Forbes.com released an article last week featuring the story behind Instagram’s beginning. Had it not been for this one individual, the photo-sharing giant that we know today might cease to exist. The article follows the owner of one of Silicon Valley’s most successful, and smallest, investment firms, Steve Anderson.
One could imagine the level of gratitude Instagram founder, Kevin Systrom, has for Steve Anderson after writing him his first check for $250,000. Systrom, and cofounder Mike Krieger, had originally pitched Anderson a social check-in app but when that failed, they were hesitant to inform Anderson of their new concept, a photo-sharing tool. Rather than the expected irate reaction, Anderson simply responded, “Well, what the hell took you so long?”
The article goes on to illustrate Anderson’s offbeat tactics in Silicon Valley. Systrom reflected on his relationship with Anderson, “I meet too many people who care too much about money in the Valley, I never felt like Steve was ever worried that we were going to screw up. He may have been worried, but he showed confidence.”
On Forbes’ Midas List, which features the top 100 tech investors globally, Steve Anderson is number two. With Anderson’s success rate, one might question why he chooses to stick with Baseline Ventures, rather than join a larger VC firm. According to forbes.com, Anderson’s decision to operate as the sole decision maker for his firm, Baseline Ventures, is more about freedom rather than ego. “My partnership meetings are really short, Me, myself and I have a long debate.” While most firms have several partners who will consult on varying investments, Anderson makes all of the decisions.
When a company is in a vulnerable position, and needs money to survive, you’ll encounter investors who will leverage that desperation in negotiations. Social Finance CEO, Mike Cagney, spoke of a similar situation he found himself in back in 2012. SoFi had relied on a substantial investment of $100million, and when that investor backed out, they were left with over $60 million in approved loans. Cagney commented on Anderson’s lead in an $80 million round after the initial deal had fell through, “He didn’t use his position to extract a lot of bad stuff when he had a lot of leverage because we needed a deal done,”.
It’s refreshing to see an investor of his stature abide by his own set of rules, rather than be coerced into mainstream venture capital tactics. As a new company, looking for funding, take the time to explore your options and meet with as many VCs as possible. Ultimately, you want to find an investor that you’re comfortable with and who believes in your product. Who knows, perhaps you’ll be as lucky as Kevin Systrom was.
For more on Instagram’s founding investor, check out the article on forbes.com!