Low-Key Investor Who Turned Bets On Flipkart And Peloton Into Billions —And Has A $1.3 Billion Fund To Do It Again

Peloton CEO John Foley was used to hearing “no” by the time he met with investor Lee Fixel in early 2014. Hundreds of venture capitalists and investment firms had passed on his fitness startup; Peloton’s internet-connected stationary bike had even turned to Kickstarter for funds. But as Foley went through his pitch – that Peloton was more than a bike, but an emerging media company, with recurring subscription revenue and a sleepy incumbent ripe to upend – for the first time, a big-firm investor’s eyes were lighting up.

The investor had come across Peloton researching exercise options on vacation, he told Foley, and saw parallels to other disruptive consumer brands like Harry’s Shave Club in razors and Warby Parker in eyeglasses. “I’m in, shut down the round, I’ll wire $5 million next week,” Foley remembers Fixel saying. “There was a lot to like that he saw and nobody else saw.”

When Peloton went public in September, Fixel’s firm Tiger was the largest investor, holding just under 20% of a company that now trades, amid a Covid-19 user surge, at more than $16 billion. But as Peloton rang the bell from the Nasdaq roof that day, Fixel was hard to spot, lingering inside. Months earlier in March, Fixel had informed Tiger he was leaving after 13 years. Why he’d left was a mystery to entrepreneurs, fellow investors and the press. Fixel, notoriously low-profile, gave no interviews.

Now, just over a year later, the eight-time Midas List investor is breaking his silence. Fixel has raised $1.3 billion for a new multi-stage venture capital firm called Addition, the investor told Forbes on Wednesday. Addition will invest one-third in early-stage startups and two-thirds in growth-stage opportunities, according to two investors in the fund who asked to remain anonymous because they don’t comment on individual holdings.

And Fixel, who has already started building out a team around him at Addition, has made one of the firms’ first public-facing investments: Fauna, a NoSQL database software company founded by ex-Twitter infrastructure leaders that just raised $27 million.

In a startup ecosystem in which venture capitalists often look to boost their profiles through blog posts, podcasts and tweets, Fixel is typically a cipher, speaking on rare occasions to talk only about his philanthropy. But from interviews with a number of founders he’s backed as well as limited partners in his new fund and peers elsewhere in the venture industry, Forbes can paint the clearest picture yet of what Fixel is looking to accomplish with his new firm.

Fixel himself declined an interview request for the look inside his fund. But in a statement, Fixel confirmed the closing of his new fund. “We are excited to partner with visionary entrepreneurs, and with our 15-year fund duration, we have the patience to support our portfolio companies on their journey to build impactful and enduring businesses,” Fixel said.

FIXEL’S DEPARTURE was a shock to some in the tech ecosystem when Tiger announced it in a letter to its investors in 2019. It ended a longtime partnership with fellow Midas List regular Scott Shleifer and Tiger founder Chase Coleman III. Fixel, now 40, had joined in 2006 as an unproven twenty-something, not far removed from his degree at Washington University in St. Louis. With Shleifer, his senior at the firm by a few years, Fixel helped Tiger make a string of successful investments in private tech companies, especially in India, where they scored $3.5 billion in profits when Flipkart sold to Walmart. Known initially for later-stage investments, like one in Spotify not long before the company went public, or at the mid-stage, like a large investment in $36 billion-valuation Stripe, Fixel also made a lucrative and controversial investment in Juul Labs, the e-cigarette company.

Why leave Tiger? Sources close to Fixel, and investors in his new fund, say that the investor had tired of the decision-making process at Tiger, where multiple partners had to approve each deal; eventually running Tiger was not a realistic prospect with Coleman and Shleifer only several years older. Tiger declined to comment on Fixel’s departure or new fund.

Fixel will run Addition as the sole partner at the top. The firm has a “traditional” management fee and carry structure, sources say, with fifteen years to return capital back to its limited partner backers, which include endowments, non-profits, hospitals, foundations and family offices. His goal with Addition, according to multiple sources with knowledge of his thinking, is to groom investors for eventual partner roles to build a firm that outlasts him. But for now, the investor is the final decision maker at Addition, and the “key man” around whom the fund depends. The fund’s backers are assuaged by the fact that in a move uncommon for billion-dollar venture funds, Fixel is the largest investor in his own fund. Fixel also expects to deploy the $1.3 billion within 18 to 24 months, the sources say.

Fixel has already hired a team of more than a dozen for Addition, including three investment principals, mostly from Wall Street backgrounds, as well as a head of data science who previously spent three years working in that field at Uber. Since the fall, they’ve made investments, first from Fixel’s own personal holdings (his thirteen year stint at Tiger likely has made him at least worth hundreds of millions) until Fixel set out to formally raise Addition in May.

Addition is also unusual because Fixel insisted on reserving one-third of its capital for early-stage investments, the rest going to growth-stage deals more typical of Tiger’s long-time approach. Such an approach adds complication and puts more pressure on Fixel as a “picker” to get the investment mix right. It can also create tension inside a firm, as the return profiles and cash returned by startup investments can vary widely based on when an investment is made.

Entrepreneurs backed by Fixel are mostly unsurprised that the investor set up his own shingle and wanted flexibility in doing so. “I was surprised he didn’t before,” says Demet Mutlu, CEO of Trendyol Group, a Turkish ecommerce company she says now carries a $5 billion valuation, and in which Fixel invested at a $20 million valuation years ago. “The way he is as an investor, he very much has a founder mentality.”

Fixel is known for chasing deals himself, from India — where he backed Flipkart, acquired by Walmart, and unicorn Freshworks, among others — to Columbus, Ohio, where he showed up to pitch Root Insurance CEO Alex Timm on a deal. A signature of Fixel’s startup courtship: lots of upfront research, like with Freshworks, where CEO Girish Mathrubootham says Fixel showed up in Chennai for a meeting, then surveyed his first 200 customers and provided the findings back to the startup. In Peloton’s case, Fixel sniffed around a retail location in Long Island pretending to be an interested shopper.

Glenn Kelman, CEO of publicly-listed real estate site Redfin, remembers Fixel showing up in Seattle for the afternoon with a duffel bag stuffed with papers, Fixel’s own research and diligence on Redfin, prior to a first meeting. “He said, I interviewed your customers, your employees, your ex-employees, your competitors. And we want to talk about why margins in San Diego in Q3 of last year were off.”

But the shtick isn’t so much shock and awe as Fixel trying to prove his worth, his founders say. The ideal Fixel entrepreneur: someone who doesn’t need constant hand-holding but wants Fixel’s support – board seat or not – on high-level strategy and product. “He has this way of appreciative inquiry that leads you down to this place of understanding the big opportunity,” says Julia Hartz, cofounder and CEO of Eventbrite. When Eventbrite went public in 2018, Fixel left the event company’s board. But as her business was turned upside down by the spread of the coronavirus, Hartz says she made Fixel one of her first calls anyway. “And he’s just so affable. Obviously  you don’t get to the place he is by lumbering along like Forrest Gump. But he’s just very sincere about everything that he does.”

Fixel’s fans extend beyond his founders. At Benchmark, famed – and outspoken – investor Bill Gurley says Fixel’s earned that reputation by succeeding with Shleifer in China, then in India, in New York’s then-nascent tech ecosystem with Peloton, all while moving up into earlier stage deals as he gained experience. “He’s not afraid to speak up and offer a strong point of view,” Gurley says.

WHAT TYPES OF DEALS to expect from Fixel at Addition: there’s Stedi, a business-to-business messaging platform based in Boulder, Colorado; and most recently, Fauna, a fully remote startup that provides database software to applications that run on a “serverless” computing model, meaning their businesses run no servers themselves but host their data and processing online in the cloud.

Founded by early Twitter employee and former infrastructure lead Evan Weaver and fellow ex-Twitter colleague Matt Freels, Fauna’s NoSQL database tools are intended to make it faster and cheaper to ship new features or apps without devoting resources to IT; the startup says it is used by 25,000 developers and businesses including Nextdoor and Hannon Hill. Fauna had already raised nearly $30 million in funding from investors including CRV, Point72 Ventures and Google venture unit GV when it set out to add more funding to scale up its sales organization and developer relationships. Through a previous investor, Weaver met Fixel, of whom he’d only heard second-hand from Fixel’s Tiger days.

Madrona Venture Group ended up leading a new $27 million round in Fauna, bringing in Bob Muglia, the former CEO of software infrastructure unicorn Snowflake, as chairman and Eric Berg as its new CEO. Fixel took much of the rest for Addition in April, committing quickly despite heightened uncertainty of the spread of the Covid-19 pandemic, says Weaver, now Fauna’s CTO: “He’s been willing to make contrarian and aggressive long-term bets.”

Back at Peloton, Fixel’s first investment didn’t suddenly open the investor floodgates. In need of cash, cofounder Foley turned to Fixel and Tiger repeatedly for $10 million checks in the following months to keep it afloat before fundraises; when Peloton’s board of directors tried to remove Foley as CEO, Fixel thwarted the attempted coup.

“I only own one thing in life: it’s Peloton stock. I’m turning 50 years old and I don’t own one other stock, don’t have one other investment. I only have Peloton,” says Foley. “I strongly considered selling some Peloton and giving it to Lee. That would be the only other place I would put it.”