The Chainsmokers just closed their debut venture fund, Mantis, with $35 million
Alex Pall and Drew Taggart are best known as The Chainsmokers, an electronic DJ and production duo whose first three albums have given rise to numerous Billboard chart-topping songs, four Grammy nominations and one Grammy award, for the song “Don’t Let Me Down.”
Soon, they hope they’ll be known as savvy venture investors, too.
They already have some major-league believers, including investors Mark Cuban, Keith Rabois, Jim Coulter and Ron Conway, who are among the other individuals who provided the Chainsmokers’s new early-stage venture firm, Mantis, with $35 million in capital commitments for its debut fund.
It’s a surprisingly traditional vehicle in many ways. Mantis is being managed day-to-day by two general partners who respectively offer venture and operational experience: Milan Koch graduated in 2012 from UCLA and has been an investor ever since, including as a venture partner with the seed-stage fund Base Ventures; Jeffrey Evans founded the record label Buskin Records and the mobile communications platform TigerText (now TigerConnect), among other companies, and has long known the Chainsmokers’s business manager, Josh Klein.
With fundraising begun earlier this year, the firm has already made a handful of investments, too, including the fitness app Fiton (Pall says they “squeezed into the A round after its close”), and LoanSnap, a mortgage-lending startup that was founded by serial entrepreneur Karl Jacob.
Pall and Taggart take their health seriously, so the fitness app is easy to understand.
As for why the world’s highest-paid DJs would be interested in such a seemingly staid business as mortgage lending, Taggart says the firm’s mission is ultimately to find and fund a wide range of startups that could potentially benefit its young audience, and that he and Pall are happy to use their star power to help related founders when a particular technology catches their eye.
In the case of LoanSnap, he says that he and Pall were impressed by LoanSnap’s promise to process loans more efficiently than other lenders. By getting involved in the company, all sides also recognized a “massive press opportunity for LoanSnap at a time when COVID was hitting and there was going to be billions of dollars in refinancing going on that [the company] wanted to participate in,” he says.
Indeed, despite investing a relatively small amount — $250,000 — in what was ultimately a $10 million round for LoanSnap in May, Mantis was credited in numerous reports as being the deal lead.
Taggart and Pall say they also take inspiration from singer Jimmy Buffett, who has co-created numerous businesses to both benefit, and capitalize off, his own fan base. Though Buffett started with Margaritaville — a hospitality company with a casual dining American restaurant chain, a chain of stores selling Jimmy Buffett-themed merchandise and casinos with lodging facilities — he has more recently begun building retirement communities in Florida for aging Buffett acolytes, and Pall and Taggart say the strategy resonates.
“When we started eight years ago, our fans were primarily all in college,” says Taggart. “Now they are dealing with paying back their college loans, and they’re probably applying to buy their first house, so a company like LoanSnap feels like one of those startups whose services our fans have grown into needing.”
Pall and Taggart aren’t entirely brand new to investing. Pall says they’ve been making seed-stage bets as angel investors for several years, including in Ember, an eight-year-old, LA-based company that makes temperature-controlled mugs and travel mugs and has raised roughly $25 million altogether, shows Crunchbase.
“I’d like to say that we were like thinking in this incredible way about the business at the time, but we were just like, ‘This is a really great product and we love the founder,’ ” Pall says.
In fact, the two got into a number of “diverse deals,” he continues, but “all of it was inbound” until two years ago, when they “decided to kind of change our strategy and go seek out the opportunities that we thought were out there… We thought that maybe if we institutionalize this process, [we’ll discover] a lot more opportunity out there for us to work with dynamic founders and interesting founders who are going to change the landscape of tomorrow.”
Soon after, Pall and Taggart were introduced to Koch and Evans, who had already joined forces and were looking for an investment partner who was a market influencer. The group spent the next year getting to know one another, and things began coming together from there.
Pall and Taggart — who say that all four members of the team have to want to do a deal for it to move forward — are certainly entrepreneurial themselves. Aside from performing roughly 100 shows last year before beginning work this year on a fourth album, the two also run a production studio. And they are stakeholders in a small-batch spirit brand called JaJa Tequila.
Last year, they also co-founded YellowHeart, a ticketing platform that aims to put more power in the hands of performers, rather than scalpers.
Mantis was originally targeting $50 million in capital commitments, as reported by Bloomberg. Asked if that target proved too ambitious, Koch says the original idea was to raise $30 million, and that though the fund’s limited partner agreement stated that it could raise up to $50 million, the team “just decided that for a first-time fund, in order for us to produce a great IRR, we’d just rather stick to the target.”
You can find our interview with Taggart and Pall at the 21-minute mark.
Pictured at the top of the page, left to right: Jeffrey Evans, Alex Pall, Drew Taggart, Milan Koch.
This post first appeared here: https://techcrunch.com/2020/09/15/the-chainsmokers-just-closed-their-debut-venture-fund-mantis-with-35-million/