Powerset gives founders $1 million to invest in other startups 

Powerset, founded in late 2022, is an investment program with a simple hypothesis: What if the best investors are founders rather than venture capitalists, writing off checks between late-night coding sessions and board meetings?

Each year, Powerset, founded by Angelist alum Jack Zeller and founder of coaching company Athena Jonathan Swanson, gives five to ten founders $1 million to invest in other startups – potentially giving them millions more if the founders bring in good investments. Past cohort members include Paul Copplestone, co-founder of developer platform Supabase, Jordan Tigani, co-founder of analytics company MotherDuck, and software engineer Wes McKinney, who created the Python Pandas project. Applications for the third group open this week.

Zeller describes PowerSet as a kind of decentralized venture fund: no programming to “teach” founders how to invest, no timeline for when founders must deploy capital, and no group of managing partners that can veto a deal. The founders take fifteen percent of the profits on a deal.

It’s an experimental model that rests somewhere between angel investing — only founders don’t invest their own money — and Old school VC scout programWhere VCs hire people including founders to help them source deals Cohort founders are then encouraged to mentor and advise portfolio companies like any investor.

In the case of PowerScout, however, the investments were entirely due to the already overworked and stressed founders. “There are founders who are so busy and so passionate about their company that they don’t invest at all,” Zeller said. Or a founder can “become very active very quickly” without making any investment.

Despite the complications, Zeller believes Powerset’s strategy will generate massive returns. “Often it’s the best founders who are building the best companies who are going to build for the best investors,” he said.

Founders, after all, deeply understand the intricacies of building a startup in their field and are always on the lookout for top talent. “I haven’t found a talent-level tech founder who’s building an incredible company who just sucks at investing,” he said.

There are no hard and fast rules for who qualifies for Powerset’s program — just that you’re building a company and immersed in the tech ecosystem. “Hopefully your company reaches a point where you get some organic connections,” Zeller says, meaning other founders like your product and naturally reach out to you.

But Zeller has a deal breaker: He’s not interested in someone who sees Powerset as an off-ramp to running a company, with aspirations of quickly becoming a full-time venture capitalist. “Those guys are going to perform terribly,” he said.

He claims that the best-performing PowerSet participants are founders who plan to spend the next five to ten years building their own companies. “If you’re building something that’s extremely important, and your life’s goal and your life’s work, you’re not going to invest in some marginal company,” he said. “It doesn’t support activation energy.”