Rackhouse Venture Capital, a San Francisco-based firm known for supporting early-stage startups, has recently announced a significant addition to its team: Brendan Baker has been appointed as the new Partner.
This marks an exciting phase for the firm, which is committed to partnering with innovative AI/ML companies.
In an exclusive conversation, Brendan shared insights into his background, his vision for the future of venture capital, and his plans for the firm.
Brendan Baker’s Journey in Venture Capital
Brendan’s venture capital journey spans several key roles and companies.
He kicked off his career at AngelList as the second employee, where he played an instrumental role in managing the first 10,000 deals on the platform, working closely with both investors and startups.
After AngelList, Brendan moved on to Greylock Partners, where he established a team and program designed to systematize the firm’s venture processes using data, research, and technology.
Most recently, Brendan was a Partner at Ridge Ventures, where his focus was on investing in software teams that address complex and high-impact sectors, such as returns management and enterprise resource planning (ERP).
His work has primarily been centered around applying algorithmic approaches to venture capital, leveraging data and research to build structured investment programs.
Introducing Rackhouse Venture Capital
Rackhouse Venture Capital, based in San Francisco, is dedicated to supporting early-stage founders who are applying artificial intelligence (AI) and machine learning (ML) to tackle real-world problems.
The firm recently closed its Second Fund with $45 million in capital commitments, which will allow them to continue their work in backing AI companies and founders who have already achieved product-market fit in overlooked niches.
The firm’s mission is to provide early-stage funding for companies that focus on AI-driven solutions across a range of industries, including those that may not traditionally attract Silicon Valley’s attention.
The Firm’s Strategy: Embracing ‘Boring’ but Essential Sectors
Rackhouse’s strategy is clear and distinctive.
The firm targets Pre-Seed and Seed rounds for companies working on AI applications in industries that are often seen as “boring” but are essential to the economy.
These include sectors such as supply chain management, industrial automation, manufacturing, construction, and enterprise resource planning.
According to Brendan, the firm is particularly interested in companies applying AI to solve challenges in these areas, which have traditionally been underserved by software innovation.
Rackhouse Ventures aims to be a hands-on partner for these startups, willing to lead or co-lead the early rounds of funding and providing support throughout the company’s journey.
Supporting Startups Beyond Capital
Beyond providing financial support, Rackhouse Venture Capital takes a comprehensive approach to helping its portfolio companies succeed.
Brendan emphasized that their goal is not just to provide capital but to actively engage with founders in areas such as hiring, roadmap planning, addressing co-founder challenges, and facilitating follow-on fundraising.
The firm leverages its extensive network and expertise in AI, machine learning, and data science to help startups navigate the complexities of achieving product-market fit.
A Diverse and Supportive LP Base
Rackhouse has been fortunate to have a strong base of institutional Limited Partners (LPs) since the launch of its first fund.
These LPs, both existing and new, have played a crucial role in supporting the firm’s growth and expanding its reach.
Brendan noted that having LPs from a broad range of international backgrounds has been beneficial, enabling Rackhouse to build a globally connected firm that attracts diverse opportunities.
Qualities That Rackhouse Looks for in Founders
Brendan shared that Rackhouse looks for specific qualities in the founders they back.
They are particularly interested in founders who are customer-obsessed, highly urgent, and have domain expertise in the problems they are solving.
These founders typically know their first 5-10 customers, have high engineering velocity, and focus on translating AI into products that meet real customer needs.
On the flip side, Rackhouse is less interested in inexperienced teams or those who are overly technical without a strong product focus.
They also avoid founders who approach AI from a top-down perspective, preferring those who are solving concrete, bottom-up problems.
Notable Companies in Rackhouse’s Portfolio
Despite being in the early stages, Rackhouse is already seeing success with several breakout companies in its portfolio.
These include Codieum, a coding copilot startup rumored to have raised at $2.85 billion, Nash, an orchestration platform for last-mile logistics, and Pogo, a consumer data platform with impressive revenue growth.
These companies reflect Rackhouse’s focus on AI-driven solutions that have the potential to disrupt established industries.
Looking Ahead: Focus on Overlooked Industries
Looking ahead, Rackhouse sees enormous potential in industries that have long been neglected by technology and innovation.
Brendan highlighted sectors like logistics, supply chain, manufacturing, ERP systems, procurement, and construction as areas ripe for disruption by AI.
While these industries may not be glamorous, they are critical to the global economy, and Rackhouse believes there are significant opportunities to bring AI-driven software solutions to these spaces.
With a focus on solving real-world problems and supporting founders with the right expertise, Rackhouse Venture Capital is positioning itself as a leader in AI-focused venture capital, ready to back the next wave of breakthrough companies.