Modern software solutions for construction project management, equipment operations, and compliance such as Procore, Autodesk, and Open space have been proven to enhance project efficiency and mitigate risks.
Investing in next-generation seeds.
Costanoa invests in entrepreneurs who exhibit qualities similar to our own: ambitious, thoughtful, persistent, and committed to solving major challenges. Our expertise lies in enterprise and fintech, enabling us to provide exceptional support to founders in those industries. We take the lead in Seed and Series A funding rounds. We strive to be your go-to resource, offering encouragement during successes and assistance in navigating challenges that arise. Count on us to be your advocate throughout the various stages of your entrepreneurial endeavors.
We specialize in the early stage.
We make early investments in companies that are revolutionizing their industries, focusing on fintech, data and developer infrastructure, applied AI, and security. With our team’s extensive B2B background, we provide valuable guidance and expertise to founders operating in these niche markets, leveraging our keen insights and sharp instincts.
Intentionally designed boutique.
With us, you are more than just a statistic. We carefully select a few exceptional companies each year to devote our time, expertise, and resources to. Startups at their early stages encounter numerous critical moments, and we are fully committed to supporting you and your team in overcoming these challenges together. Our investments span a wide range of founders, with twenty of our portfolio companies originating from or targeting Latin America, Europe, Africa, and Australia. By maintaining a balance between rapid growth and financial prudence, we can assist your company in not only surviving but also flourishing in various market conditions.
Timely assistance from the very beginning.
Our Builder Ops team is specifically designed to cater to early-stage enterprises. Collaborating closely with our investment team, we provide comprehensive operational guidance to all our portfolio companies, encompassing hiring, sales, marketing, and overall company development right from the start.
We are fully committed to the success of your company, accompanying you every step of the way, from inception to the ultimate achievement.
In order for a software company to effectively showcase its features and capabilities to partners and customers, a robust API is essential. 3scale stands out as the sole developer self-serve product available, eliminating the need for any salesperson interaction to begin using it. The acquisition by RedHat took place in 2016.
Shepherd represents a prime example of how venture capitalists can invest by identifying the significant obstacles within a vast industry and subsequently discovering the perfect combination of a skilled team, innovative technology, and a sense of urgency to overcome these obstacles. Their primary objective is to alleviate the financial burden in the commercial construction sector, which is currently experiencing a dire need for infrastructure development in the United States.
For various types of commercial builders, including those involved in office, hospital, civil, and other projects, insurance expenses rank among the top three costs. In the United States alone, commercial insurance premiums amount to a staggering $25 billion. These insurance costs play a pivotal role in determining whether major projects proceed or not. By effectively managing insurance expenses and minimizing claims, the construction industry can witness a significant increase in the construction of schools, hospitals, bridges, and office buildings.
Innovation Concealed in Clear View.
The current construction insurance market is dominated by carriers that have been around since the 19th century. However, despite their extensive experience and market knowledge, these companies often overlook the potential of software and data. Modern software solutions for construction project management, equipment operations, and compliance such as Procore, Autodesk, and Open space have been proven to enhance project efficiency and mitigate risks.
Shepherd stands out by utilizing AI-enabled machine learning models and evaluating a project’s software usage as a crucial factor in its underwriting process. What typically takes weeks for other insurers to assess, Shepherd accomplishes in just a few hours – a remarkable feat in the realm of commercial insurance. This approach also enables Shepherd to offer lower premiums to high-performing businesses.
Recognizing the significant benefits of software utilization, Shepherd is even developing software products for its clients to use, free of charge. Innovation goes beyond technology; it also involves how a product is introduced to the market.
The Fit between the Founder and the Problem.
Shepherd’s three co-founders possess expertise in construction, construction insurance, and software development, making them an ideal trio for a technology-driven innovator. This particular market demands seasoned professionals, not inexperienced Silicon Valley founders who lack knowledge of the construction industry. Understanding the mindset and emotions of customers is crucial in both the insurance and construction sectors, as it establishes credibility. Additionally, the Shepherd team demonstrates a clear understanding of how to appropriately develop the backend of their business.
At Costanoa, we firmly believe that building quality, established companies takes time and effort. This is especially true in the insurance industry, where long-term relationships and reputations are key, and patient, high-performing businesses are rewarded with renewal and expansion opportunities. Building an insurance business is a complex task, and the Shepherd team is fully aware of this as they construct their company. We not only witness innovation in Shepherd’s products but also a commendable philosophy in their approach to company building.
That is why everyone at Costanoa is eagerly leading Shepherd’s $13.5 million Series A funding round, and I am personally thrilled to join their board. I am excited to witness how the company will support the next generation in constructing the infrastructure for our country in the years to come.
With the commencement of 2024, I am delighted to announce my association with the Costanoa team.
Before joining Costanoa, I dedicated my time at McKinsey, where I focused on go-to-market and growth strategies for various retail and consumer companies, ranging from grocery stores to fitness equipment. This experience taught me that each market possesses its own unique dynamics, customer base, distribution channels, and approaches to sustaining growth. It also provided me with a profound understanding of the intricacies involved in go-to-market strategies across different industries.
My tenure at McKinsey equipped me with a strategic perspective that complements my own creative background. During my college years, I initiated my own Etsy store, delved into dropshipping, and successfully sold handmade art items throughout Asia. Amidst the pandemic, I developed a social knowledge management platform for writers to share quotes. These entrepreneurial ventures further instilled in me a deep admiration for the determination and self-awareness required to be a successful founder.
At Wharton, I pursued a major in behavioral economics, which delves into the reasons behind why humans sometimes make suboptimal or ‘irrational’ decisions in order to attain emotional gratification. My research primarily focused on the concept of bundling: understanding why individuals prefer to purchase certain groups of items over others. This exploration significantly influenced my perspectives on product bundling and upselling in the realm of e-commerce.
My fascination with evaluating preferences and choices has only grown over time. How do we develop unwavering conviction? How do we make informed decisions with limited information? How do we gauge the significance of our choices?
I now realize that these are the very questions that venture investors constantly grapple with. The intersection of psychology and economics in the realm of company building presents yet another captivating arena for exploration.
Upon reflecting on my past experiences, I have discovered a common underlying philosophy that permeates through all of them. I firmly believe in the iterative process of experimentation, whether it be in designing products or collaborating with vendors and fellow creators. I believe that writing serves as a natural manifestation of thought, evident in my data-driven storytelling at McKinsey and my professional (investing) and personal (creativity + human behavior) blogs. Lastly, I firmly believe that a remarkable venture firm is one that embraces innovation, fosters collaboration, and strives for excellence.
Delphina: Creating an Enchanting ML Developer Experience with AI.
In 2015, Jeremy Hermann developed the groundbreaking machine learning platform, Michelangelo, which allowed numerous Uber data scientists, including co-founder Duncan Gilchrist’s teams, to deploy and experiment with thousands of models. Recognizing its significant impact, Jeremy went on to co-found Tecton, the first machine learning feature store.
Upon leaving Uber, Duncan experienced the ongoing challenges of manual machine learning workflows and scattered solutions while leading data science at Gopuff. The labor-intensive nature of data science workflows and the scarcity of machine learning and data science talent posed significant obstacles.
Their conclusion was clear: despite the emergence of the MLOps ecosystem, the process of machine learning engineering remained manual, fragmented, and isolated. This hindered the potential impact of machine learning on various business areas, such as fraud models, dynamic pricing, and accurate forecasting.
Jeremy and Duncan firmly believed that there had to be a better way than the weeks or even months currently spent by teams to develop robust ML models. They aimed to create a co-pilot for data science that achieved two objectives:
1. Deliver a remarkable developer experience for machine learning.
2. Enable machine learning teams to deploy models at scale without engineering obstacles.
Delphina leverages large language models (LLMs) to enhance data exploration and modeling by optimizing feature engineering and modeling in a unified platform. The weeks and months that data science teams traditionally spent manually crafting features and fine-tuning models are now reduced to mere hours. Similarly, the weeks of engineering work required to put models into production are now minimized to minutes. This empowers machine learning teams to concentrate on the core tasks of translating business problems into effective models. Consequently, this unlocks tremendous potential for AI in critical business processes.
With Delphina, machine learning teams no longer need to rely on engineers to deploy models into production. The models are ready for deployment, along with the necessary infrastructure, streamlining the entire process.
From the Atlantic seaboard to the scenic shores of Costanoa.
I have always believed that change is a catalyst for personal and professional growth. That is why I am thrilled about the recent change in my life – relocating to a new coast and joining a new firm. As the newest associate at Costanoa, I am collaborating closely with the entire team to cover a wide range of areas, including application SaaS, fintech, defense tech, cybersecurity, and deep tech. Over the past few years, I have been involved in growth investing and have had the opportunity to interact with incredible founders across various tech sectors. However, I knew that I wanted to transition to the startup lifecycle earlier, and Costanoa seemed like the perfect place to do so.
The team at Costanoa consists of some of the most thoughtful and deliberate individuals in the venture industry. They are the complete opposite of the fast-paced, “deploy capital at any cost” mentality that has dominated the venture landscape in recent years. Each team member has their own expertise and investment theses, and they remain committed to their convictions. From what I have observed so far, this intentionality is ingrained in every aspect of Costanoa – from their thorough due diligence to meaningful conversations, regular mentoring, and always-relevant support.
I am also eager to witness how Costanoa uniquely extends this intentionality beyond the investment phase. Some of Costanoa’s greatest success stories have emerged from direct partnerships and incubation, which only a boutique firm like ours can provide. The high engagement of our BuilderOps team and the board leadership of our Investment Team have played a significant role in these success stories. The prospect of being one of the first supporters and investors in a groundbreaking technology company motivates me to bring my best to the firm every single day. Despite the current market conditions, which may not be very optimistic, I firmly believe that this is an excellent time to build startups. I am excited to meet exceptional early-stage founders and thrilled to do so at a place as special and unique as Costanoa. If you are working on something innovative or would like to connect in the Bay Area, please feel free to reach out!
Forecast for Women in Technology: Looking Ahead to 2023.
I recently had a meeting with a Chief Product Officer. When she joined the company, she was one of three female executives. She humorously remarked that for every woman who left, two men would take her place.
Now, she is the sole woman among a group of eight.
Although her situation is quite striking, it is crucial to consider the progress that has been made. For the past six years, Costanoa has organized Seat @ the Table events, which have resulted in significant advancements for women in the workplace.
In terms of senior leadership, women now make up one in four C-suite leaders, compared to one in five when we initially started. Additionally, in the “broken rung” – the first level of management – 87 women are now promoted for every 100 men, as opposed to 77 women for every 100 men just seven years ago. These improvements are a result of increased awareness and genuine commitment from employers to create more balanced company cultures.
However, this progress does not fully reflect the reality for most women in the tech industry. For women who are builders, particularly those with product or engineering backgrounds, and especially women builders of color, their experiences resemble that of the Chief Product Officer mentioned earlier – they are often the only one of their kind in the room. This can be a challenging and isolating experience, even though they recognize the importance of being role models for others.
The situation becomes even more pronounced when it comes to female founders. Only 2.3% of venture capital funding goes to all-female founding teams, while mixed-gender founding teams receive 10.4%. These percentages have remained relatively stagnant over the past three decades, despite female-founded ventures performing just as well as their male-founded counterparts when considering factors such as sector, market, experience, and hours worked.
Nevertheless, our Seat @ the Table and Women Builders events continue to inspire hope each year. Over 600 individuals have directly participated or become part of our community. They appreciate the authenticity of our speakers’ stories, which are unscripted and raw. People often see themselves or envision what their future could look like through these narratives, and they value having a safe space to connect with fellow builders. As a result, women feel confident that they can thrive and succeed in their respective fields.
Company Name – Costanoa Ventures
Website – costanoa.vc
Founder & Managing Director – Greg Sands
