Jun 24, 2022 · 48m · news
Henri Pierre-Jacques: How I Founded Harlem Capital; Our $134M Fund | 20VC #901 · 20VC with Harry Stebbings
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Henri Pierre-Jacques, Co-Founder of Harlem Capital, joins Harry Stebbings to share his journey of raising $174 million across two funds to invest in diverse founders. He provides an advanced masterclass on early-stage portfolio math, disciplined fund management, and the tactical realities of institutional fundraising.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 20.8% of the talking time here. How this is scored →
Harry as informed peer 4.3 Guest teaching 3.6 Guest disagreement 1.1 Harry pushing back 2.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 39:08 Defending 50-60 page deal memos against host skepticism
Henri firmly rejects Harry's suggestion that 50-60 page intern-written deal memos are redundant fluff, systematically defending how detailed documentation streamlines partner alignment and founder value.
Hardest push from Harry ▶ 38:18 Harry pushes back on intern deal memo delegation and lengthHarry directly challenges Henri's practice of delegating 50-60 page deal memos to interns, questioning whether skipping personal memo writing forfeits analytical rigor and mocking the length.
Biggest teaching moment ▶ 10:07 Henri distinguishes deal picking from fund managementHenri reframes the emerging manager conversation by explaining that great deal picking does not equal building a sustainable fund management institution, citing insights from TPG's leadership and Andreessen Horowitz.
Harry holds his own ▶ 30:42 Harry uses back-channel partner feedback to test Henri's self-awarenessHarry demonstrates high host expertise and insider preparation by confronting Henri with specific, candid criticisms from his co-founders regarding stubbornness and quashing investment ideas.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Founding Harlem Capital and Early Origins | 2 | 1 | 0 | 0 | Henri summarizes his journey from Bank of America and private equity to founding Harlem Capital during HBS. Harry keeps the tone friendly and self-deprecating, comparing his own early angel track record to Henri's disciplined start. | |
| The Math of Venture: Portfolio Construction Models | 5 | 3 | 1 | 3 | Harry probes portfolio mechanics, challenging how sub-$50M funds can maintain ownership targets given elevated seed pricing. Henri agrees with the premise and explains how required target ownership scales down as fund size decreases. | |
| Discipline and Valuation: The Role of Pricing | 5 | 5 | 2 | 2 | Harry quotes Keith Raboy's view that early-stage price does not matter to test Henri's philosophy. Henri reframes valuation discipline around fund size and LP return expectations, arguing that long-term fund success relies on mathematical consistency rather than single-outlier dependence. | |
| Reserves Strategy and the Business of Fund Management | 4 | 6 | 1 | 2 | Harry shares his own zero-reserves SPV strategy, prompting Henri to detail why Harlem Capital maintains reserves and avoids SPVs. Henri distinguishes between individual deal picking and building a scalable fund management business. | |
| GP Commitments: Overcoming Personal and Financial Hurdles | 5 | 4 | 0 | 2 | Harry highlights the personal financial burden of GP commitments on young managers. Henri shares tactical solutions like capping commitments at fund target sizes and leveraging GP credit lines to navigate the friction. | |
| The Hard Road: Raising Harlem Capital's Fund I | 3 | 4 | 2 | 1 | Harry asks about the early rejections during Fund I, leading Henri to recount their 500-meeting fundraising grind. Henri explains how he pushed back against LPs who questioned whether diversity was too narrow a focus compared to sector specializations. | |
| Institutional Breakthrough: Securing TPG as Anchor | 4 | 3 | 1 | 4 | Harry bluntly expresses skepticism about a first-time fund securing six institutional LPs. Henri explains how securing TPG as an anchor investor unlocked other institutional doors through active co-fundraising. | |
| Actionable Fundraising Playbook for Emerging Managers | 5 | 5 | 2 | 2 | Harry offers tactical advice on asking LPs for referrals, which Henri reframes by stressing that managers must do the board-scraping legwork themselves rather than burdening LPs. Henri also shares a key lesson from a billionaire investor to stop asking for advice and ask directly for capital. | |
| Imposter Syndrome: Dealing with the Fiduciary Weight | 3 | 2 | 0 | 0 | Harry vulnerably admits to doubting his own venture judgment during market downturns, finding common ground with Henri. Henri echoes this sentiment, discussing the anxiety surrounding paper markups versus true DPI returns. | |
| Venture Mistakes: Transitioning from Private Equity Box-Checking | 6 | 4 | 1 | 2 | Henri reflects on how his private equity background initially caused him to look for too many risk-reducing checkboxes in venture deals. Harry synthesizes the conversation into a conceptual framework mapping investor career arcs. | |
| Team Dynamics: Stubborn Feedback and Avoiding GP Bias | 6 | 3 | 2 | 6 | Harry uses back-channel quotes from Henri's partners Jared and Brandon to directly challenge Henri's stubbornness and tendency to squash ideas. Henri accepts the criticism and outlines Harlem Capital's IC voting rules designed to protect junior perspectives. | |
| A Mission of Scale: Closing the Diversity Wealth Gap | 4 | 3 | 0 | 1 | Henri details his primary mission of backing 1,000 diverse founders over 20 years to generate minority wealth at scale. Harry connects with this operational challenge by sharing his own struggles with building team machinery around personal talent. | |
| The Intern Engine and Detailed Deal Memo Processes | 6 | 6 | 3 | 7 | Harry pushes back strongly against Henri's 50-60 page PowerPoint deal memos written by interns, questioning if delegating memos sacrifices decision clarity. Henri forcefully defends the practice, citing how long-form memos accelerate co-investor decision-making and provide transparent feedback to founders. | |
| Quick Fire Round: Miami Living, Work-Life Balance, and Mushi | 2 | 1 | 0 | 0 | Harry conducts a quickfire closing round covering podcasts, Miami lifestyle shifts, and recent investments. Henri shares reflections on efficiency gains after leaving New York and discusses his investment in Mushi. |
Statements from this episode (35)
Pierre-Jacques: 99% of VC Funds Lacked Black Partners in 2017
“I didn't want to work for a firm that didn't have black partners, which was 99% of all VC funds.”
Harlem Capital Launched Fund I in 2018, Closing at $40M in 2019
“Yeah, our summer of July July of 20 18 between first and second year business school. We formally launched fund one. Ended up raising 12 and a half million dollars, our second year of business school, and then ended up closing on forty million November of 1906…”
Harlem Capital scaled average check size from $25K to $2M in three years
“Now I'm fun to, you know, our average check size is two million. And so I basically got from 25 to two million in three years”
Sapphire Ventures Data Shows Average Seed Fund Holds 28 Portfolio Companies
“According to Sapphire Ventures, which one of the best fund the funds, the average seed stage fund has 28 companies in their portfolio.”
Stebbings' $30M Fund Strategy: Diverse Portfolio and Low Ownership Targets
“Our fund's thirty million. I went for very diverse, low ownership, given the low fund size.”
Pierre-Jacques: Average First-Time US Venture Capital Fund Is $40M to $50M
“The average first time fund in the US is 40 to fifty million.”
Pierre-Jacques: Nine-Figure VC Funds Must Secure 10% to 20% Portfolio Ownership
“When you start getting into the a hundred million, the nine figure funds, like that's where you have to start doing 1015, 20% ownership. Like the math just doesn't work otherwise”
Pierre-Jacques: Venture entry pricing only matters relative to fund size
“Ultimately, the price only matters based on the fund size, right?”
Harlem Capital invests $1M-$2.5M for 10%-15% ownership in $134M fund
“So for us, a hundred and thirty four million dollar fund, we tell people we invest one to two and a half million dollars for 10 to 15%.”
Harlem Capital aims for consistent 3x-5x net returns over single outlier wins
“And so for us, like we're not targeting to be that one coin based outcome, that one stripe outcome, like we're saying over time, how do we get LPs to know that we can consistently generate three to five X net returns.”
Institutional LPs prefer consistent 2x fund returns over volatile high peaks
“They don't care if you have one, five X. Right? Like, they'd rather take a two X over 10 funds consistently than a five X, one X, three X, two X, right? They want to know, do you know how to institutionalize and operate and have processes that allow you to bes…”
Pierre-Jacques aims to build Harlem Capital into a multi-billion global firm
“Like, I'm 30 years old. I want to do this for the rest of my life. I'm trying to build a multi-billion multi-asset class business globally.”
Harlem Capital capped Fund 1 GP commit at $250K despite hitting $40M
“So fund one, our target was 25, our cap was 40. We hit forty million. So we ended up doing two 50 K instead of 400 K, right?”
Silicon Valley Bank financed 60% of Harlem Capital's Fund 2 GP commit
“Second thing we did in fund two, which we didn't do in fund one, which was help, was get a GP credit line. Right. So basically we use Silicon Valley bank. They put up 60% of our GP stake. We put up 40% of our cash and over time it gets paid.”
Harlem Capital rejected Fund 2 LPs demanding rigid GP commitments
“And we had a few LPs in fund two that we didn't let in for, you know, Whether it was GP sake or other rules, because we just felt like they weren't really humanizing us, right? They're kind of were using us as a number.”
Harlem Capital Secured 55 LPs for Its First Venture Fund
“And we, you know, we ended up with 55 LPs in Fund One.”
Pierre-Jacques: Diversity VC Funds Pre-2020 Focused Exclusively on Gender, Not Race
“You know, six years ago, diversity meant gender equality, right? Before George Floyd in America, all the diversity focused funds were women focused funds. There was no racial lens for, you know, investing.”
Pierre-Jacques: Calling Yourself a FinTech VC Specialist Is Meaningless
“Like, how can you be a specialist for 30 to 40% of the market? Like, being a FinTech investor doesn't mean anything. Like, there's multiple verticals. There's multiple differences.”
Harlem Capital's First Fund Secured Six Institutional Investors
“We ended up with six institutions in the fund and we had a lot of GPS and family offices.”
TPG anchored Harlem Capital Fund 1 and sourced three institutional LPs
“TPG was our anchor in fund one. Right. So one of our high net worths introduced us to TPG November of, Ninth, November of 18, and we had a bunch of conversations. We were doing this for five, six months back and forth, met probably 45 partners. It was a six-mo…”
Harry Stebbings: Emerging managers underutilize existing LPs for LP introductions
“I think the biggest thing that managers miss is they say that I need more LPs. And I say, well, go to your existing LP base and say, can you give me three names that you think would be really well aligned that you will vouch for me to. And people don't leverag…”
Harlem Capital's initial Fund I launch email got only two responses
“So when we first launched the fund, it was actually tax day of 2018. And we did this mass email and we got like two responses from like a hundred emails of people who we knew.”
Targeted contact research yields far better LP introductions than general requests
“When you ask LP for their introductions, they may give you one or two if they're really nice. Most of them are going to be like, okay, cool. And they'll never get back to you because they don't have the time. It's not my job to find the people in my network fo…”
Harlem Capital created approximately 200 versions of their Fund I pitch deck
“Now we have probably 200 versions of our fund one deck.”
Harlem Capital raised Fund I check minimums from $100K to $500K across closes
“Fund one, we did three closes. The first close, we did a hundred K minimum. Second close is two for decay. Third close is 500 K, right?”
Pierre-Jacques: Harlem Capital Requires Two Great Factors Out of Four to Invest
“Ultimately, if we have two of the four that are really, really great, like we're gonna invest. If you have three good ones, we might still invest, right? But we need two of them to be great at least.”
Pierre-Jacques: LPs Cannot Expect Emerging GPs to Fit Traditional Criteria
“I push back on LPs like you're looking for these check the boxes and like all GPS aren't going to fit into these perfect boxes of working in venture and, you know, doing a spin out, whatever it may be, or having a great angel track record, because they were al…”
Harlem Capital runs investment committees in reverse order of seniority
“One thing we do now is the junior person always goes first after we have investment committee. So we go associate to principal to partner to GP, right? And so for everything, for opinions, the general partners always go last. Because if the GPs talk first, eve…”
Stebbings: Collect feedback on Word docs to ensure unencumbered team opinions
“I make people comment on Word docs, not on Google docs, because then they send them back to me the night before, and then I can pick on them in the meeting and say, hey, in the Word doc you said this, and their opinion is unencumbered by others, where it would…”
Pierre-Jacques: Harlem Capital aims to back 1,000 diverse founders in 20 years
“Our mission is to back thousand diverse founders and every founder we back obviously matters. Every life we change obviously matters, but I know we can do so much more and we set that mission. Of a thousand founders over 20 years for a reason, right?”
Pierre-Jacques: Harlem Capital is the 3rd or 4th largest Black-owned VC fund
“We're now the probably third or fourth largest black owned VC fund, which is kind of crazy.”
Pierre-Jacques: Harlem Capital hired five of its 76 interns over four years
“We've had 76 interns over four years. We've hired five of them so far.”