Since the launch of venture capital firm Backstage Capital in 2015, Arlan Hamilton invested millions in more than 195 companies led by underrepresented founders, from a duo taking up car insurance to a team rethinking the way we learn virtually. Despite the size of the business, Hamilton says his portfolio companies consistently ask him two questions:
“Can you help us raise funds? And, “Can you help us hire?” »
While Hamilton’s fund is a response to the former, her latest bet – built by Hamilton herself – is a startup exploring the latter. Runner is a job market that connects startups with operational people looking for part-time work. It seeks to combat some of the biggest tensions in building early-stage startups, like deciding when it’s time to hire your first head of talent, or figuring out what to outsource or what to do. build internally when it comes to staffing. . It is launched with an explicit focus on operational roles.
“There are so many places you can go if you want to learn to code or if you want to get a job like in the more technical side of things,” Hamilton says. “But where do you go now if you want to be someone’s right-hand man, COO, etc… it’s kind of an afterthought for the most part [companies].”
Conceptually, Runner is not against the grain. Upwork and Fiverr have built solid businesses at the top of the freelance economy. What’s different about the startup, however, is who it targets — operations people in tech — and how it employs them. Every “runner” or part-time professional who seeks to secure a new gig is employed by the company under a W-2 classification. Around 200 runners are on the platform today, including those with experience in entrepreneurial roles or those who were previously entrepreneurs who want another stream of income.
Many of the company’s current executives first joined as runners. For example, customer success manager Melanie Jones joined the platform after spending time as a product manager at a dental network. Within a month, she was hired as an executive, alongside a number of other riders who became company decision makers. Separately, Boeing chief Diana Moore joined as COO just four months ago.
For Hamilton, Runner is a return to an idea she was working on even before embarking on the adventure. Prior to Backstage, Hamilton was a production coordinator and tour manager for the musicians (she continues to incorporate musical references into her work as an investor). In this role, she often worked with riders or people with local expertise who could be a right hand to get things moving on the road. When she was building Backstage, she started using runners in her own life, hiring people for one-day help while meeting founders across the country.
After the investor saw synergies between this role in the production world and technology’s love of flexibility, she created Runner, with a logo and all.
“We were building Backstage, we had no resources because COVID hadn’t happened yet, people were really a little confused about that,” she said. “So this was just one of those whiteboard ideas.” Now, nearly two years into a still ongoing pandemic, the market is ready.
The company’s business model is a 25% reduction in a rider’s hourly rate. Additionally, if a rider is recruited by a customer to join them full-time, the customer must pay a recruiting fee of 10% of the rider’s first year’s salary.
Unlike Backstage, which wants to disrupt how venture capital is distributed and to whom, Runner isn’t building under the guise of helping companies recruit underrepresented talent – a choice Hamilton made, interestingly. , because she did not want to “cram” the company.
“It would have been very easy for us to categorize ourselves as a DEI recruitment company, but we didn’t want to be responsible for that – it should be everyone’s responsibility,” she said. That said, today all of Runner’s executives come from historically overlooked backgrounds.
Before moving to the waitlist model to better cope with demand, Runner secured approximately 120 pilot clients at a $500,000 run rate. Its application should be launched on March 15, 2022.
As for funding, Hamilton initially started the business and within the first 100 days raised a round of $500,000. Most recently, Runner raised a $1.5 million pre-seed round on a SAFE rating at an undisclosed valuation.
Backers in this round include Precursor, Lunar Startups, Kapor Capital’s Freada Klein, 360 Venture Collective, and Gaingels. Backstage Capital’s crowd syndicate, Backstage Flex Fund II and Backstage Opportunity Fund I, also invested in the startup.
It’s rare to see investors pour their own fund money into a company they’ve started, but, as Hamilton notes, it’s not uncommon when you consider Guy Oseary’s Sound Ventures investing in his company. , Bright, or David Sacks’ Craft Ventures investing in its audio. business. Yet, it can create a conflict of interest if the company’s decision makers feel compelled to invest money in a GP’s business because they are, well, the GP.
Hamilton was part of the investment committee that decided to invest in Runner, but also empowered each person to make autonomous decisions, she says. She also added that the eight-page memo — which addresses challenges, opportunities and shortcomings — was written by Backstage partner Brittany Davis and associate Kelly Lei, without any editing on her part. The Runner team provided the pitch deck.
“It is my fiduciary duty within the company to bring in returns, and it is my duty as CEO of Runner to bring in the best investment partners possible. I have done both,” adds Hamilton on Twitter DM Another balance in the mix is that any Backstage portfolio company that uses Runner doesn’t have to pay the 25% service fee, or the amount that goes to company revenue and operations.
“Our goal is to have 1,000 or more learners by the end of the year, earning an average of $40,000,” Hamilton said. “[Then] we are a half billion dollar company.