This French VC Raised a $12M Fund from YouTube Success

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This French VC went from posting on YouTube to raising a $12M fund for Y Combinator startups. Gabriel Jarrosson, a French engineer who transitioned from YouTuber to investor, has established a venture capital firm based on a unique investment principle: if a startup is not part of the Y Combinator (YC) portfolio, he won’t invest in it.

A Unique Investment Philosophy

This approach has led Jarrosson to manage over $12 million in assets at Lobster Capital. His investment strategy relies on the impressive track record that YC has in producing successful startups, many of which achieve unicorn status. Jarrosson’s logic is straightforward; he believes that the potential for profit is significantly higher when investing in Y Combinator graduates.

Jarrosson launched his YouTube channel in 2017 to share his investment experiences and insights, aimed particularly at the French startup ecosystem. His channel rapidly grew and eventually transformed into one of Europe’s largest angel syndicates. Since 2020, he has successfully deployed $36 million into various startups, predominantly those that have emerged from YC.

From Video Content to Capital Management

His inaugural fund for Lobster Capital exceeded its $8 million target, closing at an impressive $12 million. According to Jarrosson, the figures back up his strategy: approximately 4.5% of Y Combinator companies achieve unicorn status, compared to just 2.5% of other venture-backed seed-stage startups. Additionally, nearly 45% of companies backed by YC progress to a Series A funding round, outperforming the 33% average for the industry.

“If you consider the VC math and expected returns, these outcomes make for an attractive portfolio,” said Jarrosson. “As investors, we must ask ourselves if we can foresee this company becoming the next unicorn.” This is a question he frequently considers, even in the face of higher initial valuations—sometimes exceeding $20 million at seed stage.

Embracing the AI Surge in Startups

Jarrosson is acutely aware of the surge in AI-driven startups, particularly those that have participated in Y Combinator’s recent cohorts. Numerous companies in the AI sector have shattered revenue growth records, achieving millions in annual recurring revenue (ARR) in mere months. However, he acknowledges that some of this rapid growth may be unsustainable, marked by high churn rates and inflated projections driven by early pilot contracts.

Despite these challenges, Jarrosson remains optimistic. “Retention issues can be addressed, and the early revenue remains the hardest barrier to overcome for most startups,” he noted.

Building Reputation and Networking

A significant aspect of Jarrosson’s success lies in his established reputation within the Y Combinator ecosystem. His visibility, bolstered by engaging with YC founders through social media, has allowed him to secure allocations in competitive investor rounds. Founders rate investors internally through a YC platform known as Bookface, and favorable reviews can significantly enhance an investor’s market position. His podcast, which features YC founders discussing various topics related to entrepreneurship and investment, has also contributed to his standing in the community.

Jarrosson sees social media as an extension of his investment strategy, believing it acts as both a marketing tool and a method for nurturing potential deals. Over the years, he has built a network that supports his investment endeavors through content creation, helping him connect not just with companies but also with limited partners interested in his fund.

Strategic Future for Lobster Capital

Through his syndicate and first fund, Jarrosson has made over 100 investments in startups, focusing heavily on sectors like B2B software, fintech infrastructure, and AI tools. Notably, he has backed nearly 30 startups, including several promising ventures—two of which have reached unicorn status and others at the brink of achieving similar valuations.

Reflecting on his investment methodology, Jarrosson emphasizes the unparalleled potential of Y Combinator graduates: “YC has built a reputation over the past more than 20 years for selecting top-tier founders and fostering the creation of successful companies.” He believes this pattern of success will only improve in the future and asserts that betting on YC companies is a calculated risk worth taking.

This investment-only-in-YC startups model, while not unprecedented, continues to gain traction among venture capitalists. Firms like Initialized, Pioneer Fund, and several others have adopted similar strategies, affirming the value of such a focused investment thesis in today’s competitive landscape.

Frequently Asked Questions

What is Lobster Capital?

Lobster Capital is a venture capital firm founded by Gabriel Jarrosson, focusing exclusively on investing in startups that are part of the Y Combinator accelerator program.

How much capital has Lobster Capital raised?

Lobster Capital raised its first fund at $12 million, surpassing its initial target of $8 million.

What is Gabriel Jarrosson’s investment strategy?

Jarrosson’s investment strategy involves exclusively investing in Y Combinator companies due to their strong track record of success, including higher rates of achieving unicorn status.

Why does Jarrosson focus on Y Combinator startups?

He believes Y Combinator’s established reputation in nurturing successful companies significantly increases the likelihood of profitable returns on investments.

How many investments has Jarrosson made through his fund?

Gabriel Jarrosson has made over 100 investments through Lobster Capital’s first fund and his syndicate.