Lattice
Jack Altman is the cofounder and chief executive officer of Lattice.
- Lattice, a startup that makes software for human resources, has created a venture capital fund to back employees who leave to start their own startups.
- Lattice's cofounder and CEO Jack Altman said it will invest in any founder who worked at Lattice for more than 3 years, leaves on good terms, and starts a business within 12 months.
- It's the latest private company to invest in startups. The corporate venture capital strategy relies on backing founders who are trusted individuals.
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Another startup is creating a venture capital fund to invest in employees who leave to start their own companies.
Lattice, which makes software for human resources, is the newest corporate patron of entrepreneurs. The firm will invest $100,000 in almost any company started by a former employee, in exchange for a stake in their business.
Tech giants like Google and Salesforce have long relied on investing in startups as a money-making strategy. In recent years, more private companies have joined the fray of corporate venture capitalists, and some are placing bets almost exclusively on their own alumni.
Lattice's cofounder and chief executive officer, Jack Altman, is so confident in his former employees that he's bypassing the usual vetting process for tech investing.
The Invest In Your People fund will write checks based on only three criteria: The employee must have worked there longer than three years, leave on good terms, and start a business within 12 months of their departure, Altman told Business Insider.
"As long as you meet those parameters, we'll invest in your company," he said.
He added that a company that deals in illegal activities or directly competes with Lattice would not qualify for a check.
Lattice will invest out of its bank account, rather than a separate investment vehicle, Altman said. The unusual structure means that anyone who owns a share in Lattice will also own a very small piece of the company's portfolio. The deals do not require sign-off from its board directors.
The fund might not write its first check anytime soon. Fewer than a dozen employees meet the criteria, Altman said. Today, Lattice has about 150 employees.
Here's why startups are placing bets on their former coworkers
Altman, who does some angel investing on the side, might be flexible on the type of startup his company funds. Still, investing in former employees creates a filter for founders he knows and trusts.
Lattice
Lattice has about 150 employees.
Lattice attracts a certain type of job candidate, he said. The startup's software helps managers give employees feedback more regularly, draft their goals, and build an agenda for their next check-in.
A person who goes to work at Lattice is someone who "likes our mission of making work meaningful," Altman said.
"And hopefully," he continued, "the experience at Lattice is one that grows them, in the same way that a college would, hopefully, attract good people and then enrich them and make them even more prepared" for their next chapter.
The same thinking explains the increase in investor appetite for former startup employees, a trend detailed in a 2019 article in The New York Times. A former head of data science at Airbnb raised $55 million for his debut fund with the goal of backing other defectors from Airbnb. More established firms like Andreessen Horowitz and Sequoia Capital have been hiring partners away from companies that recently went public, in order to jack their alumni networks, the Times reported.
To be sure, Lattice has far to go before it can expect to deliver a group of founders as recognizable as the PayPal mafia. Its employees are more likely to leave and start businesses when their stock options vest, which allows them to purchase the company's stock after a specific number of years, or when Lattice has an exit.
It's raised about $49 million in outside capital from investors including Tiger Global Management, Marc Benioff, Alexis Ohanian, and Slack's venture fund.