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SignalFire's founder says his VC firm lost staffers who 'thought we were too cheap' in prior years

For most founders, being seen by employees as cheap isn't exactly a badge of honor, but venture investor Chris Farmer doesn't mind. While Farmer's 10-year-old, seed-stage venture firm SignalFire lost frustrated employees who weren't able to compete for deals when the market was at its most frothy, he says, holding the line on price appears poised to pay off at long last.

For one thing, limited partners just committed a whopping $900 million to the firm across four new funds, doubling in one fell swoop the amount of money that SignalFire has raised previously. Farmer -- who says that SignalFire began "pumping the brakes" in 2018 because it "saw the valuations were decoupling relative to company traction" -- is further being vindicated as valuations continue to plummet and founder expectations get reset.

So what did Farmer see that others looked past? Data and lots of it, he says. We talked last week with Farmer about that data -- which has been a source of pride for SignalFire since its outset -- and why he thinks it continues to give the firm an edge, even while many other venture firms have become similarly data driven over the last decade. Questions and answers below have been edited and condensed for clarity.

TechCrunch: You've raised a bunch of money across four funds but you aren't breaking out how much each fund is managing. Why?

Chris Farmer: We don't really break it out because it doesn't really matter, [but broadly] we have hundreds of millions for seed [stage companies]; we have several hundred million to follow-on those companies through a breakout vehicle, which most of the companies are alumni and then there's some net new companies, as well. We've also been doing XIR [experts-in-residence] for a while, pairing operators who have built multibillion-dollar businesses with an entrepreneur with whom they have good chemistry and whose company typically has $5 million to $10 million in revenue; they join the board and get involved typically one to three days a week to help scale up the business in sort of like an executive chair mode.

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And in return, they receive...

They get advisor shares. They write a check themselves concurrently with us. And then they get some upside from the fund.

You've said previously that SignalFire has access to 100 major datasets that your “competitive data nerds” pore over to figure out what’s happening in the world, but it seems like this approach has been copied by other firms, so what is your biggest differentiator today?

I actually think that our competitors have dropped back. It's actually shocking to me how much they've not caught up with us and how we're farther ahead than we've ever been, which is not at all what I expected. There are a lot of funds that are doing something with data, but [that basically means] having a Bloomberg terminal. It's nothing like what we have. Every time we look at a deal or turn it down, the machine learns. We're the only venture firm with a true ML system where it's a closed loop.

What proof do you have that what you've built works?