Factor Fund II
Investor Presentation - 2025
The Paradigm Shift
AI and Crypto infrastructure have fundamentally altered the dynamics of company creation
Coding is Commoditized:
10-person engineering team can be replicated 1 founder + exponentially improving AI tools
Build Costs Have Collapsed 90%+
What used to cost $5M to build now costs <$500k
Revenue Paths Accelerate
$1M in ARR is achievable with team of 1-3 people in weeks not years
Market Multiplication Effect
Products once needing $100M+ TAM now profitable at $10M TAM
The Result
Thousands of "too small" markets suddenly represent venture-scale opportunities
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The Trillion Dollar Unlock
A Cascading Opportunity
What was "too niche" for VC is now a goldmine of high-margin, defensible businesses
Regional enterprises, specialized workflows, and legacy verticals now represent venture-scale returns
The multiplier: Each cost reduction of 10x creates 100x more viable market opportunities
The prize: Dominant positions in thousands of underserved segments before competition arrives
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An Operator + Investor Approach is Required
2023: Factor Fund I
Launched with prescient, contrarian thesis to back practical crypto applications at market bottom. 18 investments with 4 early markups.
Proven track record of building businesses as well as investing:
2015: HyperScience
Scaled as COO in early enterprise AI, nearly 10 years before ChatGPT.
2018: Two Sigma
Built quantitative analytics platform, Venn, used by 1,000+ allocators with $10T+ in AUM when Excel models were the status quo.
2021: GSR
Led 50+ early-stage investments in crypto and developed institutional DeFi platform anticipating institutional adoption.
Unique Market Access: Deep relationships with traditional businesses outside the SF/NYC bubble
We've been consistently ahead of the market on identifying emerging technology trends. The latest is the unit economics revolution.
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A Sea Change for Early Stage Capital Markets
The Misalignment
Old Reality
High build costs and slow revenue = founders NEED traditional VC runway
New Reality
Non-technical founders can build $100M+ businesses solo, founders have leverage to choose their path
The Gap
Traditional VC still forces every company toward unicorn-or-bust outcomes
Factor's difference:
Two funding paths matched to how companies actually want to grow
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Where We Invest - Ignored Value Creation
Our Core Investment Thesis: Companies can achieve dominant market share (30-50%+) in less competitive segments while building sustainable, profitable businesses AND offering investors traditional venture-scale MOIC.
Examples of Opportunities Unlocked by AI and Crypto rails:
Regional powerhouses: Franchises, home services, equipment dealers ($200B+ combined)
Vertical Solutions for traditional industries: Agriculture, logistics, manufacturing
B2B payments for niche sectors:
Wholesale electronics, specialty imports
Workflow automation:
Tools for frontline workers, field services, traditional trades
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A Market Competitors Can't Access
Structural Barriers to Entry
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Mega Funds require $100B+ addressable markets to move the needle and justify deployment
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Career investors aren't equipped to construct new business models and adapt to new realities
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Requires an understanding of traditional businesses, owners and access to those relationships
Result: A wide open playing field for investors who have the right tools
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Flexible Capital for the New Reality
Fund II is designed to capture upside from both traditional early stage ventures and those uniquely designed for this AI native era of capital efficiency
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Traditional Seed/Series A
Standard $1-3M high-conviction stakes in solutions poised for fund-returning MOIC.
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Shared-Earnings Structures
Revenue based investment structures for profitable businesses seeking growth capital
- Targets 25%+ IRR via revenue share and an equity warrants
- Delivering early cash returns plus upside exposure to breakout successes
Strategic rationale:
Two funding paths optimize for how companies actually scale today
LP advantage:
Earlier distributions from shared-earnings + venture upside from equity positions
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Portfolio Strategy: Diversified Return Streams
Core Investments (90%)
- Standard equity with structure flexibility based on company trajectory
Consulting OpCo (10%)
- Market acceleration and early driver of cash returns
Combined Effect
- Faster DPI timeline with maintained venture return potential
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The Consulting Advantage
Proprietary Intelligence and Distribution
10% of Fund II commitments earmarked to capitalize a consulting operating company with multiple benefits to LPs:
Investment Add
Validates and uncovers new investment theses in overlooked markets while accelerating portfolio GTM.
Proprietary Upside
Solutions spawn NewCo incubations with outsized fund ownership - build to 1 client spec, sell x 1,000.
Target
>75% of Mid-market businesses are ready to embrace AI, with 2/3 looking for outside help to maximize ROI.
Advantage
We know the tools and how to implement for clear 10x+ opportunities.
Fund will own 100% of consulting OpCo with all EBIT flowing to Fund.
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Fund I Overview
Ahead of the trend: Fund I focused on commercial applications of blockchain technology with real-world impact. Our average investment is >13 months old with ~1.1x TVPI and 4 early markups.
Example Fund I InvestmentsA:
CoalaPay
Stablecoin efficiency for humanitarian aid funds
3.0x MOIC / 123% IRR
CrunchDAO
Global data-science workforce with blockchain coordination
2.7x MOIC / 261% IRR
Koywe
Solving cross-border payments inefficiencies across LatAm
1.5x MOIC / 31% IRR
375ai
Edge data collection and wireless network
1.5x MOIC / 30% IRR
Dinari
Global platform for tokenized equity
Shield
Neo-banking solution for electronics importers
Fund I established a platform for scaled deployment of our proven investment approach
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$50M Raise
Timeline
Initial discussions with anchors underway, first close Q3 2025
Terms
2% Management Fee | 20% Carried Interest
4 year investment period
Access
Co-investment rights, consulting insights, early DPI
Structure
Delaware Feeder (US taxable), Cayman Feeder (non-US & tax-exempt) → Cayman Master
Our Advantages
See Around Corners: Track record of being 18+ months early
Build, Don't Wait: Consulting creates proprietary deal flow
Founder Alignment: Flexible capital matches their actual needs
LP Alignment: Earlier returns through multiple paths
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www.factorcapital.com
Factor Capital Website
We’re experiencing a profound shift in how software companies are founded, developed, and scaled, driven by the rapid advancement of AI models and sophisticated coding tools. Just a few years ago, launching a software startup required substantial capital, extended development timelines, and sizable teams of highly skilled engineers. It typically took months or even years before a viable product reached the market.
Contact
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Appendix: About the Founder
Jake Dwyer, Founder & Managing Partner
Jake Dwyer has over 20 years of diverse industry operating and investment experience, building, and scaling high-growth businesses at the intersection of emergent technologies and practical market applications. Jake has made ~100 investments over the past 10 years, including multiple $1Bn+ outcomes.
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Appendix: Fund I Portfolio
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Appendix: Flexible Capital Example
Investment A: Traditional Seed investment - 25x MOIC on exit in Year 10
Investment B: Revenue-share investment - repays 3x over years 1-5, $100M EV exit in Year 10
- Early returns from revenue-based investments can be recycled in years 1-5 to enhance overall fund returns
- Produces predictable early DPI as investments are repaid with strong investment level IRR
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Appendix: Consulting FAQ
- How much of my commitment goes into the Consulting OpCo?
- Up to 10 % of total commitments. The remaining 90 % is deployed across venture investments.
- Does the GP own equity in the OpCo?
- No. The Master Fund owns 100 % of Factor Consulting Inc.; the General Partner (GP) holds 0 %. This removes “double-dip” concerns and aligns all upside with Limited Partners (LPs).
- When will the OpCo start generating cash?
- We will target positive operating cash flow in Year 2 as consulting contracts ramp. Cash will be dividended to the Fund and recycled into new investments until the five-year recycling window closes.
- Will I receive early cash distributions?
- Distributions begin after the recycling period (Year 5 onward). Until then, OpCo dividends are reinvested to compound returns.
- How do you protect my capital if the consulting model underperforms?
- OpCo exposure is capped at 10 % of commitments.
- What prevents the GP from spending too much time on consulting projects?
- Partner time is capped at 30 % Full-Time Equivalent (FTE) in Year 1, tapering to 5 % from Year 3. Equivalent to ordinary portfolio company support.
- How are expenses shared between the Fund and the OpCo?
- A written cost-sharing agreement requires the OpCo to reimburse the Fund at cost for any shared staff or overhead.
- Is recycling unlimited?
- No. The GP may reinvest dividends and sale proceeds up to pre-agreed percentage of total commitments through Year 5. After that, all proceeds flow directly through the waterfall to LPs.
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