The Ledger
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Top Tier never backs first-time fund managers without an investing track record
“While we might invest in first-time funds, we won't invest in first-time investors, so there must be a track”
Top Tier has refused to re-up with top-performing venture funds
“And we've done this, it could be that we're evaluating and doing our compare and contrast, as we call it, and there might be a One of the best performers in our portfolio, and we don't re-up, and the numbers would tell you all day long, you know, with your eye…”
Premium venture capital carry should require a 3X return hurdle
“For carry, I think you have to start at 20%. That is the base when you're getting started, and to have some type of premium carry after a return hurdle is okay, but really that return hurdle should be three X, you know, not two X, because you kind of have to d…”
Lisa Edgar: Top Tier managed two VC fund-of-funds with no J-curve
“We had two fund-to-funds that didn't even have a J-curve. I mean, think about it. Venture capital only, fund-to-funds, no J-curve.”
Top venture capital firms command premium carry above the standard 20%
“So VC is not a two and 20 world. PE is, but a lot of VC isn't, and certainly when I say that, I really mean the top players. I mean, they have premium carry, and we are fortunate enough to have a portfolio of a lot of that.”
Edgar: Globalization is the biggest shift in venture capital over 20 years
“It's changed, obviously, dramatically from a very small cottage industry that was really Silicon Valley in Boston, so it was really US-based, and I would say the biggest change that we see today is really the globalization, and sitting in this room, you know, …”
Lisa Edgar always responds to pitch inquiries sent via warm introductions
“If it comes from somebody I know, i.e. A warm introduction, I always answer. I either take a call or meeting, or I turn it over to someone on my team”
Lisa Edgar prefers conversational pitch meetings over deck presentations
“I cannot go through a pitch deck. I just don't have, I don't have the capacity. I think I'm ADD. I don't know what it is. So I like to have a conversation.”
Raising a first-time venture capital fund takes 18 to 24 months
“First-time funds, I mean, often, it's 18 to 24 months, and you just have to expect that.”
Top Tier's average U.S. venture fund commitment is $20 million
“Our average commitment is twenty million, that's because that's kind of what ours is in our main kind of U.S.”
A 2.5% management fee is reasonable for small venture capital funds
“If you're raising a very small venture capital fund, having fees at two and a half percent is reasonable. I mean, you're building a team, you're building a platform. I mean, that would not be egregious, right?”
Institutional LPs expect wealthy venture managers to make higher GP commitments
“When somebody has made a ton of money, and they're not Putting it back into their fund, you got to scratch their head about that. So in those cases, you do expect a much higher GP commit.”
Top Tier Capital Partners added secondaries and co-investments to shorten J-curves
“So we really added secondaries and co-investments to our portfolio construction so that we could really reduce and shorten the J-curve for institutional investors.”
Initial LP meetings assess context while second meetings examine portfolio details
“First meeting, it's more context. Who are you? What are you doing? Why is it different? Second meeting is generally drilling a little bit further into companies because you probably have some, a track record of some sort.”
Top Tier Capital commits to GPs who maintain persistent post-meeting follow-up
“Some of these people have been very good at continuing to keep in front of us, and they are the ones that we've ended up Committing to, because they're doing things, you know, they said they're going to do something, they're giving us more information, and so …”
Lisa Edgar: Industry standard for GP commitments is 1%
“I think the industry standard is one percent, so you want somebody at least be doing one percent”
Lisa Edgar: Institutional LPs invest in firm franchises, not one-off funds
“Most institutions are looking for franchises. They're looking for the ability to continue to invest with a firm”