In a move that could see more investments for startup founders of color, rapper and business mogul Jay-Z is launching Marcy Venture Capital Partners in partnership with Roc Nation President Jay Brown and Silicon Valley veteran Larry Marcus, whose investments focus on digital media and consumer services.
Early last year, Axios reported that the Carters were looking to launch their own venture capital fund in partnership with San Francisco-based Sherpa Capital, which had invested in Uber and Airbnb, but the move was put on hold between Roc Nation launching its own startup platform and “troubles at Sherpa.”
It is unclear what the focus or size of the fund will be but Jay-Z and Brown’s previous startup investments may offer some ideas. The business partners participated in Uber’s Series B, at a $300 million pre-money valuation early in 2017. They have also invested in brokerage platform Robinhood, luggage company Away, private jet company JetSmarter, and life insurance startup Ethos. Their Marcy Venture Capital Partners may now anchor some of their larger investments. The fund’s name, according to the Business Insider, may be a reference to Jay-Z’s upbringing in the Marcy Housing Projects in Brooklyn, New York, which is in line with what Nas did when naming his QueensBridge Venture Partners.
Over the years, as artists looked to diversify their investments, they have increasingly looked toward Silicon Valley, showing interests in startups with investments in delivery services to messaging apps. Nas’ investment in Ring, through QueensBridge, earned him a $40 million payday after the startup’s acquisition by Amazon. His firm has also invested in successful startups like Dropbox, Lyft, and Casper.
In 2015, Snoop Dogg launched Casa Verde Capital, a firm focused on early-stage marijuana startups, along with a slew of investments in Reddit, Robinhood and Philz Coffee. Nicki Minaj invested in Music Messenger. Will Smith joined Andreessen Horowitz and Madrona Venture Partners as an investor in Julep, a Seattle-based e-commerce beauty brand. He has also invested in Fancy and Chromatik. Chamillionaire left the rap game for Silicon Valley to become an Entrepreneur-In-Residence at Upfront Capital. Def Jam founder,Russell Simmons invested in Flyp, a service that allows mobile phone users to set up multiple lines on one device. Even Ludacris participated in a $10 million Series A round in Roadie, an on-demand package delivery service. Diddy invested in Tiny App, which was acquired by Paltalk. In 2013, T.I. invested in Yopima, an app that lets users find trending spots based on recommendation from peers. M.C. Hammer has investments in Bump Technologies, Square and Flipboard. Drake invested in Omni, an on-demand storage app based in San Francisco. In 2011, Queen Latifah invested in Indaba, an online music network that lets users share songs and collaborate on new projects.
It is still unclear their return on investments over the years since many of those investments are in the early stages of the company. Tech website Techcrunch analyzed funding data of 15,600 U.S.-based technology companies founded between 2003 and 2013. Of the 1,000 startups that closed a seed or angel round, 400 of them made it to Series A. “In other words, our data suggests that around 60% of companies that raise Pre-Series A funding fail to make it to Series A or beyond.”
In a 2012 Forbes article featuring Peter Thiel and Reid Hoffman (two of Silicon Valley’s most revered investors) Theil, who is an early investor in Facebook, said, “If you go into politics, you should go to D.C. If you go into finance, New York. Movies, probably still L.A. And tech is Silicon Valley.” By Theil’s indication, artists need to invest themselves in Silicon Valley and develop relationships with the right people who would, in turn, invite them in on deals. Based on that alone, Chamillionaire is doing it right.