Factorial Capital is a New York-based early-stage venture capital firm founded in 2023 to back deeply technical founders building at the frontier of artificial intelligence. The firm was created to address a structural gap in early-stage investing, where emerging technologies often move faster than traditional venture models can effectively evaluate. Factorial Capital is known for its technical-first lens and its unconventional distributed sourcing model.
Factorial Capital invests in frontier AI startups across infrastructure, developer platforms, and next-generation applications. The firm prioritizes teams with deep technical insight into what newly possible technologies enable, rather than focusing on predefined markets or short-term traction signals. Its scope spans AI infrastructure, applied AI, and AI-native products across both enterprise and consumer use cases.
Factorial Capital closed its second fund, Fund II, at $25 million, following its initial $10 million Fund I. Fund I served as a proof of concept for the firm’s model and has already produced a portfolio of ten companies valued at least five times Factorial’s entry price.
One standout investment, Modal, has surpassed a $1 billion valuation and attracted follow-on capital from firms such as Sequoia, a16z, Lux, Lightspeed, Redpoint, and Felicis.
Fund II is designed to expand Factorial’s distributed sourcing approach, partnering with more elite technical founders while maintaining a focus on angel, pre-seed, and seed-stage investments. The fund enables Factorial to write early conviction checks and support companies well before they reach the radar of traditional institutional investors.
Leadership
Factorial Capital was founded by Matt Hartman, Founder and General Partner. Prior to launching the firm, Hartman spent nearly a decade at Betaworks, where he was an early investor in companies including Hugging Face and Anchor, later acquired by Spotify. Hartman leads investment decisions and oversees the firm’s unique partnership-driven model.
Investment Strategy
Factorial Capital operates a distributed sourcing model inspired by multi-manager hedge fund architectures. The firm partners with a curated group of highly technical founders from companies such as Venmo, Giphy, and Hugging Face, who source startups from within their networks. Factorial splits its 20 percent carried interest evenly, with half allocated to the general partnership and half to the sourcing partner behind each successful investment. This structure aligns incentives and embeds technical expertise directly into the investment process. The firm invests early, with conviction, and supports founders on product strategy and follow-on fundraising.
Notable Investments
Notable investments include:
Notable Exits
No exits have been publicly announced to date, though several portfolio companies have reached significant valuation milestones and attracted top-tier follow-on investors.
Other
Factorial Capital does not optimize for broad market theses or conventional venture patterns. The firm is best suited for deeply technical teams building at the edge of AI capabilities who value early conviction capital, technical validation, and access to an elite network of founder-operators.
Factorial is often seen as a strong signal of technical quality at the earliest stages.
United States
