The Exchanges

Q And you've said before about small seed rounds also not only kind of ensuring creativity with regards to resources, but also ensuring kind of greater flexibility for the startups. Why do you think there's enhanced flexibility with smaller seed rounds?

A Yeah, I think that the flexibility comes from two, two directions, right? One is, um, I mean, it's kind of obvious when you have a smaller seed round, you will probably have a lower burn rate, which then means that if you need, if you do need to raise additional capital, um, you don't need to raise, raise huge amounts of capital to get, you know, another 12 or 18 months because your burn is pretty low to begin with. Secondly, if you're starting to show progress Uh, on the product or even early revenue front, having a low burn means that, you know, even, you know, tens of thousands of dollars in, in revenue can really start to, to, to eat into that burn, you know, gets you closer to being at a point where, you know, your future is in your own hands. You know, the third is that if you do go out to raise another round of financing, and, you know, this is a little bit of fundraising jujitsu. I don't really love focusing too much on this, but, you know, to some degree, if you've raised, you know, a million bucks, And things are starting to work, but you need to raise another seed extension. Um, the optics of trying, going from a million bucks to raising, you know, say, you know, two, two and a half million bucks is pretty positive, right? It's saying, hey, things are working. We're raising more money. You know, it's not sort of your traditional series A, but, you know, we're, we're …

AI assessment note: “when you have a smaller seed round, you will probably have a lower burn rate”

Q I love that. And then what was the founding of next for you? What was that? I can actually do this on my own with my own firm.

A It was a lot of naivete. Um, I had started to learn the business at, at Spark over two years. Um, I saw the, um, the, the, the rise of seed funds that were starting to happen, right? So, Baseline, Harrison Metal, First Run Capital were starting to have these models where they're investing specifically in seed stage companies. That seems like a, that doesn't seem like a novel thing today. But it was a novel thing at the time. Um, most of the successful early stage funds were getting bigger and bigger, and you saw the writing on the wall for some of those firms, and I figured, you know, there's gonna be a seed stage specialized fund that's not based in the Bay Area, um, maybe here in the Boston area, so, you know, why not give it a shot? And so at the same time, my partners, David and Lee, were, had pretty similar backgrounds to me. They were all thinking about the same thing, and we decided, you know, somebody's gonna make, take advantage of this opportunity, may as well be us.

AI assessment note: “somebody's gonna make, take advantage of this opportunity, may as well be us.”

Q Yeah, that's pretty bad. How did you respond?

A Well, this was before our first close for that fund, and You know, we, we basically went back to all of our existing LPs who had committed and said, Hey, here's what happened. And, you know, the, the rationale, I actually think made sense because that institution was so large and our fund was so small that it really didn't make that much sense for them to be in funds like us, unless they had a dedicated strategy. And because they had turned over their leadership within the private equity and the CIO as well, like they had just shifted the strategies. Thankfully, one of our other LPs that was going to be sort of a co-anchor in this fund. Um, was super rock steady, and, uh, and I think that gave other LPs a lot of confidence that they could move forward. Um, so shout out to, to Michael, Kim, and Sundana for, uh, for helping us navigate that and being a really great partner.

AI assessment note: “we basically went back to all of our existing LPs who had committed”

Q No, I think it's really important. So now we've got this kind of dock preparation stage. We've got the deck, we've got the track record, they look fantastic. Now it's time to go out and raise. Rob, do we want to get an anchor first, and then get more friendlies around them, or do we want friendlies and then anchor? What's that strategy?

A I think both are viable strategies. We tried the first and ended up doing the second. Um, so typically an anchor is, you know, usually an institution, usually somebody who has some strong relationship with you, um, who is willing to be the first, yes, write a meaningful check, um, and you can build your, the rest of the, the fund around them. Um, that usually requires a pretty long process usually to get the anchor over the finish line. Um, but then because that process was so robust, Other, other institutions and folks who want to be a part of this, it makes it very easy for them to say yes. The other approach, which is what we ended up doing, was sort of a bottom stop strategy, right? It's a little bit more of a, like, you know, uh, lean startup of venture funds. You basically find the people who are willing to say yes and just trust you. Um, you try to tally up as much as possible, preferably enough to do a minimum viable first close, close that capital, get into business, and allow yourself time to be able to cultivate the, the Slower moving institutional LPs to come alongside you, hopefully by the end of the first fund. So we ended up taking the second strategy.

AI assessment note: “I think both are viable strategies. We tried the first and ended up doing the second.”

Q Okay. So you had hundreds. How did you get in touch with them? What was that entry point for that relationship?

A Thankfully, we had been in venture for a few years. Um, and so we had relationships with GPs at our firms and other firms who were willing to, to make introductions to us. Um, what I found actually very useful though, was not necessarily our closest relationships as much as other funds that were sort of like us that had raised recently. And it was just amazing, Harry. How generous people were in sharing, you know, their insights in the process, their lead list, you know, giving us background Intel on everybody who's, you know, who they spoke to. Um, I remember, you know, one, one person always sticks in my mind. There were, there were a few, but Bryce Roberts, who was doing OATV at the time. Um, he, like, I barely really knew him. Um, but I don't know, I guess we just had good chemistry and I remember him sharing me his entire spreadsheet and talking me through every single LP. And saying, like, here's how they think, and I didn't understand, like, half of the words he was saying, and he just, like, was so gracious and was able to explain to me, like, you know, what the situation was, how we should be thinking about it in our process, and, you know, I, I just, like, can't think of enough for that generosity early on.

AI assessment note: “we had relationships with GPs at our firms and other firms who were willing to, to make introductions”

Q my gosh. So we're going to go into the fundraising process today because there's like a lot of unknowns that I think need to be addressed. If we think about like chronologically speaking, we decide on this fund size that we've just touched on. Now we need to do some docs. What docs did you prep for the raise? And how would you advise on preparation in terms of documents?

A So when you say docs, I think there's both like the actual legal documentation around the fund, the LPA and so forth. I think you put that aside. You kind of wait until you're at the end of the process, but I think step one is pick a really good law firm. Like we've worked with Gunderson since the beginning of the life of next view, and we actually chose them because they had had experience working with others funds that were similar to us, um, and done a couple of recommendations. So get a good lawyer and they will help you set up the, uh, basically the agreements with your partners, which I think is really, really important. Like this is Sort of nothing to do with LPS is everything to do with like how you run the fund and how you, how the management company operates. But then go into the actual fundraising documents. Um, we basically had a deck and a few spreadsheets that had our track record. And, um, I think we had a bunch of slides around like case studies and that sort of thing. But for the most part, we weren't like, we didn't have that much documentation. It was mostly focused around our deck.

AI assessment note: “we basically had a deck and a few spreadsheets that had our track record.”

Q Yeah, that's pretty bad. How did you respond?

A Well, this was before our first close for that fund, and You know, we, we basically went back to all of our existing LPs who had committed and said, Hey, here's what happened. And, you know, the, the rationale, I actually think made sense because that institution was so large and our fund was so small that it really didn't make that much sense for them to be in funds like us, unless they had a dedicated strategy. And because they had turned over their leadership within the private equity and the CIO as well, like they had just shifted the strategies. Thankfully, one of our other LPs that was going to be sort of a co-anchor in this fund. Um, was super rock steady, and, uh, and I think that gave other LPs a lot of confidence that they could move forward. Um, so shout out to, to Michael, Kim, and Sundana for, uh, for helping us navigate that and being a really great partner.

AI assessment note: “we basically went back to all of our existing LPs who had committed and said”

Q Okay. So you had hundreds. How did you get in touch with them? What was that entry point for that relationship?

A Thankfully, we had been in venture for a few years. Um, and so we had relationships with GPs at our firms and other firms who were willing to, to make introductions to us. Um, what I found actually very useful though, was not necessarily our closest relationships as much as other funds that were sort of like us that had raised recently. And it was just amazing, Harry. How generous people were in sharing, you know, their insights in the process, their lead list, you know, giving us background Intel on everybody who's, you know, who they spoke to. Um, I remember, you know, one, one person always sticks in my mind. There were, there were a few, but Bryce Roberts, who was doing OATV at the time. Um, he, like, I barely really knew him. Um, but I don't know, I guess we just had good chemistry and I remember him sharing me his entire spreadsheet and talking me through every single LP. And saying, like, here's how they think, and I didn't understand, like, half of the words he was saying, and he just, like, was so gracious and was able to explain to me, like, you know, what the situation was, how we should be thinking about it in our process, and, you know, I, I just, like, can't think of enough for that generosity early on.

AI assessment note: “sharing me his entire spreadsheet and talking me through every single LP”

Q and care than almost the bigger LPs who are much more informed and educated. Is personally what I see and I see with other managers. Um, so that's the thing I'd say there. Can I ask you on, like, different types of LP knowledge there, did you find that one type of LP converted better for you than the others in terms of corporate, fund of funds, you name it?

A I think the different types of LPs convert better at different times in your life cycle. So fund to funds are in the business of one of two things. They're either in the business of access. So, you know, get whatever institution into these fancy names. And so they're very focused on brand. And so, you know, where you have a brand, then they've convert great. The other time, uh, the other job of a fund to fund sometimes is to execute on a particular strategy and get folks into something new. And so if you fit the category of, like, the new thing in the new category, some fund to funds are really, really great at converting. Weirdly, when you're in the middle, you're neither new, nor are you so well known that you have, like, a great brand. Fund to funds are not as good. So what I found is that, like, funds, you know, Three-ish, two to three, it's actually harder to get a new fund of funds, uh, engaged because you're neither of the two. There are some groups that are, that are very, very large LPs, and they just want stability, right? They will never invest in a fund one or a fund two, but they love the idea of investing in fund three, four, five or plus, or, or more with a team that's been together for a long time, that's executed the same strategy for a long time, That, you know, just has shown that great level of stability and, like, that's what they want, right? Um, and so I …

AI assessment note: “different types of LPs convert better at different times in your life cycle”

Q And you've said before about small seed rounds also not only kind of ensuring creativity with regards to resources, but also ensuring kind of greater flexibility for the startups. Why do you think there's enhanced flexibility with smaller seed rounds?

A Yeah, I think that the flexibility comes from two, two directions, right? One is, um, I mean, it's kind of obvious when you have a smaller seed round, you will probably have a lower burn rate, which then means that if you need, if you do need to raise additional capital, um, you don't need to raise, raise huge amounts of capital to get, you know, another 12 or 18 months because your burn is pretty low to begin with. Secondly, if you're starting to show progress Uh, on the product or even early revenue front, having a low burn means that, you know, even, you know, tens of thousands of dollars in, in revenue can really start to, to, to eat into that burn, you know, gets you closer to being at a point where, you know, your future is in your own hands. You know, the third is that if you do go out to raise another round of financing, and, you know, this is a little bit of fundraising jujitsu. I don't really love focusing too much on this, but, you know, to some degree, if you've raised, you know, a million bucks, And things are starting to work, but you need to raise another seed extension. Um, the optics of trying, going from a million bucks to raising, you know, say, you know, two, two and a half million bucks is pretty positive, right? It's saying, hey, things are working. We're raising more money. You know, it's not sort of your traditional series A, but, you know, we're, we're …

AI assessment note: “when you have a smaller seed round, you will probably have a lower burn rate”

Q LP intros for Bryce, it's funny you said that, and the reason I do, and I do actively for other early stage managers, is because when you find a great manager, They're gonna raise with or without your help. You get brownie points for helping them, and then you get brownie points from the LP for providing great leads. It's like a net win-win to do it. Don't you think?

A Yeah. And I didn't realize that at the time, right? I would, at the time I thought that folks would be very protective about LP relationships. You don't realize that, you know, a lot of the market has this win-win perception. I gotta tell you though, Some firms don't. I think it's a little bit of a scarcity mindset, and I would argue that, um, this is a little bit of the function of the time. Like, part of why the Boston venture market at the time was, was not thriving the way the west coast market was, um, is there's a little bit of a scarcity mindset here, a little bit more of a protective attitude towards everything, um, which frankly was part of why we started, wanted to start a fund, right? We wanted to buck that trend, and I actually think that many of the funds that exist today, um, Don't behave that way. Um, but you know, there's certain ecosystems where I think that that is definitely the case.

AI assessment note: “Yeah. And I didn't realize that at the time, right?”

Q And how do you determine between reserves versus opportunity fund in terms of where the dollars come from?

A Yeah, it's a little bit of a, a stage mismatch. So what I would say is actually the seed fund goes pretty heavy in the seed, usually does our prorata or a little bit less than our prorata than our series A, and then kind of stops from there. And then the opportunity fund comes in at the B or C stage. So there's almost this like period where NextView is actually investing a little bit less than our capacity, um, just to create a little bit of separation between the two funds. So, you know, it's a little bit, it's not truly a barbell, but it's a little bit more like a barbell. Um, then, then if we raised one fund and just, like, followed on at every stage.

AI assessment note: “seed fund goes pretty heavy in the seed... opportunity fund comes in at the B or C stage”

Q my gosh. So we're going to go into the fundraising process today because there's like a lot of unknowns that I think need to be addressed. If we think about like chronologically speaking, we decide on this fund size that we've just touched on. Now we need to do some docs. What docs did you prep for the raise? And how would you advise on preparation in terms of documents?

A So when you say docs, I think there's both like the actual legal documentation around the fund, the LPA and so forth. I think you put that aside. You kind of wait until you're at the end of the process, but I think step one is pick a really good law firm. Like we've worked with Gunderson since the beginning of the life of next view, and we actually chose them because they had had experience working with others funds that were similar to us, um, and done a couple of recommendations. So get a good lawyer and they will help you set up the, uh, basically the agreements with your partners, which I think is really, really important. Like this is Sort of nothing to do with LPS is everything to do with like how you run the fund and how you, how the management company operates. But then go into the actual fundraising documents. Um, we basically had a deck and a few spreadsheets that had our track record. And, um, I think we had a bunch of slides around like case studies and that sort of thing. But for the most part, we weren't like, we didn't have that much documentation. It was mostly focused around our deck.

AI assessment note: “we basically had a deck and a few spreadsheets that had our track record”

Q do want to ask, in terms of, like, getting them over the line, that anchor, a lot of times the anchor says, well, I've, I've seen him when I was very young, they're like, hey, we'll do it, but we'd like to buy part of the GP, or we'd like part of the carry, Discount on fees. How do you think about concessions to get the anchor over the line?

A Um, I wouldn't do it. I think it's a sign of strength not to take that deal. It's not very typical in venture, I would say. Um, I, I've heard it's more common in private equity or hedge funds. Um, and so if you're talking to an LP that's very used to anchoring hedge funds, like they're more likely to ask for this, but I think for the most part, it is to your benefit to show some strength and say no to that. Um, and You know, especially with our first one, I remember every other LP asked, well, do any of the early folks in the first close have special economics, special governance, and everyone is relieved when you say no. And so you think about like the long game here, like you really don't want to get stuck with, uh, with somebody who has, you know, extra power within your organization, unless you really believe they're a long-term partner. But I think that's very rarely the case.

AI assessment note: “I wouldn't do it. I think it's a sign of strength not to take that deal.”

Q I totally agree with you. So let's talk about the next level. You send them the deck, you send them the follow-up, something, the data room. They don't respond. What do you do then?

A I have a basic belief that it never hurts to ask twice, but I never ask three times, right? So if there's an email that doesn't get responded to, I don't feel bad about asking again. After two, after I'm, I'm ignored twice, that's okay. I just move on. That doesn't necessarily mean they're dead, by the way. It's just that I'm not going out of my way to proactively seek them out. But, you know, fundraising processes are long. You never know, right? You might see them at a conference in, you know, three, three months from now, and they'll be like, oh yeah, you know, the times have changed. Like, let's, let's have a follow up. And like, that's fine. I, I, they're not dead to me. They're just, I'm just not going to proactively reach out anymore. So that's my general rule.

AI assessment note: “it never hurts to ask twice, but I never ask three times”

Q And so there's no like, oh, I'm going to engage with them again with Q one in mind. I'm kind of chatting to them on a weekly, quarterly basis on WhatsApp anyway, and I think that's what managers need more of, which is just the natural relationships, where it's like, oh, meet my friend Rob, he's raising now, and he's great, I'm not raising. Do you see what I mean?

A Yeah. I think there, I think there's some GPs though that are just not, um, they don't have the constitution of like always fundraising. It's, I feel like this is true for founders too. Like there's some founders who are just so great at always having investor conversations and other founders that are just not good at that. Right. And they're better off like running a concentrated process, um, uh, simultaneous process in, in, in big bursts. And so I think to some degree, like That's sort of the same for GPs too. Some folks are very, very good at, uh, at keeping a lot of LP relationships and LP cultivation going, and I think some are just not as good at that.

AI assessment note: “there's some GPs though that are just not... they don't have the constitution”

Q How much, uh, in terms of, like, LP check size, a lot of people I meet have minimums, and it really pisses me off, because I think that they're very dangerous. Some of my best LP introductions, founder introductions, have come from 25 K checks from heads of product, say. Um, how do you advise on minimum LP check sizes?

A I would say for individuals, I'm usually pretty loose for institutions. Um, we try to enforce some sort of a minimum, but the minimum is typically pretty low. Um, because like you said, sometimes you get great introductions from LPs. Sometimes they start, you know, it's our model to start really small, but they can actually upsize quite considerably. Like we've certainly seen that in our portfolio. So, you know, I try not to be too, too Kind of snooty about that if I can. Um, I, I generally am a believer in like building an anti-fragile LP, uh, LP base. And so in a weird way, like, even though I said earlier, I really, you know, I don't mind concentration. I also don't mind a lot of small checks if you can handle it from a timing standpoint, because a bunch of small checks is very, very anti-fragile. And so, you know, I'm not, I'm not too, uh, too snooty about that sort of thing. Like, as long as folks are good to deal with and they're not like A huge time sink. Um, I'm, I'm happy to engage.

AI assessment note: “for individuals, I'm usually pretty loose for institutions... the minimum is typically pretty low”

Q This fucking LP. God. This story is a fucking LP title. Can I ask a final one before you just touch on the market? Is there anything you know about fundraising now that you wish you'd known at the start? I'm sure there's many things, but like what do you wish most?

A I, so I'm, I've become, like I said, I've become so much more zen about this. Um, in the first fund, every time someone said no, I took it personally and I felt like it was a waste of time. Now looking back, it is amazing. Like this one LP that I mentioned is one of our, it's actually our biggest LP now. This is the one that I talked to them in fund one. They never, I actually, it was very kind of them. They didn't actually engage very much, but they always took a meeting or two and then passed. And then I think fund three or fund four, they didn't even take a meeting and then fund five, they came in and I was like, you know what? Like how much of a waste of time was that? Not much, right? It was like a handful of meetings over the course of however many years, some email updates and they're, they're great partners with us and they're, they're a pretty large LP for us. And if that has kind of changed my thinking, we're like, you just don't know, like people are in the business of like meeting managers. You're in the business of meeting LPs and you just don't know how relationships are going to evolve. People are going to go to different platforms and, you know, at a new platform, maybe you become a really great fit for them when they weren't before. So just like allow serendipity to happen and do your job. And I feel like things will work out.

AI assessment note: “you just don't know how relationships are going to evolve.”

Q I, I love that, and uh, yeah, I totally agree with you in terms of seeing the riding on the wall for the large funds. I want to, before we dive in, you've now been in the industry for close to a decade, over a decade. I have to ask, what do you know now that you wish you'd known when you entered?

A Venture is a young person's sport. And going in, we were very sensitive to the fact that we were inexperienced, and we were young. Um, we have this funny joke, actually, at NextView, where every time we raise a new fund, we get backpacks for each other, like team backpacks. And the reason was, the first time we went into an LP pitch meeting, which was out of town, Lee and I showed up with backpacks, because that's what we used to travel. And our partner, David, was like, dude, you can't show up with backpacks. Like people already think we're young and now we're gonna like show up like school kids. Are you kidding me? Uh, and so we always remember that. And so after we closed our first fund, Lee, uh, you know, on his own got a gift for the two of us, which were next view logo backpacks. And since then that's been the tradition. Um, but I really believe venture is a young person's game. Like the amount we were talking about this before you started recording, right? Like the amount of like energy and hustle that you're able to deploy as a young person is truly a competitive advantage. Like, there's a lot to learn from people who've been in the industry for a long time, but you can actually get that, ah, that, that kind of knowledge, ah, if you're resourceful, and what you can't really replicate is the, ah, the energy of you.

AI assessment note: “the amount of like energy and hustle that you're able to deploy as a young person”

Q LP intros for Bryce, it's funny you said that, and the reason I do, and I do actively for other early stage managers, is because when you find a great manager, They're gonna raise with or without your help. You get brownie points for helping them, and then you get brownie points from the LP for providing great leads. It's like a net win-win to do it. Don't you think?

A Yeah. And I didn't realize that at the time, right? I would, at the time I thought that folks would be very protective about LP relationships. You don't realize that, you know, a lot of the market has this win-win perception. I gotta tell you though, Some firms don't. I think it's a little bit of a scarcity mindset, and I would argue that, um, this is a little bit of the function of the time. Like, part of why the Boston venture market at the time was, was not thriving the way the west coast market was, um, is there's a little bit of a scarcity mindset here, a little bit more of a protective attitude towards everything, um, which frankly was part of why we started, wanted to start a fund, right? We wanted to buck that trend, and I actually think that many of the funds that exist today, um, Don't behave that way. Um, but you know, there's certain ecosystems where I think that that is definitely the case.

AI assessment note: “Yeah. And I didn't realize that at the time, right?”

Q What do you see today in the seed market that you think not enough What people are talking about or spending enough time on?

A Related to your last question, I think there's actually a lot of opportunity out there for non-consensus thinking. I think there are a lot of companies that aren't getting very much love, um, because they're not AI. The teams aren't fancy founders that came from well-known companies that are just having a really tough time raising. And I think that there's going to be like, like many diamonds in the rough that come out of that. Uh, and so, you know, I think there's a lot of like doom and gloom and like disgruntled, like chatter among seed investors right now. And I'm like, I don't know, like, There are a lot of companies out there. Go ahead and do it. And by the way, if the company, if the founders are really that great, like just go ahead and pay a higher price. Like that's okay too.

AI assessment note: “companies that aren't getting very much love, um, because they're not AI.”

Q And how do you determine between reserves versus opportunity fund in terms of where the dollars come from?

A Yeah, it's a little bit of a, a stage mismatch. So what I would say is actually the seed fund goes pretty heavy in the seed, usually does our prorata or a little bit less than our prorata than our series A, and then kind of stops from there. And then the opportunity fund comes in at the B or C stage. So there's almost this like period where NextView is actually investing a little bit less than our capacity, um, just to create a little bit of separation between the two funds. So, you know, it's a little bit, it's not truly a barbell, but it's a little bit more like a barbell. Um, then, then if we raised one fund and just, like, followed on at every stage.

AI assessment note: “seed fund goes pretty heavy in the seed... opportunity fund comes in at the B or C”

Q How important is that having that equal split?

A For us, it has been really, really valuable and important. I don't think it's the right path for everybody. Um, but you know, we, the, the, especially the three founders, but all the partners now we're very aligned in our, like, Life goals in our career. And so it was kind of easy to be able to say like, hey, we're in this together long term. We felt like if it wasn't equal, there'd be too much, too much of an incentive to renegotiate depending on like how things are going in the fund. And, and thankfully my partners kind of have this long term view around the downfalls of not having equal partnership and, and we're willing to structure it this way. And, you know, I was very happy to do that.

AI assessment note: “For us, it has been really, really valuable and important.”

Q Okay, so we were okay with concentration. Probably do need one. Are there different qualities in terms of the types? We've got corporates, family offices, endowments, foundations. Is there a snootiness and exclusivity of anchor of LP?

A I think there are some LPs that are more influential than others. Um, so if you have a really fancy endowment or foundation, that tends to be a stronger signal for other LPs that, uh, that, that want to come alongside them and essentially outsource the The due diligence or help them feel better that, that, you know, they're not making a stupid mistake. But frankly, I actually don't care that much. Um, I think that you get, you get the partners that you like, um, you know, the different profiles. You know, there, there was a time when folks used to say that, like, endowments and foundations are the most robust long-term partners that exist on the planet. It is just not true. I've heard so many cases where markets turn, things change, and the first ones to leave are the endowments. So it's hard to overthink it. I actually think it's, what's more important is the individual who's there. You want somebody who is empowered, not at the very end of their career, because there's, there's a risk that they're going to leave, and then you're going to be adopted by somebody else. Um, And somebody who's really committed to whatever it is you're doing, like whatever your strategy is, whatever segment of the market that you're in. And as long as that person is still around when you raise your next fund, I think you have a pretty good chance to, to get that firm back over the finish line. And …

AI assessment note: “I think there are some LPs that are more influential than others.”

Q do want to ask, in terms of, like, getting them over the line, that anchor, a lot of times the anchor says, well, I've, I've seen him when I was very young, they're like, hey, we'll do it, but we'd like to buy part of the GP, or we'd like part of the carry, Discount on fees. How do you think about concessions to get the anchor over the line?

A Um, I wouldn't do it. I think it's a sign of strength not to take that deal. It's not very typical in venture, I would say. Um, I, I've heard it's more common in private equity or hedge funds. Um, and so if you're talking to an LP that's very used to anchoring hedge funds, like they're more likely to ask for this, but I think for the most part, it is to your benefit to show some strength and say no to that. Um, and You know, especially with our first one, I remember every other LP asked, well, do any of the early folks in the first close have special economics, special governance, and everyone is relieved when you say no. And so you think about like the long game here, like you really don't want to get stuck with, uh, with somebody who has, you know, extra power within your organization, unless you really believe they're a long-term partner. But I think that's very rarely the case.

AI assessment note: “I wouldn't do it. I think it's a sign of strength not to take”

Q If we think about that post-meeting process, though, we have that meeting, we have that call, what's the right subsequent follow-up? What do we send them? When do we send it? What do you advise there?

A Yeah, so, um, Mark Suster had a post years ago, and one of the takeaways was, to paraphrase, like, always leave something more. Like, always leave something out so that there's some reason to have a follow-up, right? So that, that's sort of why a blurb is kind of nice, because then it, it gives you the opportunity to follow up with the deck, right? Um, Sometimes so with one of our fundraisers, we had a data room for the first time we actually had a data room and we were so liberal about saying like, well, here's the data room. Have a look. Um, we have since changed that where we do have a data room, but the data room is a, is a preliminary data room and it is intentionally incomplete. And the reason it's intentionally incomplete is I want to see an LP. If we offer the data room, I want to know they looked at it. Which, which you can, like, a lot of times there's tracking for these things, but then if they actually, like, prosecuted it, it'll be obvious that there's some other stuff that they would want to see, and so we have, like, a subsequent data room that we offer for folks who actually dig in and care to care to look at it. So I like having these kind of gates, uh, that are out there to try to get, um, just, just to assess whether or not LPs are serious and, you know, to, to, it's sort of like a video game, right? Like, Let them go on quests and, uh, you know, pass the lev…

AI assessment note: “always leave something out so that there's some reason to have a follow-up”

Q That would be too funny. Tell me that the hard thing is like just creating a sense of urgency, even in ones that do respond. So how do you advise managers on getting people over the line and what works and what doesn't?

A You know, that's a tricky thing about this business, as you know, where, uh, most LPs have the incentive to be the second to last yes. Um, because, you know, it's not like you have that much benefit in being, or any benefit in being the first yes to, to fund. Um, so I have a couple of thoughts here. I think for a first fund, there is no shame in closing a very small amount, as long as your strategy can support it. I always remind people like Lira's first fund was a seven million dollar fund. Um, and you know, they're, they're pretty well known folks in the industry. So I think there's something about like, just do a close. And then that allows you to like, have a very concrete timeline of like what a final close looks like. And once you're done and you're in business, like, You know, just do what you need to do, and then you can, you can create more urgency in your next fund when you have more, more demand and more, um, more points on the board. I also think that there's some LPs that pride themselves in being in a first close, right? Like some fund of funds, some endowments, like it's really, it's meaningful to them that they, that they're, they're known for, for being the first yes. And so, you know, you can kind of use You can basically use a close date as a forcing function, um, just to, to, uh, to get folks like oriented. And if clearly that's not going to work, then, then…

AI assessment note: “You can basically use a close date as a forcing function”

Q And so there's no like, oh, I'm going to engage with them again with Q one in mind. I'm kind of chatting to them on a weekly, quarterly basis on WhatsApp anyway, and I think that's what managers need more of, which is just the natural relationships, where it's like, oh, meet my friend Rob, he's raising now, and he's great, I'm not raising. Do you see what I mean?

A Yeah. I think there, I think there's some GPs though that are just not, um, they don't have the constitution of like always fundraising. It's, I feel like this is true for founders too. Like there's some founders who are just so great at always having investor conversations and other founders that are just not good at that. Right. And they're better off like running a concentrated process, um, uh, simultaneous process in, in, in big bursts. And so I think to some degree, like That's sort of the same for GPs too. Some folks are very, very good at, uh, at keeping a lot of LP relationships and LP cultivation going, and I think some are just not as good at that.

AI assessment note: “I think there's some GPs though that are just not... always fundraising.”

Q How much, uh, in terms of, like, LP check size, a lot of people I meet have minimums, and it really pisses me off, because I think that they're very dangerous. Some of my best LP introductions, founder introductions, have come from 25 K checks from heads of product, say. Um, how do you advise on minimum LP check sizes?

A I would say for individuals, I'm usually pretty loose for institutions. Um, we try to enforce some sort of a minimum, but the minimum is typically pretty low. Um, because like you said, sometimes you get great introductions from LPs. Sometimes they start, you know, it's our model to start really small, but they can actually upsize quite considerably. Like we've certainly seen that in our portfolio. So, you know, I try not to be too, too Kind of snooty about that if I can. Um, I, I generally am a believer in like building an anti-fragile LP, uh, LP base. And so in a weird way, like, even though I said earlier, I really, you know, I don't mind concentration. I also don't mind a lot of small checks if you can handle it from a timing standpoint, because a bunch of small checks is very, very anti-fragile. And so, you know, I'm not, I'm not too, uh, too snooty about that sort of thing. Like, as long as folks are good to deal with and they're not like A huge time sink. Um, I'm, I'm happy to engage.

AI assessment note: “for individuals, I'm usually pretty loose for institutions. Um, we try to enforce”

Q No, I totally agree. Can I ask you, in terms of, like, management of the process, How tightly should it be managed? I don't find emerging managers managed them well at all. How tightly should it be managed?

A I think you want to be organized. Especially the first couple of times you do this. I think you want to be very organized, but don't try to manage it too tightly because you actually don't know enough to be able to manage it like a fine oiled machine. Um, and you have to allow for some serendipity, right? So I don't know. I, I'm like a little Zen about this, this kind of thing. Like, you know, I try to stick to my timelines. I try to be very transparent with our LPs, but you know, I always say that if, if you're not for us this time, maybe next time. And, and who knows, right? Like I, when I started, I had so much urgency around, like, we need to hit this date. We need to close this amount by this amount of time, like trying to jam people into a framework. And now I'm just like much more like laissez faire about it. Um, we had one experience with one of our funds where we closed most of it, frankly, right before the lockdown happened with COVID. And we were like, well, you know, we've, we've, we've hit our target. Like, should we just like stop fundraising and, and just like focus on, on investing? And I was like, Yes, but you never know what might happen. And like nine months later, one LP that frankly is a relationship I'd cultivated since like, since fund one decided to come in at the very, very end. And it was a hundred percent about their own timing, right? It's like, were…

AI assessment note: “don't try to manage it too tightly because you actually don't know enough”