Venture capital investors reassess Series A funding strategies amid rise of mega-funds

Stacy Brown-Philpot, founder and managing partner of Cherryrock Capital, is stepping into the venture capital arena with a clear mission to support underinvested founders at critical growth stages. The former TaskRabbit CEO and Google executive recently discussed her new venture firm on the StrictlyVC Download podcast, outlining her strategy for backing Series A and Series B software companies in today’s challenging fundraising environment.

After spending a decade at Google and successfully leading TaskRabbit through its acquisition by IKEA, Brown-Philpot launched Cherryrock Capital to address what she identifies as a significant gap in the current venture ecosystem. Her firm concentrates specifically on software companies at the Series A and Series B stages, focusing on founders who have historically received less capital despite building promising businesses.

Strategic Focus on Quality Revenue and Product-Market Fit

According to the podcast conversation with Connie Loizos, Brown-Philpot emphasizes that quality revenue matters significantly more than headline annual recurring revenue figures when evaluating potential investments. Cherryrock Capital assesses product-market fit at scale, looking beyond vanity metrics to understand the underlying strength of a company’s business model. This approach reflects Brown-Philpot’s extensive operational experience building and scaling technology companies.

The venture firm’s evaluation process draws heavily from Brown-Philpot’s current board roles at major corporations including HP and StockX. These positions provide her with valuable insights into how enterprise companies assess and adopt new software solutions, informing Cherryrock Capital’s investment decisions. Additionally, her perspective on the enterprise software market is shaped by her observations on how artificial intelligence is fundamentally reshaping the industry.

Navigating a Bifurcated Venture Market

Brown-Philpot launched Cherryrock Capital during a particularly difficult fundraising environment, a timing decision she addressed directly in the interview. Despite market headwinds, she maintains confidence that strong businesses will continue to attract funding, even as the venture capital landscape becomes increasingly bifurcated. Her thesis centers on identifying durable companies that can weather market volatility and emerge stronger.

The managing partner’s focus on underinvested founders represents a strategic bet that talented entrepreneurs from diverse backgrounds often face unnecessary hurdles in accessing growth capital. However, Brown-Philpot’s approach is not philanthropic but rather grounded in the belief that these founders represent overlooked opportunities for superior returns. She argues that systematic underinvestment in certain founders has created market inefficiencies that savvy investors can exploit.

AI Transformation and Enterprise Software Evolution

Meanwhile, Brown-Philpot discussed how artificial intelligence is transforming the enterprise software sector, creating both challenges and opportunities for Series A and B stage companies. Her perspective combines operational expertise with investor insight, allowing Cherryrock Capital to evaluate how AI capabilities will impact portfolio companies’ competitive positions. The firm’s investment strategy accounts for the rapid technological shifts currently reshaping software business models.

In contrast to venture firms that chase the highest valuations or largest round sizes, Cherryrock Capital targets what Brown-Philpot describes as a pivotal stage of growth where companies need both capital and strategic guidance. This positioning allows the firm to partner with founders at a moment when operational expertise and network access can significantly influence outcomes.

The venture firm’s launch comes at a time when many institutional investors are pulling back from emerging managers and smaller fund sizes. Authorities in the venture capital industry have not confirmed whether fundraising conditions will improve in the near term, though Brown-Philpot’s willingness to launch in this environment signals her conviction in the strategy. The firm’s ability to deploy capital and generate returns will likely influence whether other experienced operators follow a similar path into venture investing.