The Ledger
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Summit Peak committed $80M to investments before securing an anchor LP
“We committed the entire fund before we had even lined up An anchor investor. So we had nearly eighty million of company investments as well as fund investments by summer of 2018, right when we launched, and the reason for that was all of the GPs we wanted in t…”
Selling management company equity to anchor LPs creates long-term GP resentment
“Giving up a piece of your management company, it makes that LP very expensive. And ultimately, I think, as a GP, you come to resent that.”
Summit Peak conducts 30 to 50 founder reference calls per new manager
“In any new fund, we are doing anywhere between 30 to 50 reference calls with portfolio company founders.”
Seed-stage founders care progressively less about institutional VC firm brand
“I think entrepreneurs, at least from our understanding, and when, as I mentioned earlier on reference calls, entrepreneurs care less and less at the seed stage about brand.”
Summit Peak halves allocation sizes for fund managers who raise funds annually
“So in our own fund, we know that some managers are going to come back every year with a new fund, or every -- And so instead of a normal sized allocation, you cut it in half so that we can have the capital to go back fund after fund after fund.”
Summit Peak tracks follow-on investments from top VC brands like Benchmark
“Look, I would be bullshitting you to say that it's not important to us. Those brand names do matter, whether that's Benchmark Capital, Andreessen Horowitz, Sequoia Capital. They are great funds, and they're great investors at various stages, and you want to se…”
Founder references are the most important metric for evaluating early-stage GPs
“In early stage venture, the most important piece is references from founders.”
Early-stage investing offers the highest probability of generating venture-scale returns
“So we think that the ability to generate venture returns, quote unquote, you have the greatest chance at the early stage.”
Multi-stage VC bureaucracy makes their decision-making slower than solo GPs
“Look, I can help you build this, and it's not to say that brand name firms can't do that, but there's more bureaucracy, and there's more red tape for a multi-stage firm, for instance, to be able to make a decision as quick as a solo GP.”
The optimal venture fund-of-funds holds 12-15 GPs and 20-30 co-investments
“We think 12 to 15 GPs is sort of the optimal number of GPs or funds to back, as well as Anywhere from 20 to 30 underlying direct or co-investment, so direct investments into companies or co-investments.”
Summit Peak accepts 2.5% management fees for emerging venture fund managers
“When it comes to running a business, we generally are not sensitive to the management fee. I mean, so you're right on that. We're not sensitive to it because we understand that whether you're a new fifty million GP or a new twenty-five million, the management …”
Summit Peak founders invested their entire net worth into their first fund
“Every ounce of our net worth is invested into our fund one, And then whatever's remaining into our fun too.”
Summit Peak does not advise fund managers on their capital deployment pacing
“We are in the business of backing GPs, and the pace of their deployment should not be something I should be giving them advice on.”
LP commitments to venture capital managers should span two to three funds
“I think the decision to invest in a GP Is generally a two or three fund decision”
First-time fund managers struggle most to clearly articulate their edge
“Clearly articulating their edge and differentiation. We see hundreds of pitch decks, and we walk away from some calls and walk away not having learned anything. You know, why are they different? Why are founders going to back them? That is the key thing that f…”
The number of micro VC firms grew from 100 to over 1,000
“If you look back to 2012, I think by all accounts, there were probably a hundred micro VCs in the market. And you fast forward to today, and that number is over a thousand.”
Nearly 100% of Summit Peak's capital came from a decade-old network
“When you look at our fund one and our fund two, a hundred percent, or nearly a hundred percent of our capital came from people we've known for the past decade.”
Summit Peak allocates 60% to established GPs and 10% to new GPs
“We allocate 60% of our capital to early stage GPs, and these are people that we've now been backing since 2012, and they are now on their second, third, fourth, or fifth vintage, you know, of their own life cycle. So 60% of the portfolio is for that. 10% is re…”