Our Head of Engineering at RedbudVC put together the best MVP stack breakdown I’ve ever seen and I’m sharing it with you because founders ask me about this constantly…

I don’t believe in one default MVP stack.

A good MVP stack depends on the product, the founder, the team, the market, and what needs to be proven first. There are many tools now, and choosing casually can be expensive later because switching stacks is painful once product logic, data, authentication, permissions, and user workflows are built around it.

You shouldn’t ask yourself: “Next.js or React Native?”
But instead: what are we building, and where will users experience most of the value?

There are generally three components in an application:

1. Frontend
2. Backend
3. Database

Selecting the base for each component is crucial to the success of an application. There is a balance between speed, time to value, and scalability. In the new age of AI, engineers are architects not coders.

Mixing languages across your stack is like trying to speak two different languages in the same conversation.

The biggest mistake I made as a young engineer was having a Python backend and a React frontend. I didn’t need Python, I could’ve just used Node.js. If I would’ve done that, I would’ve saved hundreds of hours on syncing the shape of the data between the two.

Step 1: Web, Mobile, Or Both?

This usually decides the frontend direction.

If the product is mobile-first, I’d usually choose:

React Native + Expo

Expo is strong for MVPs because it lets you move fast, ship to iOS and Android, avoid a lot of native complexity, and still escape into native code later if needed.

If the product is web-first, I’d usually choose:

Next.js

Next.js is still one of the best choices for serious web apps because you get routing, server rendering, API routes/server actions, deployment options, and a large ecosystem.

If the product needs both web and mobile, I’d split it based on how important each platform is.

If web is secondary, I might use:

Expo + Expo Web

It can be a little funky, but for internal tools, companion dashboards, or lower-traffic web needs, it can work just fine.

If both web and mobile are important, I’d use:

• Turborepo
• Next.js for web
• Expo for mobile
• Shared packages for business logic, types, validation, API clients, utilities

That gives you native-quality mobile and proper web, while sharing the parts that shouldn’t be duplicated.

I generally would not start with native Swift/Kotlin unless the product truly requires deep native behavior, heavy device integrations, custom performance needs, or platform-specific UX that React Native cannot reasonably handle.

Step 2: Database Choice

For 90% of MVPs, I’d start with SQL (Postgres) hosted on either Supabase or Railway.

Most business apps are relational: users, teams, permissions, payments, inventory, tasks, records, etc. SQL fits that world very well.

For ease and speed, I like Supabase, especially when you want authentication, storage, migrations, dashboards, and Postgres together.

But I’m more cautious now about building the entire app around directly querying Supabase from the frontend with heavy RLS (Row Level Security). It works, but it can get complicated as product logic grows. RLS has to check permission for each row that you are getting, so it can make each query slower. When building bigger applications, RLS can get very hard to maintain, and if you don’t think of edge cases, it could potentially leak a lot of private data.

My current preference is:

Frontend -> Backend API -> Database

The backend owns permissions, business logic, and database writes. The database is not directly queryable by random frontend clients.

If you don’t want SQL, there’s another option. For more realtime, flexible, less structured apps, I’ve started to like:

Convex

Convex is especially interesting when the product needs fast realtime updates, reactive data, collaborative flows, or more flexible document-like data. The tradeoff is more vendor lock-in compared to plain Postgres.

Step 3: Backend

For TypeScript-heavy products, I like:

Hono

Hono is lightweight, fast, and simple. It works well for deterministic API endpoints where each endpoint does one clear job.

For Python-heavy products, I like:

FastAPI

I prefer Python when the product involves scraping, automation, AI agents, or hardware-intensive background jobs.

A common setup I like:

Turborepo

apps/web -> Next.js

apps/mobile -> Expo

apps/api -> Hono or FastAPI

packages/shared -> types, schemas, utilities, domain logic

packages/db -> database client, migrations, query helpers

This keeps everything in one repository while allowing each app to evolve properly.

Step 4: Avoid Lock-In Where Possible

One thing I care about a lot: can I leave this platform later?

For MVPs, managed services are great because they save time. But I prefer tools that have a credible escape path.

Good examples:

• Postgres
• Next.js
• React Native
• FastAPI
• Hono
• Docker
• S3-compatible storage
• Supabase
• Convex

These are easier to move, self-host, or replace later.

More proprietary platforms can be worth it, but you need to know what you’re accepting. Vendor lock-in is not automatically bad, but accidental lock-in is.

The key question is:

If this product works, will this stack still make sense at 10x usage, 10x complexity, and 10x team size?

Scenario 1: Technical Founder

For a technical founder, I’d optimize for long-term control without slowing the MVP too much.

Suggested default:

Web-first:

• Next.js
• Postgres / Supabase
• Hono or Next.js server-side backend
• Turborepo if there are multiple apps/packages
• Vercel/Fly.io/Railway/Render for hosting

Mobile-first:

• Expo
• Postgres / Supabase
• Hono or FastAPI backend
• Shared TypeScript packages where useful

A technical founder can handle more complexity, so I’d be more comfortable setting up a proper monorepo, clean API boundaries, migrations, shared types, and a solid backend early.

I would avoid over-engineering, but I would not build something disposable either. The MVP should be fast, but don’t create a foundation you hate three months later.

For technical founders, the best stack is usually:

boring core technology + strong architecture + room to scale

Scenario 2: Non-Technical Founder

For a non-technical founder, the priority changes.

The stack should optimize for:

• speed
• maintainability
• availability of developers
• low operational burden
• clear documentation
• easy handoff

I would avoid obscure tools, overly clever architectures, and anything that only one specialist knows how to maintain.

Suggested options:

Web app:

• Next.js + Supabase + Vercel

Mobile app:

• Expo + Supabase

Internal tool / admin-heavy MVP:

• Retool, Airtable, Bubble, Softr, or a lightweight custom Next.js app

For non-technical founders, I’d be careful with no-code. No-code can be excellent for validating demand, workflows, and internal operations. But if the product itself is software with complex logic, permissions, integrations, or custom UX, no-code can become a trap.

A good rule:

Use no-code to validate the business, and use software to solidify it.

For a non-technical founder, I’d usually recommend a stack that many agencies and freelancers can understand. Next.js, Supabase, Expo, Stripe, and Postgres are easier to hire for than niche frameworks.

Final Take

The best MVP stack is not always the trendiest.

It is the stack that lets you test the riskiest assumption quickly while still giving you a path to become a real product if the MVP works.

For me, that usually means:

• Next.js for serious web apps
• Expo for serious mobile apps
• Postgres for most data
• Hono for lightweight TypeScript APIs
• FastAPI for Python-heavy workflows
• Turborepo when there are multiple apps or shared logic

The biggest mistake is choosing technology before understanding the product. The second biggest mistake is choosing tools that feel fast today but make the company slower tomorrow.

No-code lets you understand your product before you build it. Don’t commit to a stack until you know what you’re actually building.

How to Pick a Modern Tech Stack for Your MVP was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Contrary to the title of this article, there’s no single right answer on how to split equity with a co-founder. But there are a few ways that you do want to avoid. Most founders ignore these until it’s too late.

The default is 50/50 equal partners, especially with two engineers, previous co-founders, working on the idea before starting the company, etc. If a few people get together, feel like they’re bringing equal weight, and are in this for five to ten years, they tend to split it evenly. That instinct is increasingly common: according to Carta’s 2025 Founder Ownership Report, 45.9% of two-person founding teams divided equity equally in 2024, up from 31.5% in 2015.

But most founding teams still don’t do it, and for good reason.

The negotiation looks different when one person originated the idea, spent years building domain expertise, and recruited a technical person to come build with them.

How unequal that share is depends on how dependent the company is on the technical hire vs. the person who really started it. If the CEO is the clear driver and the engineer was brought in to execute, you’re probably looking at a 10–25% stake for the technical co-founder. If you recruited someone to come build your vision, the math looks different.

Carta’s data backs this up: across all founding team sizes, there’s typically a lead founder who receives an outsize share, and that person usually becomes the CEO.

Now, there is one thing that shifts the math, and that is salary. A technical co-founder drawing a full market-rate salary should expect less equity than one betting entirely on the outcome.

Most founding teams get it wrong when they spend all their energy on the split and none on control.

Early on, you typically don’t have a board. And if you do, it’s just the CEO. You don’t usually see multiple founders on the board until an investor comes into play at Seed to take a board seat. That’s by design. If you have a 50/50 split where both founders have equal voting control, and sh$t hits the fan, there’s no clean way out. In some cases, one founder may have founder share class terms that outline additional voting power. The CEO may not be able to legally remove a non-performing co-founder.

Carta data shows that roughly 23% of co-founders have departed their company by the three-year mark, and departure rates are accelerating in recent cohorts. Nearly one in four co-founders in VC-backed startups will face this within three years. Structure the company so it can survive if you two don’t.

Voting control should sit with the CEO. Pair that with standard vesting (~four years) so equity is earned over time, rather than handed over at signing. A clean split means nothing without the governance to back it up.

The Right Way to Split Equity With Your Co-Founder was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

A big mistake entrepreneurs make is thinking they know more than they know. I see this all the time: Someone comes from a specific industry and has domain expertise, so they don’t think they need to do customer discovery. That’s a dangerous trap to fall into.

Oftentimes, your pain points are somewhat siloed. There’s a subset of the industry that feels and operates the same way. They would buy what you’re selling, you just have to find those people. At the same time, you want to understand your path to taking over the entire market. If it is a small market, what is your path to taking over? What does this wedge unlock into?

In addition to that, you don’t just want to interview your customer. You want to do discovery with a lot of different profiles of people, even though they might not be the right purchaser.

When we were starting our HOA tech company, we interviewed literally everybody. We did about 100 customer discovery interviews across property management companies (small regional, middle market, large scale), private equity firms doing roll ups, board members of HOAs and condominiums, service providers, attorneys, other tech companies that had built software in the space, mortgage companies, and real estate agents.

That helped us shape our perspective. We didn’t come from the industry, so we had to fill in a lot of knowledge gaps. I purchased a condo and was on the board of an HOA, but I really had to shape our thought process. How do we go to market? Who is the actual customer? Is this the right pain point to solve? If there are 10 major pain points, you don’t want to solve the eighth-ranked one. You want to solve one of the top pain points — the ones somebody is going to buy, think about, and adopt.

And early on, that matters more than making a ton of money. What matters is that your time to value is super fast.

The amount of meetings I have with entrepreneurs who say, “I’ve talked to five companies. I don’t need to do diligence. I am the customer,” is insane to me.

That’s not even close to being enough. I can get just as many insights conducting diligence on the investment.

We want to meet people who have developed a secret about an industry through a combination of lived experiences and ruthless discovery. And because of rigor and experience, you will have shaped a unique perspective on the industry and your customer that is different from how others think. This perspective is a must before you start building a product and fundraising. If you have secrets that are good secrets, then it’s really not that risky to build.

I really like it when entrepreneurs save all their transcripts from their customer discovery. When I’m doing due diligence on the company, we normally want to call industry experts or their customers. But if they have all the transcripts and recordings, I can just pop them into Claude or ChatGPT and query them. They’re cutting the time of diligence for the VC firm as well as building trust.

It also shows the rigor and the work you put into what you’re building. Every entrepreneur should have their discovery transcripts in their data room.

Customer discovery often gets overlooked. It is the most important thing that you can do when you’re starting a company.

Read original post: here

Secrets Are Earned Through Ruthless Customer Discovery was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Short answer: Yes.

For most of VC history, investors had a hard rule: no investment unless you were full-time. When we started our incubator, we had that same point of view. But the bar for what you can build part-time has changed. The rules should too.

Longer answer: Now more than ever, you can raise funding without being full-time because of what you can do on nights and weekends. A great engineer can keep their salary while doing customer and product discovery — building conviction in what they’re making before they quit, and long before they ask an investor to believe in it.

We’ve funded numerous entrepreneurs while they’re still in their full-time roles because we can see high execution velocity while part-time. When we first invested in Rebulk, they weren’t full-time. But they were shipping product constantly and acquiring customers. They went on to join YC after our investment. Today, they’re crushing it. Seeing what founders can do part-time is one of the best indicators of what they’ll do when it’s their only focus.

Someone part-time may have a family, multiple kids, or a mortgage — there are real reasons you can’t just quit tomorrow. That’s understood. But the scrappy founder finds a way anyway. Maybe they fund it with early revenue. Maybe they’re just really good at articulating what they’re building. If you can do that clearly, you can raise before going full-time, and you might not even need a lead to do it.

If you’re a non-technical cofounder going part-time and you don’t have much proof of concept, it’s going to be hard to raise. Needing money just to hire your technical co-founder is a tough sell. Investors aren’t funding your vision of what the team could look like — we’re funding what the team has already shown.

If you want to raise without being full-time, you need two things:

1. Execution velocity.
2. Ability to articulate the problems you’re solving.

If you’re building something worth funding, pitch us today.

Can I raise without being full-time? was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

1. Hide until you’re ready.
2. Or build where everyone can see you.

Most founders default to stealth because it feels disciplined. Typically, it’s not.

What stealth actually protects

Stealth only makes sense when you have something worth protecting. A technical breakthrough. A proprietary dataset. A regulatory wedge a well-resourced competitor could exploit the moment they see it.

If a larger player could move fast once alerted — stealth buys you runway. It delays the moment your idea lands on a VP’s roadmap at a company with 100x your resources.

But that scenario is rarer than founders think. Ideas are cheap — R&D is basically zero, and unfair distribution is what’s actually unique. You shouldn’t be scared of someone stealing yours. Just go execute. And if someone copies you, that’s a good signal. It means you’re onto something.

What stealth costs

Building in stealth has a price.

You lose the feedback loop. Early customers are the only real test of whether you’re solving an actual problem. The further you build from their reality, the more expensive your wrong assumptions become.

You lose organic distribution. Building in public generates a compounding asset — an audience that arrives at launch already primed to care. Stealth companies launch cold, spending money to acquire attention that public builders earned for free. Migrate Mate sponsored visas for influencers in exchange for content. Jam made creative videos.

You lose talent. The best engineers have options. A company they can’t talk about is harder to recruit into.

The right question isn’t “could someone copy this?”

Almost anything can be copied. All you need is Claude and some Redbull.

The right question is: does building publicly destroy the specific thing that makes this valuable?

One of our portfolio companies, High Degree, built in stealth for months. They’re developing steam-based soil treatment equipment that kills weed seeds and soilborne disease — hard tech, physical product, real IP. Stealth made sense. They needed to validate the machine before the world was watching.

If the moat is technological secrecy — build in stealth for a defined window, reach defensible scale, then surface.

If the moat is distribution, brand, or network effects — stealth is actively harmful. You can’t build a loyal community or a word-of-mouth loop in a vacuum.

If the moat is execution and team — stealth is largely irrelevant. A competitor knowing what you’re building doesn’t really matter if you’re better at building it.

There are exceptions.

Biotech, defense, deep infrastructure. Long development cycles where premature disclosure creates legal or regulatory exposure. For everyone else, the math doesn’t work.

The honest default

Most software startups aren’t building anything secret enough to justify stealth. The execution risk — wrong product, wrong customer, running out of money — dwarfs the competitive risk.

Building in public accelerates learning, cuts customer acquisition cost, and forces you to articulate your value before you’re comfortable doing so.

Stealth should be a deliberate, time-bounded decision — not a comfort blanket that protects founders from public accountability.

Customers vote with their wallets, not their awareness. Build in public and let them.

Read the original post: here. Follow for more.

Stealth vs. Building in Public was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Early on, everyone says the same thing:

“We’re in… just waiting for a lead.”

At pre-seed, I’ve watched founders chase a lead as if it were a golden ticket — Weeks of meetings. Endless updates. All for someone to “set the round.” Meanwhile, the people who actually believe in the company are already writing checks.

Most founders structure early rounds around finding a lead because that’s how later-stage fundraising works — a lead investor prices the deal, takes a meaningful position, and signals to everyone else that someone credible has done the diligence. It’s a rational framework. The problem is it doesn’t map onto pre-seed reality at all.

With SAFEs, there are no long NVCA docs to negotiate or time constraints with closings. The lead’s traditional function no longer exists at this stage. So when an investor says, “we’re in, just waiting for a lead,” they’re usually communicating uncertainty. One foot in, one foot out. And when you stack enough of those conditional commitments together, you don’t build momentum. You build a round full of people who were never quite sure, waiting on each other to go first.

Find people with conviction. Close them. Move on.

Party rounds get a bad reputation for legitimate reasons. A lead can i) add strong momentum, ii) set the tone for the next round, and iii) possibly lead the next round. Those are real accelerants. But at the pre-seed stage, they’re mostly nice-to-haves. What you actually need is a handful of angels, a few micro funds, maybe a strategic operator or two. People you trust, who have real conviction, and who you’d actually want on your cap table for the next ten years.

Once you’re raising a real seed round, everything changes. Especially once you’re raising $4–5M or more. Now you need someone to price the deal, take a real position, and pull the rest of the round together.

Early on, chasing a lead is like hiring a general before you have an army. It looks impressive, but it slows everything down. Nobody actually needs it.

Read original post here. Follow for more!

Lead Investors Are Overrated (Until They’re Not) was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Every year, millions of Americans take the leap to start a business. They form an LLC, open a bank account, and begin building. Then they run into the same problem: the financial system does not trust businesses without history. No business credit profile means no business credit card, no meaningful financing options, and no clear path toward the growth capital required to scale.

Today, we’re excited to invest in Dao as they build the financial operating layer for newly-formed small businesses. Art Flores helped build ZenBusiness into one of the largest business formation platforms in the country, giving the team rare insight into the earliest moments of the entrepreneurial journey. Alongside Seth Snyder, an experienced fintech operator, and Rafael Lopez, a repeat SMB founder and ZenBusiness co-founder, Dao combines deep distribution advantages with operational and technical expertise. Together, they are building a guided path from business formation to long-term financial access.

The Opportunity

• Over 5.5 million business applications were filed in the U.S. in 2023, with high-propensity employer applications up roughly 37% versus 2019.
• Only 43% of startup employer firms under two years old that applied for financing were fully approved.
• Fiscal Year (FY) 2025 saw the most capital ever delivered to small businesses. In total, the SBA has guaranteed 84,400 7(a) and 504 small business loans for $44.8 billion. This includes 6,750 504 loans for $7.8 billion and 77,600 7(a) loans for $37 billion.

What Dao Actually Builds

• An unsecured business credit card designed for newly-formed businesses, helping business owners establish business credit from day one.
• Automated reporting to business credit bureaus, allowing entrepreneurs to build a real financial profile through everyday business spending.
• AI-assisted workflows that simplify SBA loan research, preparation, document collection, and lender application processes.
• A lender-matching system that connects qualified businesses with approved SBA lenders once they become credit-ready.
• Integrations with accounting ledgers and all the spend management needs a business owner expects, making Dao part of the company’s existing operational workflow.

Conclusion

Dao’s insight is simple: the card is not the product, the path is. Existing fintech and SMB lenders largely serve businesses that already have traction, revenue, and established financial histories. Dao starts at the beginning providing access and guidance through foundational financial decisions and tools that are currently not accessible or don’t exist for the day one business owner.

What makes this especially compelling is distribution. The hardest part of building a financial product is often not the software or infrastructure, but access to customers at the exact moment of need. Dao is positioned directly inside the formation funnel, where intent is highest and acquisition costs are lowest. Combined with an already-established issuing bank, debt facility, and experienced founding team, we believe Dao has the opportunity to become the financial on-ramp for the next generation of small businesses. We’re excited to welcome them to the Redbud team as they help entrepreneurs build financial credibility and a path towards growth from day one.

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Why We Invested in Dao was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Most VCs try to pick winners. Kingmakers try to create them — backing a company early with a check large enough to crown it the category leader before the market decides.

Not all kingmaking is the same. Sometimes capital is a genuine prerequisite — frontier AI, defense, infrastructure that can’t be built incrementally. But more often it’s deployed as a weapon: to buy distribution, subsidize growth, and manufacture the appearance of inevitability before anyone has earned it.

Capital creates signal. Signal shapes belief. Belief drives behavior. That’s why it can work in specific conditions.

In capital-intensive categories, money is a raw material, not a strategy. In true network markets, capital can subsidize one side long enough to lock in the other. Enterprise buyers genuinely prefer well-capitalized vendors — stability is a buying criterion. And when the underlying thesis is right, capital accelerates genuine momentum.

Databricks is the landmark case: a16z led every round from the $14M Series A onward after they asked a16z for $200k. They pushed seven PhDs to think beyond a $50M academic exit. Thiel bet on SpaceX because he believed rockets were a monopoly waiting to happen. The $671M became $18.2B because the thesis was right. The capital was conviction made tangible.

But those conditions are rarer than the strategy is deployed. Capital cannot manufacture product-market fit — it only buys time and talent to find it. Large balance sheets breed parallel bets, premature hiring, and confusion between growth and product validation. Premium valuations compress returns even on winners. And the best founders have leverage to take less capital; the ones who take kingmaker checks often need them to paper over weak unit economics.

The base rate is damning. Most $100M+ rounds since 2018 have not produced commensurate outcomes. Inflection, Adept, and Character are early evidence that kingmaking in AI is already failing. Convoy, Bird, and Fast raised enormous sums and failed anyway.

Figma beat InVision. Cursor is beating the incumbents. Customers, not capital, get the final vote.

This isn’t new. In 1903, Samuel Langley had the full backing of the Smithsonian, $50,000 in War Department funding, and a team of engineers. The Wrights had roughly $1,000 and a wind tunnel they built themselves. When the Aerodrome collapsed into the Potomac twice, the Wrights flew at Kitty Hawk nine days later.

There’s also a cost the kingmakers don’t absorb. Kingmaking concentrates capital in a handful of firms, inflates valuations across the stage, and forces every other investor to pay up or sit out.

It creates zombie unicorns — companies too big to fail gracefully but unable to grow into their valuations, locking up talent and capital for years. It pulls LP money toward mega-funds even though fund size is inversely correlated with returns. And it trains the next generation of founders to optimize for the next round rather than the customer.

The kingmakers themselves can survive on brand and secondaries. The companies, the LPs, and the ecosystem absorb the cost.

The current AI cycle is the largest live kingmaking experiment ever run. The next 24 months will produce real evidence. But the history is clear: the best venture returns have come from disciplined check sizes and founder-driven momentum, not manufactured inevitability.

The market still decides. Capital just speeds up the answer — and often the answer is no.

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Kingmaking Is How VCs Try to Buy Winners was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

Every great generation of companies starts with the same ingredient: a handful of remarkable people in the same place at the same time. The PayPal mafia. The early YC houses. What looks like a portfolio in retrospect was just a group of people who made each other better by proximity. No institution has ever reliably manufactured that environment before the decision to build has been made — before the idea is locked, before the path is chosen. That’s the gap that Nick Linck and Peter D’Ambrosio set out to close.

Today, we’re excited to invest in the residency as they build the defining talent infrastructure for early-stage founders. Nick filed 6 patents and published 4 AI research papers at IBM before the category went mainstream. Peter is a Babson-trained operator who has bought and sold companies, taught entrepreneurship abroad, and is the kind of person who duct-tapes his shin to finish a marathon (without any training). Together, they have built something in two years that most programs spend a decade trying to earn.

The Opportunity

• US business applications have nearly doubled since 2019, hitting a record 5.5 million in 2023 — the number of people willing to bet on themselves has structurally shifted upward.
• The cost of querying a frontier AI model dropped 280x between 2022 and 2024. The bottleneck to company creation is no longer capital or technical ability. It’s environment, community, and conviction.
• Traditional accelerators take 7% equity and arrive after the hardest decisions are already made. the residency takes 2% and catches founders before the leap.

What the residency Actually Builds

Think of the residency as an operating system for the most formative months of a founder’s life: live-in cohorts where residents set measurable goals on Day 1, a subtraction model that eliminates every logistical distraction, such as laundry, meals, and social events, and a curated Demo Day where investors get early access built from months of living alongside founders.

In two years, bootstrapped and profitable, the residency has hosted 340 founders across 13 global locations, produced 70 companies valued at over $3B in aggregate, and seen applications double every cohort with a 3% acceptance rate. NY Magazine put them on the front page. Sam Altman visits the houses. Entrepreneurs First and 500 Global came to the residency to learn how they built it.

The model is working. We believe the window to back the market leader is now. We’re proud to welcome the residency to the Redbud ecosystem.

Original post: here.

Why We Invested in the residency was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.

There’s two ways to build a company:

1. Stay at home and build under constraints.

2. Move to the place where you believe you have the best chance of success, aka where the best resources are (talent, capital, etc.)

Most cases follow the second path. But when 1 aligns with the right mindset + skillset, it’s special. And often taken for granted.

The conventional wisdom, reinforced by decades of capital flow and carried interest, is that great tech companies come from two places: SF and NY. The data looks convincing on the surface — until you look at where some of the biggest names in tech actually came from.

Marc Andreessen was born in Cedar Falls, Iowa. He was raised in New Lisbon, Wisconsin, a place he described as “the sticks,” the son of a Lands’ End customer service operator and a seed company sales manager. He taught himself basic programming at age nine, and while studying at the University of Illinois, he and a colleague built Mosaic, the first user-friendly web browser with graphics — an invention that changed how every human on earth accesses information.

Sam Altman was born in Chicago, and his family moved to Clayton, Missouri when he was four. He grew up in the suburbs of St. Louis. He eventually dropped out of Stanford and built OpenAI in California.

At 18, Shegun Otulana moved to Birmingham, Alabama from Lagos, Nigeria to attend the University of Alabama at Birmingham. Two decades later, he sold Therapy Brands for $1.25 billion — one of the largest software exits in Alabama history. He didn’t leave when he had the money. He announced plans to build 40 new startups in Birmingham over the next ten years, with aggregate valuations in the billions. His thesis: constraints aren’t a reason to leave. They’re a reason to stay. When he could only raise $250,000 in ten months for his healthcare SaaS company, he turned that into motivation — without the luxury of burning cash, he had to build profitably from day one.

And then there’s Willy and Jabbok Schlacks. The Schlacks grew up in a rural Missouri community with no formal education, taught themselves to code, and built EquipmentShare from scratch — a construction tech company that reached $4 billion in revenue and went public on the Nasdaq earlier this year. They built it in Columbia, Missouri. Population 130,000.

The misconception is that you have to build by water to be successful. As a VC, we want to fund a basket of opportunities. That includes the ambitious person uprooting their life to go to San Francisco to build, because they believe this is their best chance of success, and the person passionate about building at home who operates under different constraints. One founder is in the comfort of their home and may be closer to customers, but is underrated, while the other is building in a new place with unlimited access, but life is taking a back seat to the business.

Now and then, Venture Capital still shows its cottage industry roots. It’s a small industry with ~6,000 investors across 3,500 firms in the US. At that scale, a few loud investors and deals can shape the industry’s voice. On the surface, it is an echo chamber, and from a talent perspective, it is, with 60% of investors coming from Harvard and Stanford. On top of that, although there are talented people, under pressure, our psychology defaults to biased investment decisions. This is reflected in the stat that 30% of VC deals are tied to an investor’s alma mater; therefore, you can assume 18% of deals are Stanford and Harvard alums.

Investors pitch LPs on differentiation and access, but those are tried-and-true sales tactics. The industry is full of tourists and masked privilege. Everyone has an angle with networks, so being kind, honest, and assiduous is a differentiator for winning allocations with founders, but that doesn’t hold up in the LP court when it comes to securing a multi-fund commitment. We’ve even been told, “You’re not posted up at coffee shops in SF every day, so you can’t win deals there.”

There is certainly an argument to be made that if we see an SF deal, it’s probably already been picked over, so why is this Missouri fund getting a look? This has surely happened, and maybe someone’s pass is someone else’s treasure. No one knows what will truly happen with a company at the Pre-Seed stage, but having the versatility to remove any bias and strip an opportunity down to what matters is a skill in itself. Backing people who don’t give up is what truly matters, not where they are based. Someone’s roots are part of the story and a data point to support conviction.

More than ever, talent is moving to San Francisco to chase ambitious dreams, which is why we invested in the residency, which has a global network of hackerhouses that feed into the San Francisco house. This gives us a first look at people who are self-selecting for the kind of mentality we seek. Many of these entrepreneurs are immigrants and/or have Midwest roots.

Some of the most durable companies in history were built by people who had no choice but to be resourceful. Columbia, Missouri, punches above its weight — with companies like Zapier, EquipmentShare, StorageMart, Veterans United, and Carfax, it has an outsized concentration of billion-dollar companies for a city its size. That’s not a coincidence. When you build without a safety net, you build things that work.

The research on this is consistent. Capital-constrained founders tend to reach profitability faster. They make fewer vanity hires. They stay closer to the customer because they have to. They don’t have the luxury of the “figure it out later” mentality that abundant Series A capital can afford. Struggle, as it turns out, is a feature — not a bug. That’s just another reason why: the greatest driver of venture returns is resilience.

The irony is that the investors best positioned to identify this advantage are the ones closest to it. The Midwest isn’t a consolation prize for founders who couldn’t make it to the coasts. It’s a filter — one that tends to produce founders with unusually high pain tolerance, unusually tight unit economics, and unusually strong reasons to prove something.

Andreessen built the browser that played a major role in opening the internet to the world. Altman is building the technology that may reshape it again. Otulana built a billion-dollar company in a city most VCs can’t find on a map. Schlacks built a $7 billion equipment company in a college town in Missouri. Don’t sleep on the midwest.

At Redbud VC, we aren’t regionally focused. We invest in world-class talent wherever they are. Help us fill out this map, and pitch us today.

Roots Over Zip Codes was originally published in Redbud VC on Medium, where people are continuing the conversation by highlighting and responding to this story.