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Illustration: Sarah Grillo/Axios

Indie.vc, an effort launched six years ago to invest small amounts in bootstrapped businesses, announced on Tuesday that it’s winding down.

Why it matters: Venture capital, despite being the money of innovation, is rarely innovative itself. Indie.vc was an effort to break out of the tedium, so its failure is de facto disappointing.

History: Indie.vc was launched in 2015 as a pilot program by O'Reilly AlphaTech Ventures, which was a typical early-stage VC firm. Its focus was sustainable — and often profitable — businesses that could use a capital boost but weren’t looking to hyperscale. It also allowed founders to buy back their stakes via “redemptions.”

  • The idea was to back the next GitHub, which became profitable early on and didn’t take any VC money for its first four years.
  • "There needs to be something that sits in between banks and venture capital blitz," AOTV managing director Bryce Roberts tells Axios.
  • It initially began operating out of OATV's $85 million third fund, and has invested in nearly 40 companies.

What happened: Limited partners were unimpressed, particularly as many of their other VC fund bets kept minting overnight unicorns. They basically wanted OATV to maintain its status quo.

  • When OATV announced its fourth fund would focus on the Indie.vc model, it lost around 80% of its investor base — which came in at just $25 million versus the $85 million secured for Fund III.
  • One issue was that Indie.vc portfolio companies didn't raise follow-on rounds as quickly as did traditional VC-backed startups, which resulted in fewer mark-ups and slower fund IRR growth. Another was that the investment structured blurred the lines between equity and debt, and LPs love their buckets.
  • "I really bought into the idea that we needed to be completely detached from the mainstream VC narrative instead of being more complimentary and more of an on-ramp to growth equity,” Roberts explains.
  • Raising Fund V proved untenable, leading to yesterday's announcement.

The bottom line: Indie.vc deserves kudos for the attempt to do something different, despite how it turned out.

  • Traditional venture capital works great for certain sorts of startups, but not for all. Hopefully Indie.vc's death won't put a chill on other efforts to create alternative structures.

Go deeper

45 million Americans under winter storm watches near New England

Computer model projection showing the winds moving around the powerful East Coast storm on Saturday Jan. 29, 2022. Image: https://earth.nullschool.net

Nearly 45 million Americans are under winter weather alerts and warnings from North Carolina to northeastern Maine, as a major winter storm threatens the region.

Why it matters: It is predicted to be the biggest blizzard since 2018 to strike the Northeast with more than 2 feet of snow possible in parts of eastern Massachusetts, according to the National Weather Service.

3 hours ago - World

Australian PM pledges $700M for climate change-threatened Great Barrier reef

A green sea turtle is flourishing among the corals at Lady Elliot island in Australia's Great Barrier Reef. Photo: Jonas Gratzer/LightRocket via Getty Images

Australian Prime Minister Scott Morrison announced Friday a AU$1 billion ($703 million) investment plan for the Great Barrier Reef.

Why it matters: The nine-year plan for projects including water quality improvement, reef conservation and supporting some 64,000 tourism jobs comes months ahead of this year's federal election. It has been criticized by scientists and environmental groups for failing to tackle climate change.

Judge nixes Gulf of Mexico oil leases in climate-focused ruling

Tug boats prepare to tow the semi-submersible drilling platform Noble Danny Adkins through the Port Aransas Channel into the Gulf of Mexico on December 12, 2020 in Port Aransas, Texas. Photo: Tom Pennington/Getty Images

A federal judge on Thursday canceled the Biden administration's late 2021 sale of new oil-and-gas drilling leases in the Gulf of Mexico.

Why it matters: The ruling that the greenhouse gas emissions analysis by the Interior's Bureau of Ocean Energy Management (BOEM) was insufficient is a win for green groups that challenged the decision, as they seek to curb fossil fuel production.