Coughdrop Capital Research
Investment Thesis
Coughdrop Capital is an early-stage venture capital firm founded by brothers Austin Petersmith and Stu Smith. The fund focuses on B2B software startups at the pre-seed and seed stages. The firm's thesis centers on backing founders building software that solves real problems in sales, go-to-market, product development, and growth. The partners bring deep operational experience from both sides of the table - as founders and as investors - and provide hands-on support in these critical areas.
Sector Focus
Coughdrop invests exclusively in B2B software with a broad focus across multiple verticals:
- Enterprise Software: HR platforms, CRM, workflow automation, compliance tools
- Developer Tools & Infrastructure: AI/ML infrastructure, data platforms, observability tools
- Finance & Operations: Payroll APIs, bookkeeping, fintech integrations
- Sales & Go-to-Market: Revenue operations, deal management, sales automation
- Healthcare Tech: Patient engagement, online therapy, healthcare services
- Specialized B2B: Education technology, agricultural tech, supply chain tools
The fund explicitly focuses on B2B software solutions and avoids consumer apps, hardware, and hardware-heavy businesses.
Stage Focus
Coughdrop is definitively an early-stage investor with stated focus on pre-seed and seed investments. The fund emphasizes getting in at the concept stage and backing founders early with capital and operational support. The portfolio shows consistent pre-seed and seed investments with occasional Series A follow-ons for portfolio winners.
Check Size
Coughdrop writes initial checks of $40K-$100K based on stage:
- Pre-seed: $40K-$75K
- Seed: $75K-$100K
- Follow-on reserves maintained for portfolio companies
This positions them as accessible to early-stage founders while maintaining check size discipline.
Lead Tendency
Coughdrop positions itself as a "first-check investor" that leads or co-leads early-stage rounds. The website explicitly states "We invest early. Here are some firms that have followed us into companies:" followed by a list of prominent VCs (Khosla Ventures, Founders Fund, Andreessen Horowitz, Y Combinator, etc.). This demonstrates strong lead positioning and the ability to attract follow-on capital from tier-1 investors.
Recent Activity
Recent portfolio investments demonstrate active deployment from 2024-2025:
- January 2025: Pre-seed investment in AI researcher platform
- January 2025: Pre-seed investment in data layer for financial AI
- January 2025: Pre-seed investment in complete POS system for liquor stores
- January 2025: Pre-seed investment in systems engineering tools
- December 2024: Pre-seed investment in AI-powered websites for service businesses
- December 2024: Pre-seed investment in HR-focused AI copilot
- December 2024: Seed investment in loan origination and underwriting platform
- November 2024: Pre-seed investment in AI character development and animation
The fund appears to be actively deploying with consistent monthly investments, primarily in AI-related B2B software.
Portfolio Highlights
Notable Exits:
- Superhuman (acquired by Grammarly, 2017)
- Mercury (raised to Series A, 2019)
- Varda Space Industries (IPO, April 2024)
- Nira (acquired by Dropbox, 2020)
- Span (raised to Series A, 2024)
- Serve Robotics (IPO, April 2024)
- Symbl.ai (acquired by Invoca, 2020)
Active Portfolio (Sample):
- Humata: ChatGPT for all your files (2024 Seed)
- Primer: Code-first product prototyping (2024 Pre-seed)
- Practice: Modern software for lesson-based businesses (2025 Pre-seed)
- Hello Patient: AI-powered patient engagement (2024 Pre-seed)
- Hamming: AI copilot for engineering delivery (2023 Pre-seed)
- Helicone: AI observability and analytics (2023 Pre-seed)
Portfolio companies include 150+ investments with a strong track record of follow-on funding from tier-1 investors.
Team
Core Partners:
- Austin Petersmith (Stu Smith's brother) - Co-founder and General Partner
- Stu Smith (Austin Petersmith's brother) - Co-founder and General Partner
Both partners have deep operational experience from both founder and investor perspectives, with expertise in sales, go-to-market, product development, and fundraising. The firm emphasizes hands-on operational support for early-stage teams.
Geographic Focus
Coughdrop shows a US-centric focus with primary geographic concentration in Silicon Valley and NYC based on portfolio company locations. The fund invests primarily in US-based B2B software startups.
Founder Preferences
Coughdrop explicitly seeks:
- Founders solving real problems in sales, go-to-market, product, growth, and fundraising
- Both technical and non-technical founders with deep domain expertise
- Founders with demonstrated ability to execute and scale
- Teams with complementary skills and experience from both startup and enterprise environments
Decision Process
Coughdrop operates as a partnership with the two founding brothers as decision-makers. The fund emphasizes speed and responsiveness in decision-making, positioning itself as accessible and founder-friendly. Investment decisions appear to be made quickly to support early-stage deployment.