Charles Hudson is optimistic about outliers
How one investor finds success in the margins.
Written by Athena Feng
Photography by Derek Yarra
If there’s one thing Charles Hudson knows about backing founders, it’s that you never know whether someone will make a good CEO until you put them in the role.
“Until they make their first [mistake],” he says, “it’s all theoretical. The best founders rise to the occasion.”
And Hudson should know. Since founding Precursor Ventures in 2015, he’s backed over 375 early-stage companies across four funds, becoming one of the most prominent Black investors in Silicon Valley — and one of the most recognizable faces in venture capital, period. But success hasn’t stopped him from asking the hard questions, like how do we decide who gets to be a founder? And are the same people succeeding simply because we keep giving them opportunities?
For Hudson, the issue is simple. While venture capital promotes itself as an industry based on bold investments and even bolder returns, it actually leans on cold data and equations to dispense relatively safe, measured bets. These “measured bets” are much more accessible to someone with a Stanford diploma, a stint at Y Combinator, or the road-tested wisdom of a repeat founder than someone without. In short, someone who is White and often male.
“What we do is focus on founders who are more than one degree removed from the core set of folks who have easy access to venture capital,” Hudson says. “And it turns out when you apply that strategy, you end up with a pretty large pool of women and people of color.”
The environment Hudson and his team have cultivated at Precursor Ventures produces interactions you’d rarely observe elsewhere — like female founders giving fundraising advice to male founders, and Black founders harnessing the social networks of White men.
"What I've found is that the experience of fundraising as a Black founder is really negative. You get a lot of no’s, and some of those no’s are delivered in a really tactless, rough way. I think it wears on you."
Indeed, a lot of the folks who make their way to Precursor’s doorstep haven't fundraised before. They’ve also never hired or fired anyone, set a strategy, or managed a budget — at least not as the operator of a startup. For many of them, building a company is what Hudson describes as “jumping into the deep end while holding a kettlebell.” That said, he’s never been shy about backing them.
Like his peers, Hudson wants to be the best pre-seed investor on the planet. Unlike many of his peers, he believes in following a formula that others see as theoretically impractical — what he calls investing in “strangers with no data.” In less than a decade, he’s built up a colorful roster that spans everything from women’s health apps to Gmail challengers.
Evidently, the results are paying off, one stranger at a time.
Talking to Hudson, you get the sense that he isn’t the type to self-label as a contrarian — he doesn’t come across as having a chip on his shoulder, nor does he seem hell-bent on winning external validation. Sure, he has strong convictions, but he’s patient about them. He’s also paid his dues to get here.
Funnily enough, the journey began at Stanford, where decades ago, Hudson earned two degrees himself and now teaches today. “I do find it ironic that a two-time Stanford alum is trying to make sure that Stanford doesn't become the default in our industry,” Hudson says, clarifying, “but I'm not against Stanford grads, I just think our industry overindexes on known pedigree archetypes like Stanford, Harvard, etc.”
While working towards his first Stanford degree, a flier in the campus coffee house alerted him to his first startup opportunity, an ecommerce internship with then-Web 1.0 titan, Excite@Home. Strong internship performance and a lucky connection helped him land his next gig at In-Q-Tel, the CIA’s venture capital group. A few more forays into big and little tech later, Hudson became a tech founder himself as the CEO of Bionic Panda Games, a mobile game studio. It was around then that he caught the attention of several micro venture capital firms, including an iconic seed-stage outfit called Uncork Capital (then known as SoftTech VC) that convinced him to leave the world of product-building behind.
The Uncork that Hudson came on board to in 2010 was a one-man operation, the one man being French luminary Jeff Clavier, who was single-handedly sifting through prospects, negotiating and closing deals, and providing ongoing support for companies post-investment. “It was really amazing to watch,” Hudson told Hustle Fund’s Elizabeth Yin in an interview earlier this year, “I didn't fully appreciate how much work [went] into running a fund until I started my own.”
Back then, the nature of seed investing looked a lot like today's pre-seed investment arena. Hudson and Clavier were writing $400K checks into million-dollar seed rounds for fledgling startups that were pre-product-market fit and often seeking a strategic partner to help catapult them to Series A. In return, Uncork would take a 7–10% ownership stake with room to make additional investments if the company managed to break out.
In the span of a few years, the firm went from raising a $55M Fund III to an $85M Fund IV, with the influx of capital justifying heftier checks and a more ambitious follow-on budget. This was paired with a noticeable shift in the people Uncork attracted. “We [started] meeting a different type of entrepreneur than we used to,” Hudson remembers. “More experienced, more credentialed, and more connected.”
This concerned him. “I thought, what about the people we met who were on the outside looking in — who was helping them? And I kind of concluded that the answer was [no one].” It seemed like only a matter of time before the starter checks Hudson had grown so fond of writing would no longer have a place within Uncork’s scaling strategy. But if that were true, perhaps Uncork was no longer the place for him, either.
Despite sensing a growing divergence between what he wanted and where Uncork was going, Hudson wasn’t in a rush to leave. He and his wife, Brandi, had just gotten married, and starting a family was next on the horizon. Having only been a partner at Uncork for a couple of years, the idea of uprooting his career seemed like it could throw off a delicate balance.
But it was Brandi who persuaded him to think with urgency. She knew the risks, but she also knew what her husband was capable of. Here was an opportunity to build something that could not only change the future of their family but touch the lives of others, too. “I remember her saying, ‘We both know this is what you're supposed to be working on — this is the right thing to do.’” Hudson recalls. “I probably would've waited longer to start Precursor if not for her,” he admits.
When Hudson finally shared his decision, Clavier gave him his full blessing. Just a decade earlier, a younger version of Clavier had been the determined visionary when he left Reuter’s venture arm to launch Uncork. And now, it was time to pass the torch.
One look at Precursor’s website and you can tell it’s a place that puts people before companies. The homepage greets you with the warmth of a proud parent’s refrigerator door: a simple gallery of smiling founder headshots — no logo mosaic in sight. Every row has at least one person of color, and almost every other face belongs to a woman.
Getting to this point wasn’t easy — much like any founder, Hudson had to convince people to believe his thesis was worth funding.
In the world of venture capital, limited partners (LPs) are the classified faction of high-net-worth individuals and foundations who selectively finance the visions of general partners like Charles Hudson. (A role not unlike the silent backers behind filmmakers.) To earn their approval, Hudson needed to craft a pitch that would set him apart from a sea of micro VCs, each with an identical business model: giving away someone else’s money.
One day, after an early failed pitch, he drew two intersecting lines on a piece of paper. Along one axis, he scribbled "data on the business," and on the other, "data on the founder,” forming the four quadrants of the venture capital playing field. For most investors, the strategy had been clear: bet on companies with strong metrics or founders with impressive resumes — and if you were willing to pay a premium for it, bet on both. The remaining quadrant, where data was scarce in either aspect, represented the quietest corner of venture capital. It was in this no man’s land that Hudson found his competitive advantage.
Since then, he’s kept Precursor relatively capital-efficient compared to other early-stage firms, choosing to channel its resources into founders, more than their startups. These resources focus on three main areas: fundraising help, tactical conversations, and community. When it comes to fundraising, the value Precursor provides is simple: “We know lots of VCs, and we know what a good deck looks like.” The tactical conversations are a little more intimate.
“I try to be an honest broker for all of our portfolio companies. If I think that they're off track and they don't see it, hopefully, we've built enough trust and respect that I have the space to tell them.” It’s not his style to be prescriptive in these one-on-ones — as he puts it, he’d rather play the role of a founder’s GPS than make them feel like they’re in a self-driving car. That way, they can own their successes and their failures.
As for community, Precursor maintains peer support groups, a steady cadence of social mixers and programming events, and an active Slack channel to encourage as many founder-to-founder conversations as possible.
The uniqueness of Precursor’s atmosphere can’t be summed up by any single element — it emerges from the gestalt of bringing these pieces together with a diverse set of founders. “I think what you miss out [on] with a monoculture is that you don't get the chance to take advantage of what everybody's bringing to the table,” Hudson notes.
And when all is said and done, there’s only so much Precursor can help with — the rest is up to the founders themselves. “[We’re] expecting people to figure out a lot of things that they haven't done before,” Hudson says. “If they can overcome their lack of experience and it doesn't kill the company, they’ll come out the other end with a better company — and [as] a stronger founder.”
But not everyone is so convinced.
Hudson isn’t naive. He knows that it’s impossible to be a contrarian in a vacuum. After all, playing lone wolf won’t earn him any LPs, nor will it get him on any cap tables. The difficulty is that there’s been no precursor to Precursor; its methodology doesn’t fit neatly in any of the preconceived categories. It doesn’t help that Hudson’s commitment to finding people as early as possible — “pre-everything” — has meant embracing first-time founders, solo founders, incomplete teams, and unstructured markets — categories most VCs shy away from — leaving him with a bigger pool of candidates to sift through.
"[N]ot all of these folks are looking for a fund that's exclusively focused on people like them. But they are looking for a fund that treats them fairly and gives them an opportunity."
In an industry where the average venture capital partner only makes 3–6 yearly investments, many question the sustainability of a solo GP who makes 30–50 while also serving as the primary point of support for his entire portfolio. Others furrow their brow at Hudson’s target check, which has historically lingered just between half a percent and one percent of the entire fund. They insist the math can’t possibly work — how could it with Precursor owning such a fractional stake in each company?
And then there are those who fundamentally disagree with Precursor’s mission. “To them, the venture game is [about] finding people who know how the system works [and funding] them,” Hudson explains. “They’re like, why would you look for people who are disconnected?”
Despite the criticisms, Hudson still believes in his approach. Like a lot of VCs, he uses a scorecard to evaluate founders — his just follows different data points. With each candidate, he asks himself: “If I write them a check, do they have the potential to get to $100M ARR in seven years with reasonably good margins?” He doesn’t base that potential on traction or even a completed product — there’s time for that. What Hudson looks for is someone who is internally motivated to grow and has the ability to navigate challenging decisions with limited information. And can’t all kinds of people fit that bill?
Some of his critics seem to have a hard time wrapping their heads around this. Others make hasty judgments. “In the beginning, every time I walked in [to pitch LPs], people would be like, oh, you must be doing a ‘diversity fund.’” With this, Hudson lets out a wry chuckle. “I'm like, first of all, I don't even know what that means. Second of all, nowhere in my deck does it say that we're focused exclusively on BIPOC founders.” Still, compared to the rest of the venture industry, he’s managed to build a portfolio far more reflective of the broader population; 54% of Precursor’s companies have at least one female founder and roughly 44% of all of its founders are people of color. And while Hudson’s micro VC firm isn’t a minority-focused one, he can relate to the scrutiny such funds have faced. “I've told LPs, ‘The irony to me is that you hold the smallest funds who want to solve these problems to the highest standard.’ Most of the funds that have a specific lens on race or gender are small, right? And I think people dissect the racial and gender breakdown of their portfolios with a microscope,” he points out.
As for Precursor, “I just want it to feel like a firm that's available to everyone,” Hudson says plainly. This shouldn’t be a controversial statement, yet it is. He doesn’t spell it out, but the elephant in the room is that certain individuals are just uncomfortable with the idea of letting outsiders in. And that argument goes beyond venture capital.
“What I've found is that the experience of fundraising as a Black founder is really negative. You get a lot of no’s, and some of those no’s are delivered in a really tactless, rough way. I think it wears on you.” There's a hint of weariness in Hudson's voice too, as he says this before continuing, “In my experience, not all of these folks are looking for a fund that's exclusively focused on people like them. But they are looking for a fund that treats them fairly and gives them an opportunity.”
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Throughout the firm’s history, no less than half of Hudson’s investment team has consisted of Black women — that this intentional decision has naturally given way to more diverse investments just underscores the crux of representation: diversity breeds diversity.
And it’s not like Precursor isn’t selective. Out of the over 3,000 pitches that cross his desk every year, Hudson only invests in 1%. “You have to be okay with walking out of a lot more meetings where you know it’s going to be a hard no,” he confesses, “but if you invest in good companies at a good price and you keep your fund size relatively small, it works.”
It’s also hard to argue with the results. By now, Precursor has been around long enough to shepherd several companies through successful exits, including Betty Labs, a live audio app developer that was acquired by Spotify in 2021 for $67.7M; The Athletic, a sports media platform that was purchased by the New York Times in 2022 for over half a billion dollars; and Sora, an automation startup that recently sold to ADP in 2023 for an undisclosed sum. Hudson regularly heaps praise on founders in his portfolio like Iman Abuzeid, a Sudanese immigrant entrepreneur whose digital nurse-hiring platform, Incredible Health, raised an $80M Series B at a $1.65B valuation just last year, making her one of only eight Black and Latina female founders to reach unicorn status. “She’s a fantastic entrepreneur, like an incredibly strong operator. I’m really proud to be associated with that company,” Hudson told Stevon Cook in 2020. And he’s continuing to lead pre-seed rounds for first-time entrepreneurs like Madison Long and Simone May, whose company, Clutch, helps connect businesses and social media influencers in hopes of helping to close the pay and opportunity gap for Black creators.
Of course, not all of Precursor’s investments have been success stories — but that’s also the nature of venture capital. “Most VCs that I know are wrong far more often than they're right,” Hudson says.
A lot of the choosing boils down to instinct. As Hudson’s wife Brandi reminds him, “Isn't it more important to pick the best companies than it is to be able to explain how you do it?” At the end of the day, Hudson is just a practical investor searching for people who can be success stories. “This might sound a little like Pollyanna,” he muses, “but my aspiration is that when we're successful, it'll show the world that you can color outside the lines a bit and still be successful.”
This is Hudson’s final startup.
“Right now, I’ve accepted that we’re operating near the theoretical maximum of the Precursor model as it exists today,” he says. Nonetheless, he’s optimistic that someone, someday will figure out how to do it at scale. With a different objective and a different construction, they just might succeed — and if so, Precursor will light the way, true to its namesake.
That being said, no one has a crystal ball. Not even all the data in the world could make any of this a sheer bet. And Hudson never claimed to have all the answers, just like he also never set out to be a contrarian. But if you’re a Black man championing opportunities for people who usually don’t get them, does that make you a contrarian — or are you just a human being advocating for the way things should be?
Either way, Hudson is acutely aware that the work he’s doing — the work that all VCs are doing, really — has a direct correlation with the way that things will be. “Something I think about a lot is that the venture capital industry has a disproportionate impact on the future,” Hudson reflects. He pauses for a moment before continuing, “The things we choose to fund and the people we back really matter.”
These are the people who are beginning to prove, with Hudson’s help, that you don’t need the traditional data points in order to succeed — reminding us that sometimes the boldest returns can come from those who dare to jump into the deep end, kettlebell in hand.
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