SAN JOSE, Calif. – At first glance, Clancey Stahr looks like any other 23-year-old eager to make his mark on Silicon Valley.
But this baby-faced Stanford graduate is already managing $55 million of other Âpeople's money.
Stahr and his partner, 24-year-old Phil Brady, launched GoAhead Ventures during their senior year at Stanford, and closed their first investment fund last fall. Even in Silicon Valley, where money flows like Yosemite Falls after a drenching winter, $55 million is a significant sum for a venture capital team just two years out of college.
But GoAhead Ventures isn't a one-off. In a trend that turns the established venture capital dynamic on its head, the investors backing the Bay Area's early-stage tech start-ups increasingly are 20-somethings with little more than college credits, internships or a few years of work experience under their belts — a far cry from the seasoned tech veterans who traditionally have offered sage advice and guidance to the start-ups in their portfolios.
"Founders are getting younger and investors are getting younger," said Duncan Davidson, a general partner at San Francisco-based Bullpen Capital. "It's easy to invest $25,000 — you can be an 'angel.' "
While the trend is largely anecdotal — and many 20-somethings still would rather follow in the footsteps of entrepreneurs like Mark Zuckerberg or Larry Page — the chance to cash in as an investor in the next Facebook or Google is alluring.
Young VCs say they can spot great investments because they are more plugged into the hottest tech trends and university talent pools than their older counterparts. Some have managed to rake in sizable chunks of cash to invest.
Stahr and Brady raised money from investors in Japan, using Stahr and a third partner's connections in the country. University of California, Berkeley graduate Jeremy Fiance, 25, raised $6 million to launch the House Fund in 2015 from tech execs, established venture capitalists, successful Berkeley alumni and even the UC endowment.
But not everyone thinks fresh college graduates — who often are younger than the founders they invest in — can do the job.
Tech entrepreneur Kori Handy, 36, sees no value in accepting money from 20-something investors who haven't launched companies of their own.
"It's almost a slap in the face to people like me who actually run start-ups and build things," he said. "I feel like I'm talking to my little brother, and I'm like, 'Are you going to give me the money or what?' "
Davidson says the shift is part of a larger "democratizing" of the start-up process. Improved technology and the advent of open source software has made it cheaper to launch a start-up, which also means it's cheaper to fund one. But traditional VCs have focused on bigger and bigger deals, leaving start-ups in their earliest stages to look elsewhere for small amounts of funding. That's led to an explosion of new seed-stage funds, some of which close with just a few million dollars — making them attractive to young or first-time investors who don't have the capital or connections to raise huge sums, Davidson said.
"That is extraordinary," he said. "It's the biggest disruption that's occurred to venture capital since 1979" — when Congress allowed pension funds to invest in VC, transforming the industry.
Investors in the U.S. poured more than seven times as much cash into these "seed" deals last year as they did in 2010, according to PitchBook Data. The jump in early stage spending far outpaced the growth of the overall market, which saw deal value roughly double during that time.
Helping to fuel the trend are TV shows like "Shark Tank" and such celebrity investors as Peter Thiel, Mark Cuban and Marc Andreessen, who have glamorized the venture capitalist lifestyle.
"Everybody's getting a little glimpse into how the venture world works, and suddenly it's this exciting thing," said Adam Draper, founder of venture capital firm Boost VC. "There's a cachet to it. It sounds glorious."
Fresh college graduates with an itch to invest could join an established VC firm and work their way up, but that's a circuitous path that could easily take 10 years. Instead, Brady and Stahr founded GoAhead Ventures after meeting in a Stanford venture capital class.
"This fund is our start-up," Stahr said. "It's what we're staking our lives on."
