When the South Park Commons (SPC), a community of a dozen engineers in San Francisco’s South Park neighborhood, mostly flew under the radar, save for a New York Times profile in 2017, a year after it was formed.
Founded by Ruchi Sangvi, Facebook’s first female engineer, she explained at the time that her ambition with SPC was to create a technological answer to the Bloomsbury Group or Benjamin Franklin’s Junto Club, where people could discuss their own and shared experiences and hopefully form new ideas along the way.
Fast forward and SPC — which went on to raise $55 million in 2018 to support projects generated by community members — says the trial is working. It now has 450 members in the Gulf region and around the world. I just closed a new $150 million fund from prominent tech personalities, as well as institutional investors.
She says she also has a high-value portfolio. In fact, says Sangvi, SPC’s first fund has already returned its capital – and then some – to investors thanks to Compound Labs, an open source decentralized lending platform where tokens were partially distributed to early shareholders.
Sanghvi says SPC has 10 to 12 other purported unicorns across its portfolio as well.
We spoke earlier today with Sanghvi and her husband and business partner, Aditya Agarwal, who was also an early engineer at Facebook before he co-founded the startup Sanghvi which they sold to Dropbox in 2012 in a reported talent acquisition. (Sangvi remained for two years as Vice President of Operations at Dropbox; Agarwal, who joined as Dropbox Vice President of Engineering, was promoted to CTO in 2016 and left in 2018, joining Sanghvi at South Park Commons.)
We’ve talked in some detail about the evolution of the SPC community, which started in a physical space, and has become very much a highly organized virtual community during the pandemic, but this is still very focused on bringing people together in real life.
In fact, Sanghvi and Agarwal believe so strongly in the power of offline interactions that in addition to their San Francisco hub, a New York location is currently in the works and suggest other locations can be followed, including in Seattle and even Southeast Asia.
As for that membership, roughly 70% of SPC members are “technicians,” says Sangvi, though she adds that the other 30% are “domain experts, have operational experience, or even academics.” This configuration is very much a design. “The funny thing is when you talk to a great entrepreneur and you ask if they want to hang out with another entrepreneur, the answer is always ‘No,’” Sangvi says with a laugh. “They want to hang out with the expert who beat the Stanford team on some AI algorithm So integrating these operational experts into the community is incredibly valuable.”
Bonds lead to more than just friendship and new ideas, it seems. According to Agarwal, over 50% of organization members find their co-founders or founding employees within the community, underscoring another way that South Park Commons considers itself distinct. Unlike Y Combinator, which meets with emerging teams, or VCs who monitor operational executives at large companies, SPC says it’s focused on capturing people who are clearly talented and probably in great demand but, although they let go of their recent crises, I’m not immediately sure of their move. following, and often just want a little time to find out.
She looks forward to capturing people whose next step is to explore ideas freely, even though they may seem squishy. “We are really a learning community that helps people in the ‘passive phase from one to zero’ get to the point of being able to start a company, and if the startups get out of that process, the fund invests,” Agarwal says.
Other things to know: Members tend to work closely within the community for nine months before “graduating,” which means they’ve either raised more than $1 million for a new startup concept, have more than four full-time employees, or they’ve got Job (Exploring ideas doesn’t always create companies).
When a community member reaches the fundraising stage, one of the agreements that is struck early on is to give the SPC the right to invest first. (Each member is also invited to invest in SPC funds if they wish, and many accept the company’s offer. According to Sanghvi, the new $150 million SPC fund has 100 members as investors.)
As for the form of those investments, they are rather standard. Agarwal says that SPC typically invests anywhere from $700,000 to $2 million for 7% to 10% of the company. It also suggests that because the SPC network is so valuable, project firms that tend to make ex post investments usually give way to SPC to maintain its percentage ownership rather than dilute it in its short-term advantage.
Sure, the formula seems to be working now. In addition to Compound Labs, some groups pass through the corridors of South Park Commons (physical and virtual), including The Graph, an indexing protocol for organizing blockchain data that has gained public support from Ethereum founder Vitalik Buterin; Pilot, a bookkeeping software maker now backed by Sequoia Capital and Index Ventures with a value of $1.2 billion; and Unit21, a no-token software startup that helps companies monitor fraudulent activity, and in July raised $34 million in Series B funding led by Tiger Global.
In addition to Sanghvi and Agarwal, who are the outfit’s general partners, SPC is an investor Mitra Lohrasbpour, who previously led revenue analytics and Dropbox’s international expansion efforts, and Finn Meeks, who previously spent two years as Sanghvi’s chief of staff.
For what it’s worth, Agarwal says that although SPC’s new fund is three times the size of his last fund, he doesn’t expect the team to invest more aggressively.
“Our focus is more on quality than quantity. If quality happens quickly, that’s great, but this is not high-level play.”