where Synthesis is providing the necessary infrastructure for empowering a student's mind Replit is offering infrastructure to turn that thinking into building.
"[Replit's] plan starts with becoming the first place that everyone writes code, and growing with them symbiotically as they grow. That means giving new software creators everything they need to start creating, accessible from anywhere to anyone with a laptop, tablet, or phone."
Companies like Replit and Synthesis are building complex networks of people that are more than just a Linkedin group or an occasional dinner. These are networks that are built on the fundamentals of how you learn and build. Imagine what the Replit creator community and the Synthesis learner communities will look like 20 years from now.
What Does This Mean For The World?
Before when I've written about the renegades of venture I'll end with the question "what does this mean for venture?" What I love about Synthesis is so much bigger than venture capital. Venture capital is a result of a broader landscape. The landscape for thinking and building.
Synthesis is a renegade of venture capital only inasmuch as its a renegade of education. Changing the way people are thinking, learning, and solving problems will lead to the greatest solutions the likes of which we've never seen before. I'm eager to spend the next 50 years investing in the ideas and companies people built who have been educated to think outside the box and become "supercollaborators."