Connect Ventures into Venture Philanthropy

Feb 23, 2024

San Diego, California (February 14, 2024) –A self-funding and growing source of financial capital to fuel San Diego’s innovation economy – that is the vision behind TL Fund, a new venture fund thought up by and launched out of Connect San Diego.

“The mission is to propagate growth around San Diego,” said Connect CEO Mike Krenn.

Although Connect had a heavy hand in designing TL Fund, the fund is actually run by its own 501c3 foundation, TL Foundation, Krenn said.

TL Fund has so far raised more than $1.5 million and beginning this year has committed to investing $500,000 into five local startups that will be chosen from Connect’s Cool Companies program. TL Foundation is keeping the remaining money in reserves to get “at least a two-year runway,” Krenn said, adding that the fund started with investing in Cool Companies this year because it is “an easier process” to pick five.

“Connect has this funnel of deal flow – we’re really good at deal flow,” he said.

“The idea is, we pick some good companies, invest in them and then all the returns just go right back into the fund, so it keeps going.”

Krenn envisions the fund growing by investing in multiple startups per year with all returns going back into the Foundation.

“A $15 million fund becomes $100 million over time, and then $300 million and so on. All of that money gets reinvested back into the local economy – and not just into startups, but across the community,” he explained. “If it grows over time, which we hope it will, there’s an independent board and it can peel off and do things like give money as a grant to a group or organization or eventually look at debt deals for small businesses.”

TL Foundation is still working out how to structure debt deals, Krenn said, but is “trying to figure that piece out” to facilitate investing in “mom-and-pops in different parts of San Diego.”

Another unique feature of TL Foundation is that no one involved in the fund is taking a carry (typically 20% of the profits off the top), and the fund has no management fee (typically 2% of funds under management). Krenn has pledged to not take salary or any ownership percentage for his role and the Fund includes just one employee, former venture capitalist and founder of Windward Ventures, Dave Titus – “a fixture in San Diego startup community for a long time,” Krenn said.

In addition to investing all profits and eliminating management fees, the fund also promises “founder friendly and straightforward” terms for the companies it invests in. Krenn pointed out that Connect is often approached by accelerator programs outside of San Diego that bring investment dollars to startups, but at terms much less favorable.

“Why are we sending them all of our companies to go make a bunch a people rich that don’t even live here? This is a way to keep all that money here for our own community,” he said.

Inspired by History

The TL Foundation’s name is an abbreviation of “Tree Lady,” the name given to historic San Diegan Kate Sessions, the first woman to receive a science degree from a University of California school.

The inspiration for the Foundation also came from San Diego’s history, which includes many successful business leader/philanthropists.

“Everyone in San Diego has benefited from the generous philanthropy of a handful of individuals. People like Buzz Wooley, Malin Burnham, Irwin Jacobs, Ernest Rady, Conrad Prebys and David Hale. They largely created the San Diego we love. We need to inspire the next generation of leaders in their likeness,” Krenn said, adding that the fund is a way to “drag people into this idea of philanthropic benefit for startups in the community.”

TL Foundation is currently looking to get the “attention” of new philanthropists to help grow the fund.

“Everyone thinks Connect is a well-funded organization. We’re not – we’re a nonprofit,” Krenn said, adding that Connect has put $100,000 into the fund. “We think its foundational to San Diego to build out a strong innovation economy. This is totally benevolent; we’re doing it for free.”

San Diego Venture by the Numbers

  • $4.1B: Venture capital raised in 2023 – $1.6B tech, $2.3 life sciences, $200M consumer
  • 5th: San Diego’s ranking in U.S. regions for venture investment
  • 1,000+: New jobs created in innovation economy
  • 200+: Venture capitalists attended Connect events
  • $500k: Amount TL Fund will invest in five companies, $100k each
  • 100%: Percent of returns TL Fund will reinvest back into San Diego

TL Foundation / TL Fund

  • FOUNDED: 2024
  • FUND MANAGER: Mike Krenn
  • BUSINESS: Non-profit venture fund
  • AUM: $1.5 million
  • WEBSITE: www.tlfund.org

About Connect
A trusted partner for more than 35 years, we propel our region’s entrepreneurs as they create and scale their companies – from first-time founders to seasoned executives. We operate across diverse industry verticals with a mindset driven by inclusive sociaI good – making a positive impact across the entirety of the mega­region. In elevating entrepreneurial mastery ­such as providing access to capital, advising and partnering opportunities – we bring together our region’s culture and spirit to ignite our region’s world-class innovation economy.

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Media Contact:

Mike Krenn, CEO
mkrenn@connect.org