The Exchanges

Q Listen, we're going to get into the fundraise. Uh, I do just want to ask, I, obviously I have my funds now, but I look at my angel track. I was a shit angel, Henri. Like, really crap. Um, how did your mindset change moving from angel investor to now institutional manager, do you think?

A It was pretty scary at first, right? Our first check out of fund one was 250,000 dollars. Our average check as an angel was 20 to 25. Like we had 10 extra check size and we were like, that was a lot of money. Um, and then, you know, by the time we finished fund one, because we started deploying, we started deploying capital while we were raising, we were writing seven fifty million dollar checks. And so I always tell people like, as you scale your AUM, like your, your comfort level for discomfort, uh, increases. And so, like, 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 and like, it feels like it'd be really scary, but actually gets more and more easy as you do it for longer periods of time. So, at first, it definitely was scary. Um, but I think over time, I really adjusted to it and it's been a great learning experience.

AI assessment note: “as you scale your AUM, like your, your comfort level for discomfort, uh, increases.”

Q something. GP commits. Like, I'm young. I didn't have that much liquid cash, but like, oh my God, I'm like up to my eyes in GP commit. And then they, LPs would expect the same from a billionaire founder in terms of percent, which is like his play money. I, how do you feel about the state of GP commits today? Um, is there anything you'd like to see change?

A Yeah, I think there's a few things that we did that help. So one, we set our, you know, we did one person, which is standard. Some people have gone less, some people have gone more. We set the one person at the cap, at the, at the target of the fund, right? 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? And we said, hey, like two 50 K, we were 27 years old. I was graduating from business school. That was still a lot of money. I had 120 dollars of business school debt. Right. But we said, hey, we think that it should be based on the target. There should be some cap. If we get to the cap, great, but that shouldn't be the GP cap. 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. That's really helpful, particularly because we raised fund two a year after we closed fund one. So you start to stack these GP stakes really quickly and you've got no carry. Uh, your, your partner is like, where's all this money going to? Are we going to get it back? So there, you know, you, you do want to leverage like one of our, uh, one of our LPs in fund one, Henry Kravis, like always said, you want to use other people's money, you know,…

AI assessment note: “I think there's a few things that we did that help.”

Q Not at all, but I want to start today with a little bit on you. Tell me, how did you make your way into the wonderful world of venture? And how did you come to found Harlem and start that journey from the kitchen table with Jared?

A Yeah, I always tell people I kind of bought my way into venture. So I started out in investment banking at Bank of America, did that for two years, then moved over to a black owned private equity firm where Jared and I actually were Cubemates. We were working in PE and we basically said, hey, like, why don't we do what we're doing at work for ourselves? We're obviously making decent money. Uh, and so we started angel investing, right? So that was 2015. Uh, in Jared's living room and in Harlem, we all live in Harlem, which is where the name came from. Started angel investing did that for two and a half years. Uh, Jared and I were both fortunate enough to get into Harvard business school where we were roommates and we started recruiting at HBS for, for venture and private equity roles and. Most of our angel investing were into diverse, uh, diverse founders, right? Even though it wasn't our mission, our firm was black owned. And so to be frank, you know, going from Bank of America, where I was one of I found a group of black people in a group of 45 working at a black owned firm. I didn't want to work for a firm that didn't have black partners, which was 99% of all VC funds. And so I turned to Jared, my roommate in the kitchen and said, Hey, like, why don't we use our angel track record? And instead of recruiting, uh, raise a fund, not fully knowing exactly what that meant. Um, so …

AI assessment note: “why don't we use our angel track record? And instead of recruiting, raise a fund”

Q Tell me, what's the most recent publicly announced investment, and why did you get so jacked and say yes?

A For me, a company called Mushi, which is a high-end NFT marketplace platform for artists who are basically converting their real-life artwork to NFTs. Um, so Ariana, Black female founder based here in Miami. I met her during Art Basel at one of our events. Uh, I'm really excited. Like, I love her, her focus. I love her connections to the galleries from a distribution standpoint. But honestly, the thing that's been best is like our friendship. Like, I know she goes to my church with me. She's best friends with my wife. They go off and like, we didn't know her five months ago and now she's really ingrained. And so it's been really awesome to have founders in Miami. I've invested in two companies here now and really like get to know them as humans. Um, that's what I'm most excited about.

AI assessment note: “For me, a company called Mushi, which is a high-end NFT marketplace platform”

Q into a quickfire, but I'm just intrigued. Deal memos help clarify thoughts, bring clarity to investment decision making. By not doing it, do you not lose out on that clarity and validation of why you're doing the deal? And then also, like, 50, 60 pages. Henri, man, I think, you know, you're fantastic. By 50, 60 pages, it's early stage. What are you putting in there? An encyclopedia? Like, what?

A So first it's in PowerPoint, not Word, because I don't believe in Word docs. Um, and a lot of investors have, you know, different views on that. But I think, you know, there's kind of, there's three reasons, right? So the first reason is we want all the information, you know, so this includes customer references. It includes founder references. Like, I don't want to send the other partner who's on the deal. Hey, like, here's, here's a Google folder that has five different Word docs with all the customer references. Like, go and read them. Like, nobody has time for that. Right? Give me the document, put all of the stuff that you did into one document and say, hey, here's a document that has all of our diligence process over two to three weeks. Read this document, come back, give me your feedback. Right? So part of it is like streamlining the process. People think it actually like slows it down. It doesn't. We do deals in as fast as. 48 hours, 72 hours. We can do a 30 page deck that fast. Right? The second piece is to my point of like, what processes are you doing to scale? Like, how do we get six institutions in fund one? We did deal memos for Angel Syndicate, right? So when people are trying to validate our, hey, you picked these companies. Great. You've made money. How do I know you've actually institutionalized that? We said, hey, here's our, at the time, you know, when we we…

AI assessment note: “first reason is we want all the information, you know, so this includes customer references”

Q Listen, we're going to get into the fundraise. Uh, I do just want to ask, I, obviously I have my funds now, but I look at my angel track. I was a shit angel, Henri. Like, really crap. Um, how did your mindset change moving from angel investor to now institutional manager, do you think?

A It was pretty scary at first, right? Our first check out of fund one was 250,000 dollars. Our average check as an angel was 20 to 25. Like we had 10 extra check size and we were like, that was a lot of money. Um, and then, you know, by the time we finished fund one, because we started deploying, we started deploying capital while we were raising, we were writing seven fifty million dollar checks. And so I always tell people like, as you scale your AUM, like your, your comfort level for discomfort, uh, increases. And so, like, 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 and like, it feels like it'd be really scary, but actually gets more and more easy as you do it for longer periods of time. So, at first, it definitely was scary. Um, but I think over time, I really adjusted to it and it's been a great learning experience.

AI assessment note: “as you scale your AUM, like your, your comfort level for discomfort, uh, increases.”

Q Who do you look up to and learn from in Venture, and why them?

A So Nahal Mehta ENIAC is probably one of my, my favorite LPs, uh, and to your point, smaller check, but phenomenal upside. And just like somebody who's built, you know, five funds is such a human. And I just love what they've built and what ENIAC has done to humanize venture. And that's really what we are trying to do at Harlem capital. Like, it's not this quantitative, like, we're not just like LP hungry. It's like, Hey, like we're all humans. Let's enjoy this experience. We know we're all going through trauma, especially the last three years, right? And so I, I really appreciate Nahal's perspective on like, oh, like, you know, COVID's happening. You know, what are you, like, what are you guys sending to your founders? Like, how are you thinking about that, right? How are your founders doing? Like, are family members dying? Like, those questions, I think a lot of other GPs and LPs don't ask. Um, I think they're really valuable, and I think a lot of founders appreciate you being thoughtful about them.

AI assessment note: “Nahal Mehta ENIAC is probably one of my, my favorite LPs”

Q ownership if you're going to be diverse, or you have to be super concentrated, which I do not think is the right strategy. And so I guess my question is like, How did you think about that? Because I have the same problem, which is like, you know, our fund's thirty million. I went for very diverse, low ownership, given the low fund size. How did you think about that?

A Yeah, I mean, the average first time fund in the US is 40 to fifty million. I think that's the spot where you probably can do your, you know, five to eight percent ownership. That's probably average for size of that fund. So ownership does change, obviously, as the size of the fund changes, because you need larger returns. So I don't think it's, uh, ownership doesn't matter. I think it's just, you need less ownership, right? Because a. Five hundred million or a billion dollar outcome for a million dollar fund can return the fund. Now, 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, but for some fifty million dollar funds, or a lot of funds are sub ten million. Like, you don't need a lot of ownership because you don't need out large outcomes to return your funds.

AI assessment note: “ownership does change, obviously, as the size of the fund changes”

Q of a level on pricing. When we think about pricing, I just had Keith Raboy on the show, and he was like, the thing I wish I knew from the start of my career in venture is that C&A, just price just really doesn't matter. It just doesn't matter. Um, how do you think about your relationship to price and reflections on it given the time you've been investing now?

A Ultimately, the price only matters based on the fund size, right? And so once you kind of decide which camp you're in, let's say we're in the diverse camp, 30 to 45 companies, we decide, hey, for whatever size fund you are, like, we need this much ownership. All that really matters is based on whatever reserve model you have, you know, the average reserve model is one to one per rata. So let's assume a ten million, a hundred million dollar fund, I'm doing fifty-fifty, I want 30 companies, like, you basically can back into what is the max check I can write to get my ownership, right? 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%. Now, if that two and a half kid says 10% versus 15, that's going to vary based on the price or based on the round. But like, we can't go below that threshold, right? The math for us just doesn't work. Uh, I think it's pretty clear over time, like we have a lot of fund to fund to our LPs in our fund. And if you look at fund to fund data over time, obviously they're outliers. Obviously, you know, I was listening to black sheep on your show, like you can get the Coinbase 100,000 dollar check and Can return the fund, right? But if you look at like over time, green spring, true bridge, the best fund, the funds you've been investing for 2030 years, there's pretty clear da…

AI assessment note: “Ultimately, the price only matters based on the fund size, right?”

Q something. GP commits. Like, I'm young. I didn't have that much liquid cash, but like, oh my God, I'm like up to my eyes in GP commit. And then they, LPs would expect the same from a billionaire founder in terms of percent, which is like his play money. I, how do you feel about the state of GP commits today? Um, is there anything you'd like to see change?

A Yeah, I think there's a few things that we did that help. So one, we set our, you know, we did one person, which is standard. Some people have gone less, some people have gone more. We set the one person at the cap, at the, at the target of the fund, right? 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? And we said, hey, like two 50 K, we were 27 years old. I was graduating from business school. That was still a lot of money. I had 120 dollars of business school debt. Right. But we said, hey, we think that it should be based on the target. There should be some cap. If we get to the cap, great, but that shouldn't be the GP cap. 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. That's really helpful, particularly because we raised fund two a year after we closed fund one. So you start to stack these GP stakes really quickly and you've got no carry. Uh, your, your partner is like, where's all this money going to? Are we going to get it back? So there, you know, you, you do want to leverage like one of our, uh, one of our LPs in fund one, Henry Kravis, like always said, you want to use other people's money, you know,…

AI assessment note: “I think there's a few things that we did that help.”

Q to two years without a salary. I was lucky I had chat shit on a podcast, um, but, like, if I didn't, it would be brutal. Um, I do want to talk about the fundraise itself, though, because it's always a really interesting journey, I think. You know, you and Jared sitting at the kitchen table. How was the fundraise for Fun One? How many LP meetings did you have?

A Yeah. Fun one was brutal. Uh, it was 18 months long. 12 of those 18 months we were at Harvard Business School. Uh, and so Jared and I, our kitchen table was our office. We purposely second year only took what we call X classes, which were basically Monday, Tuesday, Wednesday, right? So every Wednesday night we took an Amtrak to New York, uh, and we stayed until Sunday and we fundraised. And so like, yeah, second year business school is kind of rough. Like it didn't do spring break trips. I was in New York, all the spring break fundraising. Uh, but, like, luckily, you know, Jerry's one of my best friends. I've known him for 12 years, and so when you're fundraising with your best friend, like, that helps. Like, my wife calls him my husband, because I work with him so much. Um, so yeah, it was hard, right? And we, you know, we ended up with 55 LPs in Fund One. My guess is probably took four to 500 meetings. We got much better at, like, knowing who, who would likely have a chance, right? So for us, ultimately, it was like, hey, we had to know, do you back first-time managers, right? Do you have a problem with that? Do you believe in diversity as an asset class, right? Like, we didn't get into venture because we love the venture. Like, I didn't know anything about venture, even when I was angel investing. Like, I just thought I was investing in companies and businesses. I came from …

AI assessment note: “ended up with 55 LPs in Fund One. My guess is probably took four to 500 meetings.”

Q Whoa, whoa, whoa, whoa. Six institutions is very impressive. Institutions don't normally come in that early, bluntly, especially into managers who are first time managers. Um, what do you think you did to enable them to gain comfort, to invest in a first time fund and a first time manager, given they, they rarely do?

A Yeah, I think there are two things. I think the first was we were so left field that it was like, either you got it or you didn't. And if you were an institution who had been looking and searching for diverse managers plus diverse founders, like the diverse manager piece has been in the LP world for 1020 years, right? Emerging manager, diverse manager programs, but people now are like, okay, great. We backed black GP similar to my private equity fund, but their portfolio is still white. Right. So ultimately we're helping to make whatever, five, 10 people of color or women, you know, more successful, but like, that's not scalable. And so I think LPs have been having this question and now it's like, okay, well, now we have a diverse manager who's investing in diverse founders. Those diverse founders have been proven to hire diverse teams. Like now you actually begin to get much more deeper network effects. So that was first. And then second, TPG was our anchor in fund one. Right. So one of our, one of our high net worths introduced us to TPG, uh, 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-month process, and TPG ended up being the anchor for our fund, and once we had them, like, they actually were really big advocates for us, right? So we did a big press rel…

AI assessment note: “I think there are two things. I think the first was... And then second, TPG was our anchor”

Q you give me three names that you think would be really well aligned that you will vouch for me to. And people don't leverage the existing that they have to get net new. I always find it astonishing. When you think about advice, uh, like that, which I just said, like, how would you advise emerging managers, first time fund managers on lessons that you took from that first process?

A Yeah, I think you, you want to go. 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, a hundred emails of people who we knew. And so I think the first thing we realized was like, Hey, we have to go really deep. Right. And we need to like be super targeted. So I think even to your advice of like asking LPs for three references, like we went a step further. Like we, we had our first intern class that spring to help us fundraise. And so we literally went through and we scraped every board that every person we knew was on. And we looked at, like, who are the other people on those boards, right? And then we would go on to their LinkedIn and see, like, hey, are they connected to these people on those boards? We would go and see, like, okay, what schools did they go to? You know, what clubs are they in? And so I think, you know, even for founders, for me, when they come and say, hey, do you have three people you can invite me to? I'm like, go and look through and then tell me the five. Like, I don't have the capacity to take the time to find those three for you. And LPs are the same way, right? 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 …

AI assessment note: “we realized was like, Hey, we have to go really deep. Right.”

Q ownership if you're going to be diverse, or you have to be super concentrated, which I do not think is the right strategy. And so I guess my question is like, How did you think about that? Because I have the same problem, which is like, you know, our fund's thirty million. I went for very diverse, low ownership, given the low fund size. How did you think about that?

A Yeah, I mean, the average first time fund in the US is 40 to fifty million. I think that's the spot where you probably can do your, you know, five to eight percent ownership. That's probably average for size of that fund. So ownership does change, obviously, as the size of the fund changes, because you need larger returns. So I don't think it's, uh, ownership doesn't matter. I think it's just, you need less ownership, right? Because a. Five hundred million or a billion dollar outcome for a million dollar fund can return the fund. Now, 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, but for some fifty million dollar funds, or a lot of funds are sub ten million. Like, you don't need a lot of ownership because you don't need out large outcomes to return your funds.

AI assessment note: “for sub fifty million dollar funds... you don't need a lot of ownership”

Q updates when they're like, Hey, can you introduce me to new bank? And you're like, well, if you say, I want to speak to Henri head of partnerships at new bank, I can see on LinkedIn who's connected and it's just way easier than like new bank. Do you know what I mean? So I totally agree with you there. What was your biggest mistake in the fundraiser fun one?

A Um, I mean, early, I would say the biggest mistake early on, and it's the same for founders, when you asking people for money, the people where money always seems smarter than you, right? Like you're a first time manager, people are giving you advice or flipping your deck, literally in front of you, marking stuff up. I remember seeing people X-ing stuff out, like right in front of us, like, oh, they're not investing, right? And so they give you that advice back and you keep changing stuff. Now we have probably 200 versions of our fund one deck. Right and there was a moment where we met with a billionaire and we turned to him, you know, at the end of the pitch and we said, hey, like, you know, we'd love your advice. We'd love your check. We'd love for you to invest. We kind of hesitated. And he said advice is cheap. Ask for the money. And like, it was like this, like, light bulb went off for us and like, it was like, okay, like, we, you know, we've done at that point, maybe 50, 60, 70 pitches and we need to stop asking for advice. Right? And so literally after that, we would go into meetings and people would give us advice. You're like, like, we really appreciate your thoughts. Like, we're going to be successful with our value, but we'd love you to be on a journey with us. Like, let us know if there's anything we can do to get you over the line. Right? And I think, you know, the…

AI assessment note: “the biggest mistake early on... they give you that advice back and you keep changing stuff”

Q you give me three names that you think would be really well aligned that you will vouch for me to. And people don't leverage the existing that they have to get net new. I always find it astonishing. When you think about advice, uh, like that, which I just said, like, how would you advise emerging managers, first time fund managers on lessons that you took from that first process?

A Yeah, I think you, you want to go. 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, a hundred emails of people who we knew. And so I think the first thing we realized was like, Hey, we have to go really deep. Right. And we need to like be super targeted. So I think even to your advice of like asking LPs for three references, like we went a step further. Like we, we had our first intern class that spring to help us fundraise. And so we literally went through and we scraped every board that every person we knew was on. And we looked at, like, who are the other people on those boards, right? And then we would go on to their LinkedIn and see, like, hey, are they connected to these people on those boards? We would go and see, like, okay, what schools did they go to? You know, what clubs are they in? And so I think, you know, even for founders, for me, when they come and say, hey, do you have three people you can invite me to? I'm like, go and look through and then tell me the five. Like, I don't have the capacity to take the time to find those three for you. And LPs are the same way, right? 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 …

AI assessment note: “going an extra step and doing the work for them”

Q Whoa, whoa, whoa, whoa. Six institutions is very impressive. Institutions don't normally come in that early, bluntly, especially into managers who are first time managers. Um, what do you think you did to enable them to gain comfort, to invest in a first time fund and a first time manager, given they, they rarely do?

A Yeah, I think there are two things. I think the first was we were so left field that it was like, either you got it or you didn't. And if you were an institution who had been looking and searching for diverse managers plus diverse founders, like the diverse manager piece has been in the LP world for 1020 years, right? Emerging manager, diverse manager programs, but people now are like, okay, great. We backed black GP similar to my private equity fund, but their portfolio is still white. Right. So ultimately we're helping to make whatever, five, 10 people of color or women, you know, more successful, but like, that's not scalable. And so I think LPs have been having this question and now it's like, okay, well, now we have a diverse manager who's investing in diverse founders. Those diverse founders have been proven to hire diverse teams. Like now you actually begin to get much more deeper network effects. So that was first. And then second, TPG was our anchor in fund one. Right. So one of our, one of our high net worths introduced us to TPG, uh, 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-month process, and TPG ended up being the anchor for our fund, and once we had them, like, they actually were really big advocates for us, right? So we did a big press rel…

AI assessment note: “TPG ended up being the anchor for our fund”

Q 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 be in a Google doc, and you see the real time. Do you see what I mean? You have, like, the purest thought there. Tell me, what are you scared of, Henri?

A Um, honestly, my big, one of my biggest fears is like not accomplishing everything I know I can. Right. And so I think ultimately we're both very successful. We're top, you know, one percent. My family came from Haiti. My mom came from Italy. I know my privilege. I know my blessings. And so I'm not, you know, I don't have many regrets. Um, but I think it's, I know that 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? Because we believe that in order to have true change, in order to really change venture capital, change the wealth gap in America between people of color and whites, like we have to do this at scale, right? And so for me, that's what keeps me up at night is like, hey, are we doing everything we can to scale this business, help as many founders as possible, to change the mindset of as many people as possible, which is why we're so media driven. Like we, why I tweet so much, why we do so much press is because we believe you can't be what you can't see. And for a lot of people, they don't have that in their life. Like, we were very fortunate. We worked at a black home PE firm with a billion plus dollars of AUM. Like, Willie was our first investor. Willie inspired us. Li…

AI assessment note: “one of my biggest fears is like not accomplishing everything I know I can”

Q 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 be in a Google doc, and you see the real time. Do you see what I mean? You have, like, the purest thought there. Tell me, what are you scared of, Henri?

A Um, honestly, my big, one of my biggest fears is like not accomplishing everything I know I can. Right. And so I think ultimately we're both very successful. We're top, you know, one percent. My family came from Haiti. My mom came from Italy. I know my privilege. I know my blessings. And so I'm not, you know, I don't have many regrets. Um, but I think it's, I know that 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? Because we believe that in order to have true change, in order to really change venture capital, change the wealth gap in America between people of color and whites, like we have to do this at scale, right? And so for me, that's what keeps me up at night is like, hey, are we doing everything we can to scale this business, help as many founders as possible, to change the mindset of as many people as possible, which is why we're so media driven. Like we, why I tweet so much, why we do so much press is because we believe you can't be what you can't see. And for a lot of people, they don't have that in their life. Like, we were very fortunate. We worked at a black home PE firm with a billion plus dollars of AUM. Like, Willie was our first investor. Willie inspired us. Li…

AI assessment note: “one of my biggest fears is like not accomplishing everything I know I can”

Q What are the big nuances that you think managers miss?

A I would say the biggest, because we invest in fund managers as well. So I've invested in 12 funds. The biggest thing that I learned, you know, TBG was our anchor investor in fund one. And I remember Jim Colter, the CEO of TBG. He was like, awesome. You have two jobs, right? Invest in deals and manage your funds. And they're two different skill sets. It kind of reminds me of, of co-founders, right? We love CEOs who are business oriented and the co-founder being a CTO. It's two different jobs, fundraising, managing team versus managing the tech. And a lot of fund managers, especially early on emerging managers, think that by being the best deal picker, having the best sourcing, like they're going to be the best fund manager. You can do that at, at small scale, right? 10, fifty million. You can just be a picker, not think about ownership, you know, have maybe no associates, no memos, but like, and that's fine, right? But if you want to scale and be in this business and become the Andreessen's investments of the world, that's not going to work. And that, what Andreessen's doing, you know, they just announced their Four and a half billion dollar fund. That's a completely different skill that has nothing to do with deal picking, right? When you're that kind of fundraiser, that kind of money manager, that kind of talent hire, that is like, I think what the difference is between the go…

AI assessment note: “You have two jobs, right? Invest in deals and manage your funds.”

Q updates when they're like, Hey, can you introduce me to new bank? And you're like, well, if you say, I want to speak to Henri head of partnerships at new bank, I can see on LinkedIn who's connected and it's just way easier than like new bank. Do you know what I mean? So I totally agree with you there. What was your biggest mistake in the fundraiser fun one?

A Um, I mean, early, I would say the biggest mistake early on, and it's the same for founders, when you asking people for money, the people where money always seems smarter than you, right? Like you're a first time manager, people are giving you advice or flipping your deck, literally in front of you, marking stuff up. I remember seeing people X-ing stuff out, like right in front of us, like, oh, they're not investing, right? And so they give you that advice back and you keep changing stuff. Now we have probably 200 versions of our fund one deck. Right and there was a moment where we met with a billionaire and we turned to him, you know, at the end of the pitch and we said, hey, like, you know, we'd love your advice. We'd love your check. We'd love for you to invest. We kind of hesitated. And he said advice is cheap. Ask for the money. And like, it was like this, like, light bulb went off for us and like, it was like, okay, like, we, you know, we've done at that point, maybe 50, 60, 70 pitches and we need to stop asking for advice. Right? And so literally after that, we would go into meetings and people would give us advice. You're like, like, we really appreciate your thoughts. Like, we're going to be successful with our value, but we'd love you to be on a journey with us. Like, let us know if there's anything we can do to get you over the line. Right? And I think, you know, the…

AI assessment note: “the biggest mistake early on... they give you that advice back and you keep changing stuff.”

Q humanity enough, and we're all crushing it, and we're all so amazing, which is wonderful. Um, I'm sitting here going, I felt like a fucking rockstar Henri for years. Books way high, you know, numbers are great, and now, I mean, I'm really questioning whether I'm any good at this shit at all. Um, so when you think about your insecurities, what do you think your biggest insecurities are today?

A I mean, honestly, what you just said, right? Like I, I, I did a thread on this and it's like, am I actually good at what I'm doing? Right? Am I a good investor? And so I think there are obviously KPIs that you can track, right? I can raise capital. I've raised capital already. I can win deals. I can get markups. I can create value out. I can write great content and great Twitter threads and get more followers, right? All these things like kind of point to, Hey, if I'm a, if I'm a company, these KPIs should lead to generating more revenue or more, DPI returns to my LPs, but it's still unclear, right? Until you get the checks that go to your LPs, you actually don't know if you're good. If you didn't get out before the bubble busted, if you were still in whatever company, you know, Affirm, Coinbase, Robinhood, and you hadn't actually liquidated it yet, like you just lost 70% of your value, right? So you still probably made money, but not nearly as much as you thought, right? And so I think that's my biggest question is like, Hey, am I actually good at this? Like, I know I'm good at the in-between phase, but like time will tell. Right. I think ultimately that's the LP's job. That's your job is to figure out, Hey, based on what we've seen historically, and we can execute on these five or 10 things, which is to my point, they want to institutionalize stuff. Like we fundamentally beli…

AI assessment note: “what you just said, right? Like... am I actually good at what I'm doing?”

Q fascinating, kind of, the alternating paths that you can take post that, like, mid-tier. So I totally agree. I spoke to Jared before the show, and he told me that you're wonderful in many ways, but he told me you are bad at accepting feedback, um, and you won't accept feedback on some things. What are the things you won't accept feedback on, and why do you think that is?

A That's funny from Jared. Um, I mean, you know, I think one of your strengths are always your weaknesses, right? So for me, being sovereign is one of my greatest strengths, one of my greatest weaknesses. I think to the extent of being a GP or being a founder, you have to be sovereign because it enables you to do things that people told you not to do, right? I'm very quantitative. I love math. I love data. I love analyzing things. So I'd say my biggest thing is like, when I have a belief, it's going to take me longer to change my position, unless you've kind of like, show me the data, show me the proof. There's obviously things that are just qualitative, but like, as a quantitative mind, like that's the part gets me over the line faster. And, you know, now I've known Jared for 12 years and so he's gotten better at learning, like how to, how to present information in order to change my mind. But like, I definitely can be stubborn, uh, with things like that, unless I see like the data and quantitative. So we've been doing a lot of back and forth the past few months with the recession talks. Uh, is it a bear market? Is it not? How do we present this data to our founders? Ah, and so, you know, that's just, that's, that's my edge. Like, I love data, and I think for better or worse, it can sometimes trap you.

AI assessment note: “when I have a belief, it's going to take me longer to change my position”

Q to two years without a salary. I was lucky I had chat shit on a podcast, um, but, like, if I didn't, it would be brutal. Um, I do want to talk about the fundraise itself, though, because it's always a really interesting journey, I think. You know, you and Jared sitting at the kitchen table. How was the fundraise for Fun One? How many LP meetings did you have?

A Yeah. Fun one was brutal. Uh, it was 18 months long. 12 of those 18 months we were at Harvard Business School. Uh, and so Jared and I, our kitchen table was our office. We purposely second year only took what we call X classes, which were basically Monday, Tuesday, Wednesday, right? So every Wednesday night we took an Amtrak to New York, uh, and we stayed until Sunday and we fundraised. And so like, yeah, second year business school is kind of rough. Like it didn't do spring break trips. I was in New York, all the spring break fundraising. Uh, but, like, luckily, you know, Jerry's one of my best friends. I've known him for 12 years, and so when you're fundraising with your best friend, like, that helps. Like, my wife calls him my husband, because I work with him so much. Um, so yeah, it was hard, right? And we, you know, we ended up with 55 LPs in Fund One. My guess is probably took four to 500 meetings. We got much better at, like, knowing who, who would likely have a chance, right? So for us, ultimately, it was like, hey, we had to know, do you back first-time managers, right? Do you have a problem with that? Do you believe in diversity as an asset class, right? Like, we didn't get into venture because we love the venture. Like, I didn't know anything about venture, even when I was angel investing. Like, I just thought I was investing in companies and businesses. I came from …

AI assessment note: “My guess is probably took four to 500 meetings.”

Q Is there any advice you'd have on minimum and maximum check sizes from LPs?

A Um, I mean, so it changes over time, right? So 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? As you get further along in the journey, the smaller dollars mean less and less, right? But early on, if I'm like, hey, you can give me a hundred K, I'm raising twenty five million dollar fund, like you'll take it, right? Once I get to fifteen million for my first close, I don't need a hundred K anymore, right? And so I think it really should adjust over time and incentivize those people also to move first. I'm not going to let you wait 18 months to do the minimum check, right? Like, you want to do the minimum check, you got to do it today, otherwise the minimum is going to go up.

AI assessment note: “I think it really should adjust over time and incentivize those people also to move”

Q of a level on pricing. When we think about pricing, I just had Keith Raboy on the show, and he was like, the thing I wish I knew from the start of my career in venture is that C&A, just price just really doesn't matter. It just doesn't matter. Um, how do you think about your relationship to price and reflections on it given the time you've been investing now?

A Ultimately, the price only matters based on the fund size, right? And so once you kind of decide which camp you're in, let's say we're in the diverse camp, 30 to 45 companies, we decide, hey, for whatever size fund you are, like, we need this much ownership. All that really matters is based on whatever reserve model you have, you know, the average reserve model is one to one per rata. So let's assume a ten million, a hundred million dollar fund, I'm doing fifty-fifty, I want 30 companies, like, you basically can back into what is the max check I can write to get my ownership, right? 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%. Now, if that two and a half kid says 10% versus 15, that's going to vary based on the price or based on the round. But like, we can't go below that threshold, right? The math for us just doesn't work. Uh, I think it's pretty clear over time, like we have a lot of fund to fund to our LPs in our fund. And if you look at fund to fund data over time, obviously they're outliers. Obviously, you know, I was listening to black sheep on your show, like you can get the Coinbase 100,000 dollar check and Can return the fund, right? But if you look at like over time, green spring, true bridge, the best fund, the funds you've been investing for 2030 years, there's pretty clear da…

AI assessment note: “Ultimately, the price only matters based on the fund size, right?”

Q humanity enough, and we're all crushing it, and we're all so amazing, which is wonderful. Um, I'm sitting here going, I felt like a fucking rockstar Henri for years. Books way high, you know, numbers are great, and now, I mean, I'm really questioning whether I'm any good at this shit at all. Um, so when you think about your insecurities, what do you think your biggest insecurities are today?

A I mean, honestly, what you just said, right? Like I, I, I did a thread on this and it's like, am I actually good at what I'm doing? Right? Am I a good investor? And so I think there are obviously KPIs that you can track, right? I can raise capital. I've raised capital already. I can win deals. I can get markups. I can create value out. I can write great content and great Twitter threads and get more followers, right? All these things like kind of point to, Hey, if I'm a, if I'm a company, these KPIs should lead to generating more revenue or more, DPI returns to my LPs, but it's still unclear, right? Until you get the checks that go to your LPs, you actually don't know if you're good. If you didn't get out before the bubble busted, if you were still in whatever company, you know, Affirm, Coinbase, Robinhood, and you hadn't actually liquidated it yet, like you just lost 70% of your value, right? So you still probably made money, but not nearly as much as you thought, right? And so I think that's my biggest question is like, Hey, am I actually good at this? Like, I know I'm good at the in-between phase, but like time will tell. Right. I think ultimately that's the LP's job. That's your job is to figure out, Hey, based on what we've seen historically, and we can execute on these five or 10 things, which is to my point, they want to institutionalize stuff. Like we fundamentally beli…

AI assessment note: “honestly, what you just said, right? ... am I actually good at what I'm doing?”

Q What are the big nuances that you think managers miss?

A I would say the biggest, because we invest in fund managers as well. So I've invested in 12 funds. The biggest thing that I learned, you know, TBG was our anchor investor in fund one. And I remember Jim Colter, the CEO of TBG. He was like, awesome. You have two jobs, right? Invest in deals and manage your funds. And they're two different skill sets. It kind of reminds me of, of co-founders, right? We love CEOs who are business oriented and the co-founder being a CTO. It's two different jobs, fundraising, managing team versus managing the tech. And a lot of fund managers, especially early on emerging managers, think that by being the best deal picker, having the best sourcing, like they're going to be the best fund manager. You can do that at, at small scale, right? 10, fifty million. You can just be a picker, not think about ownership, you know, have maybe no associates, no memos, but like, and that's fine, right? But if you want to scale and be in this business and become the Andreessen's investments of the world, that's not going to work. And that, what Andreessen's doing, you know, they just announced their Four and a half billion dollar fund. That's a completely different skill that has nothing to do with deal picking, right? When you're that kind of fundraiser, that kind of money manager, that kind of talent hire, that is like, I think what the difference is between the go…

AI assessment note: “underestimate what it means to manage the business side of fund of VC”

Q Is there any advice you'd have on minimum and maximum check sizes from LPs?

A Um, I mean, so it changes over time, right? So 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? As you get further along in the journey, the smaller dollars mean less and less, right? But early on, if I'm like, hey, you can give me a hundred K, I'm raising twenty five million dollar fund, like you'll take it, right? Once I get to fifteen million for my first close, I don't need a hundred K anymore, right? And so I think it really should adjust over time and incentivize those people also to move first. I'm not going to let you wait 18 months to do the minimum check, right? Like, you want to do the minimum check, you got to do it today, otherwise the minimum is going to go up.

AI assessment note: “it really should adjust over time and incentivize those people also to move first”

Q What are the barriers to you achieving that? Is it a pure access to capital? Is it a, for me, it would be building the machine around me. I'm great at what I do, but I need machinery to make it all happen. And that's my biggest challenge. And that's the question mark around me, I would say. What's yours?

A Yeah. I mean, capital is definitely one, right? Particularly if I look at, you know, we're now the probably third or fourth largest black owned VC fund, which is kind of crazy. Right. So capital is definitely something you think about. Cause like the reality is like dollars aren't flowing to minorities and there's a cap. Um, and I would agree. I mean, I think everything, like everything in life is a people's business. And so I'm very focused on the team. Like, I think I did a tweet about this. Like oftentimes they tell you to focus on the customers. If you're a founder or for GPs, focus on the founders, like the founder first, like I'm team first, like I'm going to be successful because my team is the best team they can be and they can execute. Like I've already seen a difference of going from two people to seven people to your point, right? Going from 80% founders to 30% founders. Like my job now is not like just to help founders. Like my job is to enable my team to be as most positioned as possible. That's only going to continue to exacerbate as I have more team members. And so I think about that a lot, like talent, right? Talent to me is number one. If we can hire the right talent, we can build a brand that can recruit the best talent, which our intern program has done. We've had 76 interns over four years. We've hired five of them so far. Like, that is what, to me, will ena…

AI assessment note: “capital is definitely one, right? Particularly if I look at... talent to me is number one.”