I first met Otto in the summer of 2021 and quickly had a feeling that we’d be working together for a very long time. During that first phone call, Otto was considering leaving his role as Director of Eng at Thirty Madison. I recall being impressed with his deep understanding of the inner workings of healthcare infrastructure, both from a technical and business perspective. He had an unwavering belief that he could help build the tools that would fundamentally change how the industry treats patients. I also knew that I wanted to be part of that, in whatever way I could support him.

Over the course of the next 6 months, we planned how Otto might strike out on his own. He had an idea that he couldn’t shake. After building e-prescribing integrations at Thirty Madison, he was convinced that there must be a better way for providers to route prescriptions, and for patients to have more visibility into and control over how and where their scripts get sent. This might sound like a simple idea, but the competition is a monopolistic incumbent that has built a tightly controlled pharmacy network over the past 20+ years. We need more truly ambitious ideas in healthcare, versus incremental progress, so I offered to lead his pre-seed round towards the end of 2021. And today, we are co-leading the company’s $9 million round with Flare Capital, which includes participation from Floating Point, GG1, Ritual Headwater and Scrub Capital.

Photon’s mission is simple: To enable patients to own their prescriptions.

Oddly enough, this is how it used to work back in the day when doctors wrote patients a physical script. Photon’s “unlock” involves giving providers the tools to do this, but purpose-built for a modern age. Surescripts has built something powerful — a strong network of providers and pharmacies to send scripts digitally, but their product is painful to integrate with. As a result, the most important participant is left out — the patient! Patients today have no idea what their drugs will cost, if they’re covered by their health plan, where they might be in-stock, and how long they’ll have to wait. This friction leads to embarrassingly low adherence rates for medications in the U.S. — a $300 billion a year problem — and increasingly poor health outcomes. I believe that what America needs is a new prescription network built from the ground up with patients at the center.

Photon has designed a product that I can only describe as beautifully simple for its users (patients, providers, pharmacies), but wildly ambitious and complex underneath the hood. In crypto, we call this the “mullet” — complex web3 on the back-end, but simple for users akin to web2 on the front-end. Photon is the mullet of prescription networks. I’m sure Otto will appreciate that analogy :-)

How does it actually work? Photon builds prescribing tools and APIs for providers to write and deliver digital scripts to their patients, which they receive via Photon. Patients can then choose to send their scripts to almost any pharmacy. This enables patients to actually own their prescriptions, while keeping a digital record and wallet for all of their historical medications.

Customers like Sesame, Summer Health and Blueberry love Photon because the product is extremely easy to integrate with (days versus months), and saves them hundreds of hours of time coordinating between their patients and pharmacies. Most importantly, with a digital script in hand, patients can now go shopping. While Photon enables patients to send scripts to almost any pharmacy in the U.S., pharmacies can choose to integrate with Photon directly in order to display pricing, inventory, and so on. In other words, Photon is bringing the e-commerce revolution to pharmacy.

This is the largest investment we’ve made to date at Notation. We believe that Otto, his co-founders Rado and Sam, and the rest of the exceptional team at Photon are on their way to building a generational company here in Brooklyn, NYC. Most importantly, I believe Photon Health has the opportunity to dramatically lower the cost of drugs in the US, and provide patients better transparency into and greater control over how they get their medication.

If you’d like to join us on this mission, get in touch with me personally. LFG.

Photon Health was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

So we were already primed when we met Emily Rasmussen and Arrel Gray, and they showed us Grapevine, a new social platform that organizes giving circles, and makes them dramatically easier to administer and operate, democratizes the process of directing donations among groups, and improves transparency for reporting and impact. In an environment in which the large social media platforms have become toxic, we believe Grapevine has the opportunity to change the narrative on how social platforms can coordinate positive behavior, helping both community organizers that create and run giving circles as well as those in need.

As we spent more time with Emily and Arrel, we also discovered that philanthropy is not just in need of new products and structures, but that it’s also a very large market and business opportunity ($450B donations in 2019), growing rapidly, largely recession-proof, and driven by individual donors (70% of gifts annually) rather than institutional or corporate interests. So in addition to wanting to be involved as donors on the platform, we also decided to invest in Grapevine.

As part of this investment via Notation, we’ve also decided to personally run several matching programs on the platform in the years to come. Today we’re announcing our first one — a $5k matching effort to members that choose to donate to “Accelerating Access x Opportunity in Tech,” a new giving circle run by our friend and co-investor Steve Schlafman. We encourage you to learn more about this effort and to consider becoming a member, where we’ll all have the opportunity to vote and direct donations to organizations that further access and opportunity to underrepresented individuals in the tech community.

We couldn’t be more excited to be part of the Grapevine story, as investors, as personal donors, and as active members of the community. There’s a lot more work to be done, let’s get to it.

Grapevine, giving and a $5k match was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Like all new emerging technologies, the core infrastructure is built up over time, often over many years. For NFTs, that’s blockchains like ETH and Flow, and transactional minting and marketplace products like Opensea and others. We believe we’re now emerging into the next phase of NFTs (and crypto broadly) that will give rise to a wave of consumer-facing (and usable!) products built on these core Blockchains and new platforms. Evaluate Market is one of them, and we’re excited to announce that we recently co-led their pre-seed round with our friends at Castle Island, with participation by several strategic angels and Draftkings.

We first discovered Evaluate Market by stumbling on their popular discord channel, which most NBA Topshot fans are well aware of by now. Through their community and analytics product, Evaluate Market plans to be the first truly social platform built around NFTs, a place to look up stats, trade notes with like-minded collectors, and eventually a slew of other social features that we believe will make NFT transactions more informed and more fun. We think of this as NFTs 2.0.

It’s no surprise that the founders of Evaluate Market, Christian Dittmeier, Alex Ramirez, and Cody Bouche are avid collectors themselves, building the product to serve their very needs, as well as the community broadly. Check them out on Evaluate Market and join the Discord to connect directly. See you there!

Evaluate Market was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

For example, the Uniswap community treasury is estimated to be worth more than $10B at the time of this writing. Compound and Tezos also have hundreds of millions in their treasuries, and there are many others, and more to come. And yet, while DAOs now control many billions of dollars across the crypto ecosystem, community input and governance vary widely across projects. Compound and UNI are two examples of what most would consider relatively transparent and well-managed governance today, but many others have disjointed and opaque governance, even if they aspire to do better. The information required for investors to create, vote, and govern protocols is hard to find and difficult for the average token holder to understand. Tally is building both open source tooling and user-facing front-ends to make governance easy for protocols and participants alike, and we believe will set the standard for good governance across the crypto ecosystem in the years to come.

Today Tally is launching its first beta product, which is the best place to create and vote on proposals that govern leading DeFi protocols. The site brings transparency to on-chain governance by showing who the participants are and how they vote. Plus, it has email alerts for token holders to stay up-to-date on new proposals. The site supports DeFi projects like Compound, Uniswap, Indexed Finance, PoolTogether, Radicle, Idle Finance, Inverse Finance, and Unslashed Finance. Fei Protocol will join next week. And many more are on the way.

In the years to come, we believe strong community governance won’t be considered a nice to have, but absolutely critical to a project’s success, and we believe Tally has the opportunity to create that standard, increasing the odds of success for both mature and new protocols, and greater participation and inclusion for token holders of all levels of sophistication. We’re excited about Tally not just because we believe good governance products will be valuable, but because we believe Tally will make the entire crypto ecosystem more valuable. And that’s something worth voting on.

Tally was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Broadening access to Notation and venture capital by opening up Notation III on AngelList.

We founded Notation in 2015 with a simple thesis — That betting on founders uncomfortably early, pre-product market fit, and in many cases pre-product, would create outsized rewards. We called this “pre-seed” funding, but really it was just a moniker for something that is as old as venture capital itself — investing in passionate people with a dream. Six years later, we believe this simple thesis is working well, creating unique partnerships with founders at the earliest stages and top decile returns for our LPs.

We also believe (and have since the beginning) that the community built around Notation is critical to our success. Notation, boiled down, is just a network of aligned members — The founders we partner with, our part-time partners and advisors, the many close relationships we’ve built in the startup community over the past decade-plus, and the LPs (our investors) that enable us to do what we do. Our LPs include both large long-term oriented institutions, and by design, a number of individual “community LPs,” who invest smaller dollars but have an outsized impact on our community and success. Transparency is one of our firm’s founding principles, so you can see all of our investors on our site, as well as our operating manual on github.

Today (finally!), we’re going one step further and opening up Notation so that a much broader group of people can invest in our Notation III-A community fund on AngelList. Unfortunately, due to SEC restrictions, this is limited to accredited investors, but our hope is that we can open up Notation to everyone over time. As we announced a few months ago, we raised $41M from institutions for Notation III. Notation III-A is a sidecar fund, which invests pro-rata in all of the same companies, and has all the same rights and privileges as the institutional fund. The fund is about adding people to our community, not about the capital, and is limited to $1M in total size.

Historically, we’ve raised our community funds from folks we’ve worked with before, but today that changes. We believe strongly in the democratization of financial capital, that open systems are better than closed, and that venture capital should not only be reserved for institutions and the very wealthy. We invest in this belief through many of our core areas of interest — including open source software, financial inclusion, blockchain and crypto, open marketplaces, among others. So why shouldn’t we hold ourselves to the same standards? Our hope is that by opening up access to Notation III-A, the very networks that we credit for our success will become stronger, more diverse, and more interesting.

Normally, venture capital funds have large minimum investment amounts, in many cases $250k or more. You can invest in Notation III-A with as little as $2,500, and if you’re interested in participating and want to invest even less, we’ll try to accommodate that.* We hope that you’ll join us, as we continue to build Notation for many years and funds to come, and we’re grateful for our community’s support, which is now stronger than ever.

*You should not invest what you can’t afford to lose.

Notation III-A — Community Fund was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Why so stealthy? In Anton’s words: “It’s not that we were hiding, but it’s just that we come from a capital markets background and tend to shy away from talking about things before they’re ready. We’ve now reached a solid state, working with a good set of customers — The platform is maturing.”

In just the past two years, Talos has quietly built the most mature institutional trading platform for crypto, supporting the full trading lifecycle for institutions of all sizes and sophistication, including price discovery, execution, and settlement, and reinventing the way crypto assets are securely traded at scale. Anton and his co-founder Ethan have done this before in traditional markets through their work at AQR and Broadway Technology. They combine unique insight and experience with traditional capital markets and world-class engineering for high-performance trading systems.

For years now, we’ve heard the same prediction in crypto over and over again — That the “institutions” are coming, and that when they do, it will rapidly increase the mass adoption of blockchain technology. Until just recently, as Anton knows well from his time at AQR, crypto has been very difficult for traditional institutions to access — But with new trading platforms like Talos, increased clarity in the regulatory environment, and better security procedures, to name just a few — institutional adoption is finally happening. For example, just last week Square announced that they purchased $50M worth of bitcoin for their treasury. Paul Tudor Jones deemed bitcoin the “best inflation trade” and has invested single-digit percentages of their $22B hedge fund. We expect to see many similar announcements in the months and years to come, and we believe Talos will be one of the foundational enablers of this new institutional wave of crypto participants. Institutional crypto adoption is here, and we believe it’s here to stay.

Talos was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

As Covid-19 further accelerates the shift online, adding to years of mobile adoption and an always-on Internet, managing our communities has never been more important. And while the Internet makes communities easier than ever to access, the way in which we do so is still disjointed for the user and often difficult for organizers or moderators to manage. Today, Circle is launching out of beta, and changes all that.

It’s rare to meet founders with as deep an understanding of the problem they’re tackling as Sid, Rudy, and Andrew. But when you do, you can usually spot it in the first few minutes, and that’s exactly what happened when I first met Sid through our mutual friend and former Notation founder Brian Tobal.

The reason Sid and his co-founders have such unique insight is because they’ve spent the last several years as early employees at Teachable, helping the company scale from $1M to more than $40M in ARR, working closely with some of the largest creators on the Internet, listening to them and their problems. What they discovered, which Sid so eloquently lays out in their launch post, is that many of these creators don’t have direct access to their communities, with the large platforms like Facebook and Youtube wedged in-between, while community products such as Facebook Groups (for mass consumers), Slack (for workplaces), and Discord (for gamers) are not purpose-built for their needs.

In Sid’s words:

“ We fell in love with the idea of empowering creators by helping them build clean, distraction-free, non-toxic communities that prompted loyalty from their members and potentially made for monetizable opportunities like memberships.”

In the months since they’ve built just that, and the outpouring of love from early customers and community members has been nothing short of inspiring.

Here are just a few early examples of Circle communities:

Smart Passive Income: Pat Flynn has an audience of 100k+ creators. His SPI Pro membership launched on Circle and went from 0 to $200k ARR in a single month.

Forte Labs: Tiago Forte and David Perrell’s umbrella banner for their courses, Building a Second Brain and Write of Passage. Circle now powers their education delivery suite, which they describe as “the Crossfit for writers.”

Makerpad: A premium no-code community run by Ben Tossell that charges $600 for lifetime access. Makerpad moved its community from Slack to Circle.

teachable:hq: A community run by Teachable, the platform for online courses. Teachable opted to shutdown its Facebook community of 45k+ creators after they switched to Circle.

And today, the team at Circle is launching their product out of beta, available to anyone who wants to sign up and give it a try. In fact, Notation will be using the product to manage our new Notation Moonlight community, so we’ll be customers starting next month too.

We’re so grateful that Sid, Rudy, and Andrew chose to partner with us. We believe they’re the right team building the right product at the right time, and we can’t wait to see all the communities built on Circle in the years to come. As active organizers and participants in countless different communities, we know the tools need to be right so that they don’t get in the way, and that communities work best when they focus on what’s truly important — The people, the human connections and shared experiences.

Circle was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

• We raised Notation III, a $42M fund to back the best product-obsessed teams at the pre-seed stage. We continue to focus on investing in teams based in NYC, but selectively invest in other geos too.
• Today we’re launching Notation Moonlight— a new program, community, and set of resources for future founders, starting in NYC. You can apply HERE.

Some background:

A little over six years ago, Alex and I began to moonlight as VCs, trading notes on what would ultimately become Notation. We spent countless hours debating different iterations, strategies, our motivations and values, our hopes and dreams. A year later, we announced Notation I, the first dedicated pre-seed fund in NYC, to back founders that were never “too early.” It’s easy to forget, particularly given the environment today, that a NYC-focused pre-seed fund in 2015 was an unusual proposition. Our thesis then was simple, although not yet proven:

• NYC would become a sustainable technology ecosystem producing world-class technical talent and startups at scale.
• NYC needed more capital — particularly, small, focused funds that specialize in partnering with founders at the very beginning as the traditional venture firms were getting larger. We called this “pre-seed,” and were frequently met with confusion and smirks. Perhaps, Notation I was a touch early to market ourselves :-)

Fast forward a few years —after almost two funds fully invested and performing at the top of their vintages, more than 50 portfolio companies, 100+ founders who inspire us to work for them day in and day out, countless lessons learned, an amazing community powering Notation — we still believe the thesis above to be more relevant than ever, albeit slightly less controversial than it once was.

What’s next?

In 2020, the world irrevocably changed. The combination of a global pandemic, the accelerating and long-overdue support of the BLM movement, failed leadership at multiple levels, among other complicated challenges, has given us new perspective on what it means to run a venture capital fund, allocate capital, and support entrepreneurs. We take this responsibility seriously, and believe now more than ever that our capital needs to be invested in founders who will responsibly remake our society of tomorrow. Towards the beginning of the pandemic, we closed $42M for Notation III to do just that.

We will continue to focus on investing in pre-seed product teams building capital-efficient software companies based in NYC — this has been (and perhaps always will be) our bread and butter. But it’s not representative of everything that we do, and as we’ve grown and learned, we also know it’s important to make exceptions, to know when to break the rules, and so we’ve opportunistically invested in ecosystems outside NYC like Toronto, LA, Boston, and Atlanta, as well as several non-software companies too. Katherine Wu, who joined us as our first full-time member of the team outside of myself and Alex, has been particularly integral in expanding our areas of interest, and we expect these to continue to evolve as we grow our team and firm in the years to come.

Notation Moonlight — Supporting future founders

As we look further into the future, we believe that another part of Notation’s responsibility to the community is in supporting the next generation of founders, who will remake society as we know it but haven’t yet begun. Part of the draw of Silicon Valley lies in its deep entrepreneurial network, culture and resources — those who want to start a company have long followed the proverbial path to Sand Hill Road and moved out west in order to access the network and capital that has allowed them to build a startup from ground zero. In this regard, New York still has a long way to go.

So as part of Notation III, we’re announcing Notation Moonlight, an 8-week program, network, and set of resources for future founders, folks thinking about starting a company one day but haven’t yet begun. In the first program, we’ll focus on founders here in NYC, but may expand to other geographies over time, as we’ve done with Notation itself. If you’re interested in applying to our inagural program, you can apply HERE until August 28th. The ultimate goal for this program is to identify, encourage, and partner with future founders in NYC to help them better prepare for the journey of starting a company. The program is completely free and we don’t take equity — it’s our responsibility to help level the playing field for the next generation of founders.

It feels like just yesterday that Alex and I were moonlighting in our spare hours, dreaming up Notation, and yet five years later, we’re still in the very early days of what we believe it can become. Our hope is that we will make an enduring impact on how companies are created and built, both here in NYC and beyond. There are too many people to thank for putting us in business — from our LPs, small and large, who trust us with their capital; to the many founders who trust us to be their partners, through thick and thin; to our families for supporting all of our entrepreneurial dreams— we’re grateful and privileged to do this work. Now back to it, there’s so much still to do…

Notation III & Notation Moonlight was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

You can read their post Introducing Halcyon Health from a couple of weeks ago. It’s a good glimpse into what they’re taking on and how they plan to tackle it. Substance abuse disorders are no easy challenge — Drug overdose is the leading cause of death in America for people under the age of 50, but it’s about damn time we give it a go.

A personal note — I first met Josh years ago when he was starting as a new VC at Compound. The quality of his intellect was immediately striking, at times intimidatingly so. But what I grew to really admire in the years since is his kindness, patience, openness, integrity, and drive to build something impactful — I learned this as a frequent collaborator to Josh, at times competitor, and more recently as a friend. I suspect he’ll be a terrifyingly capable founder and CEO. Andrew we’ve gotten to know in recent months, but he struck us as Josh’s perfect counterpart, with deep product and healthcare experience, as a PM at Quartet Health and more recently as an MPH at John Hopkins University.

In a hyper-competitive VC market and at risk of furthering all of the typical stereotypes and hyperbole, I’m grateful that Josh and Andrew invited us to work with them, alongside Version One Ventures and of course Compound. In the people business, relationships still matter, and I’m glad that’s the business we’re in.

Nick

Halcyon was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.

Notation hosted its second annual LP meeting a couple of months ago, and as usual, we published our deck. In addition to the typical annual meeting topics such as fund performance and portfolio company reviews, we decided to do a few deep dives into specific areas of current interest. In particular, we’ve been investing and participating in the Blockchain space for a few years now. We have been deeply involved at the earliest stages with Livepeer, Bison Trails, Arwen and others — so we figured it might be interesting to go deep on what ‘blockchain participation’ really means to us from a venture perspective.

You can find the deck that we used here, and our learnings below. We hope that by sharing our thinking, we’ll hear additional perspectives from the community, and we expect our views on this space will continue to evolve in the years to come.

We see blockchain companies as a new way to organize the traditional “firm.” Many of the decentralized protocols and apps that are being created today are also employing a fundamentally new approach to their corporate structure. One simple way to think about many crypto projects is to view them through the lens of open source development. No single person or corporate entity owns the Bitcoin or Ethereum network, for example. These protocols are built and maintained by foundations, similar to Linux, and kept running by a network of decentralized nodes all over the world.

As open source projects, anyone can participate in these new and disruptive networks. As seen from the chart below, participating takes many forms — Contributing code, computing power, community support and governance, providing early capital, marketing, among many other forms.

One way to categorize the types of participation is in “proof of work” versus “proof of stake,” but often each crypto network has its own unique mechanisms that look a little different. For example, proof of stake participation may be primarily done via governance, full node operations, and staking. As a network participant, it’s crucial to understand these nuances, but it takes real time and commitment to do so in a meaningful way.

As VCs, we’re conscious of the time and effort it takes to particulate in crypto networks, but over the last couple years, we’ve found that active participation can really move the needle for returns, and often leads to better outcomes than passive investing, even accounting for the additional investment of time. We’re not alone in this thinking — our friends at Cambrial Capital also found that the first few months of validating on a network is likely more profitable than many years in aggregate after the network has matured.

We believe network participation is still in its infancy, but given our experiments to date and our technical and operational DNA, we very much expect to expand our capabilities here in the years to come. Our plan is to be as active participants as we are investors in the next generation of core Blockchain protocols.

Big things to come in 2020 on that front… so stay tuned :)

Cheers,

Alex, Nick, Katherine, Thomas

PS as always, we are at hello@notation.vc - feel free to visit us at notation.vc or say hi on twitter!

Notation & Blockchain Participation was originally published in Notation on Medium, where people are continuing the conversation by highlighting and responding to this story.