Jonathan Lehr and Jessica Lin launched Work-Bench from humble origins in 2013. Though both came from technology-connected backgrounds, neither worked at a high-flying startup or had cut an angel investment into the next big software IPO. And their bet – that they could sustain an early-stage fund centered around connecting the burgeoning enterprise tech community in New York with corporate customers – didn’t have Silicon Valley’s venture capital firms lying awake at night.
But Work-Bench scraped together $10 million and opened a hub for such wonkier IT infrastructure and business software fledglings to make a home base; through executive briefings and large-sized community meetups, Lehr and Lin worked to deliver on their promised value-add. In 2018, they leveled up with a $48 million fund. And now, Work-Bench has raised a $100 million third fund to lead more investments in startups at the earliest stages.
“We’re investing at that point where other VCs may see a product, but they can’t analyze any SaaS metrics, it’s often pre-revenue,” says Lehr. “We’re using our corporate network and theses to get conviction and turbo-charge them to go to market with millions of dollars in pipeline value.”
(Subscribers to the Midas Touch newsletter got a first look at Work-Bench’s fund and partners’ strategy on Saturday. Sign up here.)
With the funding, Work-Bench’s founders plan to keep a New York focus, with 70% to 80% of startups backed expected to be based in the nation’s largest city (but not, historically, its tech hub). This time, Work-Bench can try to take the largest check in an early-stage investment of $3 million to $6 million, working more closely with companies and joining their boards of directors, the partners say.
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While other firms accelerate their fundraising schedule, Work-Bench hopes to take an “anti-FOMO” approach, only investing in 17 or 18 companies per three-year fund cycle. The firm has no immediate plans to add anything like an opportunity fund, but Lehr says the firm has shared later-stage opportunities in the past with its own LPs.
Lehr and Lin bring less flashy, but corporate-friendly experience to running the small Work-Bench team. A veteran of Morgan Stanley’s Office of the CIO, Lehr says he evaluated hundreds of tech companies as potential partners or tools for the financial firm. He launched NY Enterprise Technology Meetup in January 2012. Lin spent two years at Cisco Systems in Boston, working as a learning and development manager alongside engineers (she’s now a Forbes contributor). At the time, the New York scene was dominated by early movers such as MongoDB, which went public in 2017, and ad tech standouts like AppNexus and DoubleClick, both of which were acquired.
“We thought the next wave was going to be enterprise because you had customers here, and you had deep infrastructure chops coming out of [them] to build enterprise startups. And there’s no better place to do it,” say Lehr.
The ecosystem has accelerated rapidly since. When Work-Bench announced its second fund in late 2018, the firm bragged that $6 billion had been invested in New York enterprise startups by venture capitalist in aggregate over the previous five years. In 2020, that ecosystem raised $5.8 billion alone. In the first half of 2021, it reached $6.7 billion, across 119, per the firm’s recent report.
Among Work-Bench’s portfolio are emerging successes such as Cockroach Labs, valued at $2 billion, and Socure, valued at $1.3 billion; CoreOS, Semmle, Algorithmia and Backtrace have all been acquired. Moving up are Spring Health, which recently raised a $76 million round from Tiger Global, as well as Arthur, Catalyst and FireHydrant.
Raising a new fund during the pandemic wasn’t exactly easy for Lehr and Lin all the same. The duo repeatedly got asked about how Covid-19 and the push to remote work would affect their geography-focused thesis and events. But while Work-Bench shifted some programming to virtual in recent months and downsized its own office space (meetups now happen at Amazon Web Services’ location, among others), the New York startup community has kept some of its “hometown pride,” Lehr argues. Four of the five first investments from the firm’s new fund are based in New York.
That means Work-Bench plans to continue its smaller meetups for corporate executives (the firm claims to have connected its portfolio to “tens of millions of dollars” of contracts) and community-building, not out of charity, but to support the fund, too. “We call it a full circle of our community model, built into the VC fund,” Lin says.
One area where the firm does hope to see change: the diversity of that enterprise network. About 20% of Work-Bench’s portfolio today is women-founded. The firm maintains a public directory, the Women Founders of Enterprise Startups Database, to attempt to help; it also hosts a series of “#Womenterprise” events. “We’re really proud of that, but we know there’s a ton more work to do,” Lin says. But the challenge has “many more mountains to climb.”