Watertower Ventures

Watertower Ventures Research Investment Thesis Watertower Ventures is an early-stage venture capital fund built by founders for founders. The firm operates on a founder-first philosophy, having been established by serial entrepreneurs who have built 11 successful companies across technology and finance sectors. The fund's core mission is to partner with visionary founders at the earliest stages and provide not just capital, but comprehensive operational support and access to their network of relationships in technology, media, and business development. The firm positions itself as "outsourced corporate development" for early-stage companies, leveraging deep tech/media relationships and boutique investment banking capabilities to drive distribution, deal flow, and pro-rata support. Rather than being just another capital source, Watertower sees itself as a strategic partner that helps founders navigate from idea to category-defining company. Investment Approach and Thesis Watertower Ventures has developed a distinctive approach to early-stage investing: Capital Provision: Lead and co-lead pre-seed and seed rounds Initial check sizes: $500K-$2MM Ability to allocate up to $5MM per investment Focus on providing capital that creates optionality for founders Value Beyond Capital: Early revenue generation support - acting as an "early revenue generation team" Facilitating early design partnerships and product trials with enterprise customers Virtual investment banking services - connecting founders to subsequent capital sources from Series A onward Founder mentorship from entrepreneurs who have built successful companies Network activation across technology, media, and business development circles Founder Profile: The fund seeks visionary founders building category-defining companies. They emphasize partnerships with mission-driven entrepreneurs who are creating transformative technology across their core focus areas. Sector and Model Focus Watertower Ventures focuses on four primary investment themes: Financial Technologies - Building the next generation of capital markets infrastructure, including tools for trading, settlement, financial services optimization, and blockchain-based finance applications. AI Enterprise Optimization - Companies unlocking efficiency and scale through trust, automation, and artificial intelligence in enterprise operations, productivity, and workflow management. Evolution of Media - Companies redefining how people create, own, and monetize intellectual property and creative content. AI Consumer Transformation - Companies reimagining the future of commerce, retail automation, and consumer-facing AI applications. This reflects a portfolio that spans both technical infrastructure (fintech, dev tools) and consumer applications, with AI increasingly as a horizontal enabling technology across all focus areas. Stage and Check Size Stage Focus: Pre-Seed: $500K-$2MM for early-stage development Seed: $500K-$2MM for companies with initial traction Occasional Series A participation with existing portfolio companies (up to $5MM allocation) Check Size Range: $250K-$1MM (API data indicates checkSizeMin: $250K, checkSizeMax: $1MM), with flexibility up to $5MM for promising companies. The fund is designed for founders raising their first institutional capital post friends-and-family, providing a critical bridge to Series A and beyond. Geographic Focus Watertower Ventures is based in Los Angeles, California with an office in New York. They primarily focus on US-based investments, with headquarters in Los Angeles serving the West Coast tech ecosystem and New York operations supporting East Coast tech and fintech founders. Recent Activity and Fund Status Based on available data, Watertower Ventures has been actively deploying capital: Recent Notable Investments: Stability AI (AI consumer transformation) Finofo (fintech) - June 2025 KeySquare (financial technologies) - leading platform for derivatives and trading PactFi (financial technologies) - synthetic asset platform Mothership (AI enterprise optimization) - logistics and operations optimization Entrilia (financial technologies) - settlement and trading infrastructure ThreeV (AI enterprise optimization) - enterprise productivity Built (AI enterprise optimization) - construction tech Intro (evolution of media) - creator economy platform Blockhouse (fintech/data) - financial data and analytics Fund Status: Actively deploying capital as of 2025, with 47 documented investments and 2 new investments in the last 12 months (as of mid-2025). The firm is in active deployment mode from their current fund. Portfolio Quality: Portfolio companies include both early-stage investments and more mature companies. The firm has demonstrated successful follow-on investing and strong portfolio company growth. Team and Decision Making Leadership Team: Derek Norton - Founder and Managing General Partner. A serial entrepreneur and venture capitalist with extensive experience building companies across technology and finance sectors. Serves as the primary point of contact and deal lead for many investments. Jeremy Milken - General Partner. Brings experience and network from previous ventures and investment experience in the fintech and technology sectors. Idan Levy - Partner. Investor and operator with experience in both startup development and venture capital. Caro Scalercio - Principal. Early-stage investor focused on identifying and supporting emerging founder talent. Charlotte Clark - Chief of Staff. Manages operations and founder support initiatives. Additionally, the firm has Ventureship Scholars - emerging investment professionals including Charlie Wasson, Roshna Bahauddin, and Raseel Ghoul, representing the next generation of investors. Decision Making: The firm operates as a partnership with Derek Norton as Managing Partner. Decision-making appears collaborative with partnership input, though Derek Norton and Jeremy Milken appear to be primary deal leads. The firm emphasizes personal relationships and founder fit, suggesting a more relationship-driven decision process rather than committee-based. Investment Process and Timeline Based on website messaging and founder testimonials, Watertower Ventures operates with a founder-friendly investment process: Warm introduction focus - They activate their network to identify investment opportunities and work with quality entrepreneurs Quick decision-making - Positioned as an efficient capital source for early-stage founders Founder-centric approach - Decisions appear focused on founder quality, vision, and potential to build category-defining companies Hands-on involvement - Team stays actively involved through board seats and advisory roles The firm appears to move quickly compared to larger VC firms, reflecting their focus on early-stage companies where speed matters. Notable Portfolio Companies and Exits While specific exit data is limited, the portfolio includes high-profile companies: Stability AI - Major AI infrastructure company in the generative AI space PactFi - Prominent fintech platform for synthetic assets KeySquare - Emerging trading and derivatives platform Mothership - Growing AI operations company The firm tracks founder success stories through their website testimonials, highlighting CEO impacts at portfolio companies. Competitive Positioning Watertower Ventures positions itself distinctly in the early-stage market: Founder-First Mentality - Marketing emphasis on being "built by founders, for founders" differentiates from more institutional VCs Operational Support - Positioning as "virtual investment banker" and "early revenue generation team" goes beyond capital provision Network Access - Leveraging tech/media relationships for distribution and customer development Quick Capital - Able to move fast with pre-seed and seed checks, removing fundraising friction Geographic Anchoring - Strong LA and NYC presence enables deep relationship building in both ecosystems Founder Profile and Preferences Based on website and marketing materials, Watertower Ventures seeks: Visionary founders - Entrepreneurs with ambitious ideas and the capability to build category-defining companies Mission-driven builders - Founders focused on solving real problems, not just chasing trends Technical depth - Particularly in financial technologies, AI/ML, and media/creator economy Operator mindset - Founders who understand business building and want operational support, not just checks Coachability - Willingness to learn from experienced entrepreneurs on the team The firm explicitly avoids founders seeking passive capital without engagement - they expect active partnership. Key Differentiators Founder-CEO Pedigree - All partners are entrepreneurs who have built and exited companies, lending credibility with founder audiences Operational Toolkits - Provide specific help with customer development, distribution partnerships, and financial structuring Pro-rata Support - Commitment to supporting follow-on capital rounds, not just seed investments Network Leverage - Deep relationships in technology and media enable customer introductions and partnership opportunities Speed and Flexibility - Smaller fund size ($50M AUM) allows for quick decisions and flexible check sizes Fund Economics and Performance Fund Size: Approximately $50 million in assets under management based on multiple sources. Portfolio Scale: 47 documented investments with 2 new investments in the last 12 months (as of June 2025), suggesting a steady deployment pace. Check Size Strategy: Initial checks of $500K-$2MM with ability to follow on up to $5MM, allowing for meaningful ownership at seed stage (typically targeting 15-25% ownership). Risk Factors and Considerations Stage Concentration - Primary focus on pre-seed and seed creates reinvestment requirements to support portfolio through Series A Fund Size Limitations - $50M AUM is relatively modest, limiting ability to write large checks or follow major rounds Sector Concentration - Heavy emphasis on fintech and AI reflects both opportunity and risk concentration Team Dependency - Much of the fund's value depends on Derek Norton and Jeremy Milken's networks and deal sourcing Portfolio Company Support - Hands-on operational support requires significant time investment from limited team Strategic Recommendations for Founders For founders considering partnership with Watertower Ventures: Best fit: Early-stage founders in fintech, enterprise AI, media tech, or AI consumer applications with $500K-$2MM capital needs Value proposition: Expect substantive operational support, customer introductions, and ongoing partnership through Series A Fundraising approach: Emphasize founder credentials, vision for category definition, and willingness to engage with operational support Future funding: Position for Series A with strong revenue metrics and customer traction that Watertower can help facilitate introductions for Conclusion Watertower Ventures represents a well-positioned early-stage venture capital fund with a distinctive founder-first approach. Built by entrepreneurs who understand startup challenges intimately, the firm provides value beyond capital through operational support, network leverage, and investor experience. Their focus on visionary founders, active involvement in portfolio companies, and hands-on support model creates a differentiated offering in the crowded pre-seed/seed market. The firm's geographic anchoring in Los Angeles and New York, combined with thematic focus on fintech, AI enterprise, and media technology, positions them well to identify and support category-defining companies in high-growth sectors. With $50M AUM and an active deployment pace, Watertower appears well-positioned for continued growth and successful portfolio outcomes.