Designer Fund raises $23.5M Fund II to fix the design gap in tech

With $43.5M in total funds under management, our mission is to invest in exceptional founders and empower them with design to improve the world.

2010 was the year I reached a design career “Promised Land.” I had joined Facebook three years prior as our fifth product design lead to build Facebook Platform. Within a year, I was tapped to manage and build our brand and communication design team to shape what was becoming an iconic company. We hired exceptional designers with stellar work ethic and output. Rarely a week went by when I didn’t take a moment to look around and marvel at the outsized impact our small design team was having by helping launch key products like the Facebook Timeline, Chat and Video.

Our success also led many founders and investors to seek me out for design help. Can you give us feedback on our product? How should we think about hiring designers? Can we use design to help us with our growth goals?

While we were embracing design, it dawned on me that outside of Facebook, design was undervalued and underutilized. It was rarely part of a founding team and was often brought on too late, even at well-funded startups.

These questions also led me to begin questioning Facebook’s approach to design. Were we measuring the right things? Were we finding the right balance between doing what’s right for our users vs. what’s right for society? I began feeling like the people responsible for building society’s essential products and services were doing so largely without a sophisticated design approach. In essence, I was witnessing visionaries attempt to build a grand city with engineers and construction workers. But no architects.

Creating the first design-focused fund

This realization led me to connect with many great design leaders, including my partner Enrique Allen. Enrique is one of the few pioneering designers who has worked at the intersection of design and venture capital for nearly a decade. We collaborated while Enrique was leading design for Facebook Fund and together we helped popularize the Facebook Platform with ubiquitous features like "Login with Facebook" being adopted by startups for the first time. fbFund invested in companies like Lyft (formerly Zimride), Wildfire (acquired by Google) and Life360 (ASX: 360), all companies that effectively used design to create great products.

Enrique realized that some of the most successful companies had been started by founders who value design, including companies like Instagram, Airbnb, Pinterest, Square, Snap and many others. We believed there would continue to be a massive design gap and demand from founders who want to use design more strategically. We formed our first fund with dozens of design leaders to fill this design need in venture. As investors, we committed to aligning with the long-term interests of founders rather than adopt a fee-for-service consulting approach. Five years into Fund I, our thesis is becoming a reality.

Tomer London
Design is the most under-appreciated part of what makes startups win. Understanding that puts you ahead of 90% of competition. Tomer London, Co-founder of Gusto

We believe that exceptional design and user experience are fundamental to building the next generation of iconic companies. This is due to a number of factors including higher product expectations from users, lower cost and commodification of tech infrastructure that pushes differentiation to the user experience layer, and design’s ability to be used as a strategic advantage across an entire company, not only on product but in areas like marketing, sales, and recruiting. Quite simply, good design is becoming essential to building a meaningful company.

Our Fund I portfolio is already proving out this thesis. Whether it’s financial services, enterprise tools or digital health, Designer Fund companies are transforming huge industries that have poor user experiences:

  • Stripe, the new standard in online payments, invested in design early on and designed a payments platform that focused on ease-of-use for developers and reducing financial complexity for businesses. Stripe now serves millions of customers all over the world.
  • Gusto, an online HR services tool designed to simplify HR’s complex and tedious processes has used design to build a product with a net promoter score of 75, as well as build a culture and space that has improved recruiting and employee satisfaction.
  • Omada, a dynamic program to treat chronic diseases like diabetes, uses design to build a best-in-class product that creates true behavior change and has helped hundreds of thousands of people with their health.

Collectively Designer Fund companies are now valued at over $25B with a lot more growth to come.

Malthe Sigurdsson, Stripe's Head of Design (2nd from the left), with part of the early team in 2015.

Doubling down with Fund II

Building on this success, we’re excited to announce the closing of Fund II, a $23.5M fund that brings our total funds under management to $43.5M. With Fund II, we'll continue to back mission-driven entrepreneurs who are committed to using design to improve the world. These are people who are tackling problems they want to dedicate their lives to solving. They are founders that want to use design as a strategic advantage across their business in areas like product, branding, marketing, company culture and sales.

They are founders like Koen and Jorn, founders of Framer, who have built creative tools for as long as they could design and code. They are founders like Sam Hashemi and Tiffany Chu, who conceived of Remix while volunteering for Code for America and realizing cities desperately needed better management tools.

And they are potentially founders like you. If so, reach out to us and let's build something big together.

Tiffany CHu
Designer Fund has helped us build an exceptional support network, connect to life-long friends, and is one of our most inspiring investors. Tiffany Chu, Co-founder of Remix

How we add value with strategic design

For those founders who become part of the Designer Fund community, we support them with capital, design expertise, and our network of exceptional design leaders, freelancers and agencies. For example, over the course of Fund I we’ve:

  • Helped our companies hire dozens of design leaders including amazing folks like Malthe Sigurdsson, Stripe’s head of design; Namhee Koo, Gusto’s head of design; and Loren Baxter, principal designer at Remix.
  • Provided design sprints, product and brand design reviews and feedback at key inflection points.
  • Connected our portfolio companies to curated freelancers and studios and managed the process with creative direction to ensure great work.
  • Hosted unique events and programs for founders and design leaders to share best practices and support each other.
  • Assisted our companies with everything from fundraising to designing effective pitch decks with compelling stories.
Ben, Enrique and team have provided access to world-class designers as well as more hands-on product support than I would expect from a fund. They are a must-have partner for any startup. Phil Fung, CEO of Droplet

Moving from human-centered to humanity-centered design

Enrique and I are excited to continue this journey together. We now have even more proof of design’s ability to create financial returns. We’re seeing research like McKinsey’s Design Index (“MDI”) which tracked 300 publicly listed companies over five years and showed that top design performers increase their revenues and shareholder returns at nearly twice the rate of their industry. We’re seeing design help create massive outcomes on the IPO market with companies like Pinterest, Lyft and Zoom that have invested heavily in design and user-experience.

However, despite huge financial outcomes, tech companies are also dealing with an ethical crisis. The harm from the products and services we build is preventing us from having the social impact we want alongside financial returns. We believe good design can be a huge part of the solution.

If tech giants and policymakers can be convinced that this is an existential problem, then digital products can be reworked to emphasize less outrage and more healthy conversations. Tristan Harris, Designer/Co-Founder, Center for Humane Technology

To do that, designers and founders must conceive of new paradigms, new metrics and new approaches to our work. For example, we can no longer be satisfied with a human-centered design approach that serves individuals. We must add a humanity-centered process that serves our collective interests and addresses global problems like climate change, income inequality and chronic diseases. We must go beyond measuring shallow metrics like clicks, minutes and dollars and must begin to measure things like emotion, personal health, and community and environmental well-being.

The next generation of iconic companies will use design in new ways to drive profit with purpose and produce positive social impact. Designer Fund is committed to building those companies. We are committed to finding more mission-driven founders and empowering them with design to improve our world.

The Designer Fund team from left to right: Design Partner David Baggeroer, Managing Partner Enrique Allen, Managing Partner Ben Blumenfeld, and Design Program Manager Mamie Rheingold .