Rebecca Lynn doesn’t believe in first-mover advantage.
“Never be a first mover,” says Lynn. First movers bear the burden of proving that a market exists, she says. “You’re paying to get consumer awareness of that market. You’re fighting this uphill battle. You’re spending a ton of money to prove out the market—and by the time you finally prove it exists, you have an aging tech stack. Why not let somebody else break that pick? You watch where the puck is going, and then come in with a better product and better marketing as a second mover.”
It’s advice Lynn has gleaned from decades of experience on the operations and investing sides of the table. Lynn never planned to be a VC—a first-generation college kid from the Midwest, she spent her early career in the late ’90s at Procter & Gamble. In 2007, right before the Great Recession fully materialized, she ended up taking her first venture gig at Morgenthaler Ventures. The very first term sheet she gave out was for financial services company Lending Club in 2009.
“Always keep an eye on the macro,” Lynn says. “So, when Lehman crashed, that’s what made Lending Club a great deal. Without the crash of Lehman, we wouldn’t have invested in Lending Club. But there was this macro opportunity where suddenly their product just nailed it. They were doing peer-to-peer lending and, before the crash, it was a good idea. Then, the market goes down in flames, and even if you have an 800 credit score, you can’t get a loan. It created this opportunity where they had a clear runway ahead of them.”
In 2014, Lending Club would become the biggest tech IPO of the year. Since then, she’s also been an early investor in Doximity, Luminar, FutureAdvisor, Check, and Casetext. Now, twelve years after cofounding Canvas Ventures (spun out from Morgenthaler Ventures in 2013), Lynn is spinning out on her own, launching new firm Canvas Prime as a solo GP, she exclusively told Fortune.
“We got a lot of guidance from our LPs that they liked my strategy and results,” she says. “And I had really, from a top-down level, wanted to focus more for years. Because focus—that’s the Kool-Aid we tell our entrepreneurs to drink: Focus, focus, focus, execution, execution. Make a decision, and make it fast. Because not making a decision is also making a decision.”
Lynn is keeping the Canvas name, as she’s retaining board seats and continuing to support her current portfolio companies, including Savvy Wealth, Airvet, and Marvin. In some ways, Lynn is part of a broader trend in venture, of solo GPs who have a deep well of experience, leaving older or larger firms behind. Her strategy for Canvas Prime is defined: The firm concentrates on a few sectors—primarily fintech, digital health, and AI—where she has proven expertise and a track record, plus a concentrated, high ownership portfolio. They invest in 12-15 companies a year while taking significant ownership stakes of 15% to 25% to maximize returns.
“I think the days of the mid-market, generalist fund are absolutely gone,” says Lynn. “They don’t work. Smaller funds outperform, and here’s a number: Specialized funds have 37% higher returns than generalist funds… And when we did the bottom-up analysis on where we made money for our investors, it was blindingly clear we made money in fintech, digital health, and AI—and that was it.”
In a lot of ways, Canvas Prime is about remembering that it’s important, and necessary, to say no.
“You just can’t be an expert at everything,” Lynn told Fortune. “What we tell the CEOs all the time is that knowing what to say no to is the most important skill set you can develop. So, it’s all about having focus and clarity on what we need to cover, how we need to cover it, who we need to hire, and what we need to build out to be helpful to our companies.”
Term Sheet Podcast, Episode 3… This week, we’re trying something new on the Term Sheet Podcast—pairing an episode with an essay! In my Term Sheet Podcast interview with Rebecca Lynn, we discussed her roots in the Midwest, her path to Silicon Valley, and what she’s learned as an entrepreneur turned venture capitalist. Plus, my take on the Nvidia-AMD-Trump deal and newly minted AI billionaires. Listen here.
See you tomorrow,
Allie GarfinkleX: @agarfinksEmail: [email protected] a deal for the Term Sheet newsletter here.
Joey Abrams curated the deals section of today’s newsletter. Subscribe here.
Venture Deals
– Appcharge, a Tel Aviv, Israel-based mobile game payments platform, raised $58 million in Series B funding. IVP led the round and was joined by Playrix, Creandum, Moneta VC, Play Ventures, Gilot Capital Partners, Smilegate Investment, and others.
– Gameto, a New York City-based cell engineering company focused on women’s reproductive health, raised $44 million in Series C funding. Overwater Ventures led the round and was joined by Insight Partners, RA Capital, Two Sigma Ventures, and others.
– Kustomer, a New York City-based AI-powered CX platform, raised $30 million in Series B funding. Norwest led the round and was joined by Battery, Redpoint, and Boldstart.
– GoodShip, a Bellevue, Wash.-based operating system for the freight industry, raised $25 million in Series B funding. Greenfield Partners led the round and was joined by Bessemer Venture Partners, Ironspring Ventures, Chicago Ventures, and FUSE VC.
– Jump, a Los Angeles, Calif.-based fan experience platform for sports, raised $23 million in Series A funding. Alexis Ohanian and Seven Seven Six led the round and were joined by Courtside Ventures, Will Ventures, Forerunner, and others.
– Arintra, an Austin, Texas-based AI-powered medical coding automation platform, raised $21 million in Series A funding. Peak XV Partners led the round and was joined by Endeavor Health Ventures, Y Combinator, Counterpart Ventures, and others.
– Ultraviolette, a Bangalore, India-based electric motorcycle company, raised $21 million in funding. TDK Ventures led the round.
– Transak, a Miami, Fla.-based developer of fiat-to-crypto infrastructure, raised $16 million in funding. Tether and IDG Capital led the round and were joined by others.
– Datumo, a Seoul, South Korea-based generative AI evaluation company, raised $15.5 million in Series B funding from KB Investment, Shinhan Venture Investment, Kiwoom Investment, SBI Investment, Salesforce Ventures, and others.
– Mako, a New York City-based AI infrastructure company that builds intelligent agents to generate and optimize GPU kernels, raised $10 million in seed funding. M13 led the round and was joined by Torch Capital and Parable VC.
– Dealops, a San Francisco-based developer of pricing infrastructure for revenue teams, raised $7 million in funding. Pear VC and General Catalyst led the round and were joined by Depth VC, Elsa Ventures, Weekend Fund, Flex Capital, Allison Pickens, 20 Sales, and others.
– Refold, a San Mateo, Calif. and Bangalore, India-based developer of AI agents for integrating enterprise software systems, raised $6.5 million in seed funding. Eniac Ventures and Tidal Ventures led the round and were joined by Better Capital, Ahead VC, Karman Ventures, Z21, and angel investors.
– Infinity Loop, a New York City-based AI-powered deal analysis platform, raised $5 million in seed funding. Glasswing Ventures and TIAA Ventures led the round and were joined by Plug and Play, Restive Ventures, and angel investors.
– HoneyCoin, a Nairobi, Kenya-based cross-border payments platform, raised $4.9 million in seed funding. Flourish Ventures led the round and was joined by Visa Ventures, TLCom Capital, Stellar Development Foundation, Lava, Musha Ventures, 4DX Ventures, and Antler.
– Levr Bet, a Costa Rica-based decentralized sports betting platform, raised $3 million in funding. Blockchain Capital and Maven 11 led the round.
– TLIKI, a London, U.K.-based AI-powered game creation platform, raised $2.2 million in pre-seed funding. Twin Path Ventures led the round and was joined by Atlas Sgr, XTX Ventures, and SFC Capital.
Private Equity
– Ruppert Landscape, backed by Knox Lane, acquired Greatscapes Property Management, a Winchester, Va.-based landscaping company. Financial terms were not disclosed.
Exits
– Hubbell Incorporated agreed to acquire DMC Power, a Carson, Calif.-based provider of connectors and tooling for utility substation and transmission markets, from Golden Gate Capital. Financial terms were not disclosed.
– Apollo agreed to acquire Trace3, an Irvine, Calif.-based digital and IT services provider, from American Securities.
– Proterra Investment Partners acquired AcreTrader, a Fayetteville, Ariz.-based farmland investment platform. Financial terms were not disclosed.
Funds + Funds of Funds
– Pacific Avenue Capital Partners, a Los Angeles, Calif.-based private equity firm, raised $1.65 billion for its second fund focused on corporate carve-outs and divestitures.
– Periscope Equity, a Chicago, Ill.-based private equity fund, raised $370 million for its third fund focused on founder-owned business services companies.
