Being an LP - Cup of Zhou

March 15, 2024March 14, 2024

The Proliferation of LP Podcasts

I am under no illusion that there is a hell of a lot of interest in the LP landscape today. Not only from GPs who are realizing the difficulties of the fundraising climate, but also from aspiring and emerging LPs who are allocating to venture for the first time. The latter of which also have a growing set of interests in backing emerging GPs. And in the center console in this Venn diagram of interests lies the education of how to think like an LP.

I still remember back in 2022 and prior, we had Beezer’s #OpenLP initiative, Ted Seides’ Capital Allocators podcast, Notation Capital’s Origins, and Chris Douvos’ SuperLP.com. Last of which, by the way, can we start a petition to have Chris Douvos write more again? But I digress. All four of which trendsetters in their own right. But the world had yet to catch storm. Or maybe, the people around me and I had yet to feel the acceleration of interest.

Today, in 2024, we have:

Samir Kaji’s Venture Unlocked (and now LP Unlocked)
Erik Torenberg and David Weisburd’s 10X Capital Podcast (formerly the Limited Partner Podcast)
Jason Calacanis’ Liquidity (although most of his episodes are still startup/VC content)
My friend Grace Gong who’s covering LP topics weekly with her LinkedIn Lives
VC Lab launching The LP Institute
And only more to come.

There is no shortage of content. LPs are also starting to make their rounds. You’ll often see the same LP on multiple podcasts. And that’s not a bad thing. In fact, that’s very much of a good thing that we’re starting to see a lot more visibility here and that LPs are willing to share.

But we’re at the beginning of a crossroads.

A few years back, the world was starved of LP content. And content creators and aggregators like Beezer, Ted, Nick, and Chris, were oases in the desert for those searching. Today, we have a buffet of options. Many of which share listenership and viewership. In fact, a burgeoning cohort of LPs are also doing their rounds. And that’s a good thing. It’s more surface area for people to learn.

But at some point, the wealth of information leads to the poverty of attention. The question goes from “Where do I tune into LP content?” to “If I were to listen to the same LP, which platform would I choose to tune into?“

After all, we only have 24 hours in a day. A third for sleep. A third for work. And the last competes against every possible option that gives us joy — friends, hangouts, Netflix, YouTube, hobbies, exercise, passion projects and more.

In the same way, Robert Downey Jr. or Emma Stone or Timothée Chamalet (yes, I just watched Dune 2 and I loved it) is going to do multiple interviews. With 20, 30, even 50 different hosts. But as a fan (excluding die-hard ones), you’re likely not going to watch all of them. But you’ll select a small handful — two or three — to watch. And that choice will largely be influenced by which interviewer and their respective style you like.

While my goal is to always surface new content instead of remixes of old, there will always be the inevitability of cross-pollination of lessons between content creators. And so, if nothing else, my goal is to keep my identity — and as such, my style — as I continue recording LP content. To me, that’s the human behind the money behind the VC money. And each person — their life story, the way they think, why they think the way they think — is absolutely fascinating.

In closing

There’s this great Amos Tversky line I recently stumbled upon. “You waste years by not being able to waste hours.” And in many ways, this blog, Superclusters, writing at large, and my smaller experiments are the proving grounds I need to find my interest-expertise fit. Some prove to be fleeting passions. Others, like building for emerging LPs, prove to be much more.

Photo by Jukka Aalho on Unsplash

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The views expressed on this blogpost are for informational purposes only. None of the views expressed herein constitute legal, investment, business, or tax advice. Any allusions or references to funds or companies are for illustrative purposes only, and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions.

March 11, 2024March 18, 2024

How One of VC’s Biggest LPs Builds Relationships | Abe Finkelstein | Superclusters | S2E1

Abe Finkelstein, Managing Partner at Vintage, has been leading fund, secondary, and growth stage investments focused on fintech, gaming, and SMB software, among others, leading growth stage and secondary investments for Vintage in companies like Monday.com, Minute Media, Payoneer, MoonActive and Honeybook.

Prior to joining Vintage in 2003, Abe was an equity analyst with Goldman Sachs, covering Israel-based technology companies in a wide variety of sectors, including software, telecom equipment, networking, semiconductors, and satellite communications. While at Goldman Sachs, Abe, and the Israel team were highly ranked by both Thomson Extel and Institutional Investor.

Prior to Goldman Sachs, Abe was Vice-President at U.S. Bancorp Piper Jaffray, where he helped launch and led the firm’s Israel technology shares institutional sales effort. Before joining Piper, he was an Associate at Brown Brothers Harriman, covering the enterprise software and internet sectors. Abe began his career at Josephthal, Lyon, and Ross, joining one of the first research teams focused exclusively on Israel-based companies.

Abe graduated Magna Cum Laude from the Wharton School at the University of Pennsylvania with a BS in Economics and a concentration in Finance.

Vintage Investment Partners is a global venture platform managing ~$4 billion across venture Fund of Funds, Secondary Funds, and Growth-Stage Funds focused on venture in the U.S., Europe, Israel, and Canada. Vintage is invested in many of the world’;s leading venture funds and growth-stage tech startups striving to make a lasting impact on the world and has exposure directly and indirectly to over 6,000 technology companies.

You can find Abe on his socials here:
LinkedIn: https://www.linkedin.com/in/abe-finkelstein/

And huge thanks to this episode’s sponsor, Alchemist Accelerator:
https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[03:22] How did Abe get his first job?
[15:30] The currency of trust
[17:12] How does Vintage view mistakes and weaknesses?
[20:03] How Vintage organizes team offsites
[28:42] The lessons Abe gained on people and long-term potential
[33:47] Type 1 and Type 2 errors when evaluating GPs
[36:00] How does Vintage work with their GPs and the GPs’ portfolio companies?
[45:06] What Abe likes to see in a cold email
[49:33] Funds that Abe says no to
[51:18] When does fund size as a function of stage not make sense for Vintage?
[54:51] Carry splits within a fund
[1:02:08] What kinds of funds does Vintage not re-up in?
[1:05:23] How did Abe become a Pitfall Explorer?
[1:07:38] What Abe has learned over the years about patience?
[1:11:05] One of Abe’s biggest blows in his career
[1:16:23] Thank you to Alchemist Accelerator for sponsoring!
[1:18:58] Like, comment and share if you enjoyed this episode!

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March 1, 2024March 1, 2024

Winning Deals Based on Check Size (VCs versus LPs)

I know I just wrote a blogpost on how LPs assess if GPs can win deals. But after a few recent conversations with LPs in fund of funds, as well as emerging LPs, I thought it would be interesting to draw the parallel of not only proxies of how GPs win deals, but also proxies of how LPs win deals. And as such, coming back with a part two. Maybe a part one and a half. You get the point.

The greatest indicator for the ability to win deals as a VC is to see what the largest check (and greatest ownership target) a world-class founder will take from you. (That said, if you are only capable of winning deals based on price, you might want to consider another career. You should have other reasons a brilliant founder will pick you.) And even better if they give you a board seat.

The greatest indicator for the ability to win deals as an LP is to see what the smallest check a world-class GP will take from you. And even better if they give you a seat on the LPAC.

In the world where capital is more or less a commodity, the more capital one can provide (with some loose constraints on maximums), the better. But if someone who has no to little trouble raising is willing to open doors in a potentially over-subscribed fund for you, that’s something special.

An LP I was chatting with recently loves asking the question, “How big of a check size would you like me to write?” And to him, the answer “As much as you can.” Or “I’ll take any number.” is a bad answer. According to him, the best GPs know exactly how much they’re expecting from LPs, and sometimes as a function of how helpful they can be, especially in a Fund I or II. But always as a function of portfolio construction. Your fund size is after all your strategy, as the Mike Maples adage goes. While I don’t know if I completely agree with this approach, I did find this approach intriguing, and at least worth a double take.

I’m forgetting the attribution here. The curse of forgetting to write things down when I hear them. But I was listening to a podcast, or maybe it was a conversation, where they used the analogy that being a VC is like watching your child on the playground. You let your child do whatever they want to. Go down the slides. Climb the monkey bars. Sit on the swings. And so on. You let them chart their own narratives. But your job as the parent is once you see your kid doing something dangerous, that’s when you step in. When they’re about to jump off a 2-story slide. Or swing upside-down. But otherwise your kid knows best on how to have fun. In the founders’ case, they know how to build an amazing product for an audience who’s dying for it.

Excluding the fact that you’re a good friend or family that go way back, you likely have something of great strategic value to that GP — be it:

Network to other LPs
Operational expertise and value to portfolio companies (to a point where you being an LP will help the GP win deals with founders)
Operational expertise to the GP and the investment team
Investment expertise to help check the GP’s blindside
Access to downstream capital
Deal flow, or
Simply, mentorship

At the same time, ONSET Ventures once found that “if you had a full-time mentor who was not part of the company’s management team, and who had actually run both a start-up and a larger business, the success rate increased from less than 25% to over 80%.” (You can find the case study here. As an FYI, the afore-mentioned link leads to a download of the HBS case study.)

That’s the role of the board. The LPAC. Of the advisory board. For a founder or emerging GP, the full-time availability of said board members or LPAC members is vital.

A proxy of a mentor’s availability is pre-existing relationships between founder/emerging funder and said investor or advisor. Another is simply the responsiveness of the investor or advisor. Do they take less than 12 hours to reply? Or 3-5 business days? It’s for that latter reason Sequoia’s Pat Grady once lost out on an investment deal to his life partner, Sarah Guo. Being responsive goes a long way.

In sum, for LPs in fund of fund managers, small things go a long way.

Photo by Piret Ilver on Unsplash

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January 19, 2024January 19, 2024

Do Founders Like You For Your Money?

Would the founders in your portfolio let you in on the cap table if you weren’t an investor? If you had no money? If they could only borrow your brain for two hours every three months, and that’s it?

The uncomfortable truth is that most founders won’t.

But to find the founder who will take that deal is the person you want to be focusing on. They’re the archetype of founder you want to win — that you put your whole heart into perfecting your craft for that founder.

Play to your strengths, not your weaknesses. Where do you have home field advantage?

Why does this matter?

All cards on the table, it won’t matter if you plan to stay a boutique VC firm or angel whose check size for an investment never goes past $250K. Even better if you don’t have any pro rata. But if you plan to institutionalize your firm — and I don’t mean to say this is the only way to institutionalize — you need to hire. To hire, you need enough management fees to support a team of that size. And to get enough management fees, most of the time, that requires you to scale your fund size.

Whereas in Fund I and maybe II, you played the participating investor. Squeezing in great deals. And everyone’s your friend. Founders love you. Your co-investors love you. With larger funds, you may end up scaling your check size. If you don’t, you start diversifying your portfolio more and more. And most large LPs prefer concentrated portfolios. Why?

They often do the diversification work in their own model. They pick their own verticals and stages they want exposure to. The product they want to buy is not to be their portfolio for them, but that it is just one asset in a larger portfolio. A lot of LPs also fear diversified portfolios in managers because at some point, managers will be investing in the same underlying asset. No LP wants to invest in 10 funds and have four of them all be investors in Stripe. If that’s the case, they might as well invest directly in Stripe via co-investment.

But at the end of the day, if your checks are bigger (along with ownership targets), it’s hard to always be 100% friendly with other investors since they have their own mandates. And at some point, the founder is forced to pick: you or any of those other interested investors.

And for you to win that deal, you must have something enduring that founders want outside of capital.

Examples

Of course, there are different ways to prove that you can win deals to your prospective LPs. The list below is by no means all-encompassing, but may help in giving you an idea of how people who have walked the path before you have done so.

Being chosen as the independent board member in other companies you didn’t invest in (Kudos to Ben Choi for sharing this one in our episode)
Having a platform to generate customers/leads for your portfolio companies. Like Packy McCormick‘s Not Boring or Harry Stebbings‘ 20VC.
Winning pro rata in past subsequent rounds
Even better if super pro rata (rarely happens though, especially after Series A)
(Co-)Leading rounds (met an emerging GP last year who syndicated the whole $2M round)
Repeat founders (with previous exits >$100M) let you invest in oversubscribed rounds with a check larger than $250K
Founders letting you invest on previous round’s terms (or highly preferential treatment)
Incubating the company
Evidence or repeatable ability for you to pre-empt rounds before founders go out to fundraise
Some combination of the above

In closing

Unintentionally, this blogpost is the unofficial part two of my first one on the topic of sourcing, picking, and winning. Part one was on sourcing. This one is on winning. No guarantees on picking, but who knows? I may end up writing something.

For the uninitiated, this was said by both Ben Choi and Samir Kaji on the Superclusters podcast. That to be a great investor, you need to be great in at least two of three things: sourcing, picking, and/or winning. If you only have great deal flow, but don’t know how to pick the right companies that come your way or have the best founders pick you, then you don’t have an advantage. If you’re really good at winning deals, but no one comes to you or you pick the wrong deals to win, then you also don’t have anything. You need at least two. Of course, ideally three.

But as you institutionalize, the third may come in the form of another team member or as you build out the platform.

Photo by Long Truong on Unsplash

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January 15, 2024January 15, 2024

A Case Study on Why LPs Pass on Great Funds | Jeff Rinvelt & Martin Tobias | Superclusters | S1 Post Season E1

Jeff is a partner at Renaissance Venture Capital an innovative venture capital fund of funds. Jeff’s diverse background in venture capital and technology and his experience working in various start-up ventures uniquely position him to advise startups. In addition, Jeff is quite active in the Michigan start-up community, volunteering his time to mentor young entrepreneurs, judge pitch competitions, and guest lecture student classes and organizations. Through Jeff’s work on the Fund, his volunteer efforts, and his role as the chair of the Michigan Venture Capital Association’s board of directors, his passion for fostering a productive environment for venture capital investment in the State of Michigan is evident.

You can find Jeff on his socials here:
Twitter: https://twitter.com/rinvelt
LinkedIn: https://www.linkedin.com/in/rinvelt/

Martin Tobias is the Managing Partner and Founder of Incisive Ventures, an early-stage venture capital firm focused on investing in the first institutional round of technology companies that reduce friction at scale.

Martin was previously at Accenture and Microsoft and is a former Venture Partner at Ignition Partners. Martin is a 3X venture-funded CEO rising over $500M as CEO with two IPOs who has also invested in hundreds of companies and is a limited partner in over a dozen VC funds. Martin was an early investor in Google, Docusign, OpenSea, and over a dozen Unicorns.

Martin is the father of 3 daughters, a cyclist, surfer, poker player, and life hacker. Martin tinkers with motorcycles on the weekends. He writes about Venture Capital on Incisive Ventures blog and Twitter.

You can find Martin on his socials here:
Twitter: https://twitter.com/MartinGTobias
LinkedIn: https://www.linkedin.com/in/martintobias/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Introducing Jeff Rinvelt and Martin Tobias
[04:14] What was Jeff’s pitch to their LPs for Renaissance Capital?
[06:30] Why did Jeff pivot from being a founder to an LP?
[08:10] Renaissance Capital’s portfolio construction model
[13:00] Jeff’s involvement in non-profits
[15:56] How did Martin become an angel investor?
[18:03] The big lesson from being an LP in SV Angel’s Fund I and II
[20:10] Why is Martin starting a fund now?
[26:07] A lesson on variable check sizes
[28:53] What is Martin’s value add to founders?
[33:29] What stood out about Martin’s deck and email when it arrived in Jeff’s inbox?
[35:43] The 2 biggest worries Martin had in sharing his deck with Jeff
[36:47] What does Jeff think about generalists?
[40:49] What held Jeff back from making an investment in Incisive Ventures?
[42:37] What kinds of conversations does Martin usually have with LPs?
[47:05] One of the greatest professional lessons Jeff picked up as a manager
[49:07] Martin’s greatest lesson from his days as a CEO
[51:57] Thank you to Alchemist Accelerator for sponsoring!
[54:33] Like, comment and share if you enjoyed the episode

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“One of the things a lot of investors don’t do is go back and be honest about where they got fucking lucky and where they had a thesis that they could potentially replicate in future investments.”

– Martin Tobias

January 8, 2024January 8, 2024

An Individual LP’s Guide to Investing Like an Institution | Samir Kaji | Superclusters | S1E8

Samir Kaji is the CEO and Co-Founder of Allocate, a private markets technology company that pairs origination with portfolio management tools to allow investors to efficiently construct and manage their alternatives portfolios.

Prior to Allocate, Samir spent 22 years in venture banking between SVB and First Republic Bank and closely worked with and advised over 700 venture capital and private equity firms. During this time, he completed over $12B in structured debt transactions and has invested personally in over 75 funds and companies, including early-stage investments into Carta (seed), Side (seed), PolicyGenius (Series A), and FanDuel (Series B) as well as Growth investments into Reddit, Alto Pharmacy, and Carbon Health. He has also invested in over 40 funds across various investment types.

Samir completed a finance undergraduate degree at San Jose State University, a finance MBA from Santa Clara University, and completed the prestigious Kauffman Fellows venture program in 2017. Samir is also the host of Venture Unlocked, a top venture capital podcast available on Itunes, Spotify, and Substack.

You can find Samir on his socials here:
Twitter: https://twitter.com/Samirkaji
LinkedIn: https://www.linkedin.com/in/samirkaji/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[04:15] What will be the biggest change in the next decade for the LP universe?
[08:45] Portfolio allocation for emerging LPs
[12:32] How has Samir’s LP investment strategy evolved over the years?
[16:04] Why Samir invested in Bullpen Capital’s Fund I
[17:43] GP-business model fit
[19:40] GP red flags
[21:00] The one question Samir asks to see if GPs understand how to do portfolio math
[23:31] The art of asking good questions
[29:44] What is the Minimum Viable Fund?
[36:14] How to pick 10 funds out of 4000 VC funds
[42:19] How did Samir pitch Allocate to his investors?
[48:11] The first hires at Allocate
[50:53] How Samir defines work-life integration
[56:38] The first two emerging fund managers Samir backed at First Republic Bank
[59:41] The lesson Samir’s father shared with him when he thought about leaving SVB
[1:02:41] What happens when you overanalyze
[1:07:27] Thank you to Alchemist Accelerator for sponsoring!
[1:10:02] If you liked it, give us a like or share!

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“When you think about investing in any fund, you’re really looking at three main components.

It’s sourcing ability. Are you seeing the deals that fit within whatever business model you’re executing on?
Do you have some acumen for picking?
And then, the third is: what is your ability to win? Have you proven your ability to win, get into really interesting deals that might’ve been either oversubscribed or hard to get into? Were you able to do your pro rata into the next round because you added value?

“And we also look through the lens of: Does this person have some asymmetric edge on at least two of those three things?”

“When you’re investing in a fund, especially when you’re making an ex ante decision, meaning you’re not buying a secondary, you’re actually just looking at what’s the probability of success in the future. You want to focus on process, more than just outcomes in the past. The process is how they think.”

January 2, 2024January 2, 2024

How Being Weird is a Deal Flow Superpower | Howard Lindzon | Superclusters | S1E7

Howard Lindzon has over 20 years of experience in both public and private market investing. He previously founded and managed the hedge fund Lindzon Capital, and is currently the founder and General Partner of the early-stage venture capital firm Social Leverage. Through Social Leverage, he and his partners have been seed investors in startups like Robinhood, Beehiiv, and Manscaped to name a few. Howard was the founder of Wallstrip (acquired by CBS), and is the the co-founder and Chairman of Stocktwits, the leading social platform for traders and investors. Throughout his career, Howard has strongly advocated for and helped drive the decentralization and democratization of investing. He resides in Phoenix, AZ and Coronado, California.

You can find Howard on his socials here:
Twitter: https://twitter.com/howardlindzon
LinkedIn: https://www.linkedin.com/in/howardlindzon/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[01:51] Howard’s biggest misses as a startup investor
[06:21] What happens when you trust a single reference too much in the diligence process?
[10:24] What kind of company does Howard think Carta should be?
[14:52] Howard’s two beliefs on selling positions
[24:29] What types of fund managers did Howard invest in as an individual LP?
[30:46] How did Howard write a $150K LP check in Multicoin
[36:06] Why Howard likes GPs who struggle to fundraise
[41:16] How Howard raised his fund of funds
[44:19] Howard’s LP investment thesis
[47:16] How much of investing is luck vs skill?
[51:57] Reframing curiosity and risk
[57:37] Market risk vs execution risk in your career
[59:18] Howard’s advice to young professionals
[1:03:40] A founder or GP’s first interactions with Social Leverage
[1:08:25] Does succession planning matter to Social Leverage?
[1:10:16] The big lesson about follow-on financing from Social Leverage’s Fund I
[1:14:49] Thank you to Alchemist Accelerator for sponsoring!
[1:17:25] Legal disclaimer

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“We’re in the business of swinging.”

“You can’t be a good investor if you haven’t been in there and go ‘Ahhh, that was a dumb idea.’”

“Sell when you can, not when you have to.”

“They gave me money because I’m weird. They gave me money because they trusted me, but they also know that I’m weird. Therefore, if I start to think like them, we’re all screwed. So I have to think like me.”

“If you’re curious, it’s pretty hard not to stand out over time.”

December 26, 2023December 26, 2023

How to Build a Multi-Fund VC Firm | Ben Choi | Superclusters | S1E6

Ben Choi manages over $3B investments with many of the world’s premier venture capital firms as well as directly in early stage startups. He brings to Next Legacy a distinguished track record spanning over two decades founding and investing in early-stage technology businesses. Ben’s love for technology products formed the basis for his successful venture track record, including early stage investments in Marketo (acquired for $4.75B) and CourseHero (last valued at $3.6B). He previously ran product for Adobe’s Creative Cloud offerings and founded CoffeeTable, where he raised venture capital financing, built a team, and ultimately sold the company.

Ben is an engaged member of the Society of Kauffman Fellows and has been named to the Board of Directors for the San Francisco Chinese Culture Center and Children’s Health Council. Ben studied Computer Science at Harvard University before Mark Zuckerberg made it cool and received his MBA from Columbia Business School. Born in Peoria, raised in San Francisco, and educated in Cambridge, Ben now lives in Palo Alto with his wife, Lydia, and three very active sons.

You can find Ben on his socials here:
Twitter: https://twitter.com/benjichoi
LinkedIn: https://www.linkedin.com/in/bchoi/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[02:44] Ben’s childhood
[07:54] What is Ben’s superpower?
[16:58] What aspect of being a VC do most founders fail to appreciate?
[18:46] What do GPs fail to appreciate about LPs?
[21:24] The similarities between VC and the intelligence industry
[24:00] What’s changed about being a VC since 2006?
[27:14] How does Ben tell signal from noise?
[32:46] Past track record portability
[37:24] A case study on how a syndicate investor became a lead investor
[41:00] Ben and David nerd out about free T-shirts
[44:26] An example of how a GP convinced Ben to invest in their fund
[47:53] Succession planning in a VC firm
[56:51] How Legacy Venture started
[1:01:28] Next Play + Legacy Venture = Next Legacy
[1:04:05] Which non-profits do the carry go to?
[1:05:48] What kind of GP impresses Ben?
[1:07:58] Ben’s biggest professional lesson in 1998
[1:12:56] Thank you to Alchemist Accelerator for sponsoring!
[1:15:32] Legal disclaimer

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“The integrity of information. Does this actually stand on its own not because someone said so, but because the mechanics behind it make sense. Does this have internal integrity to it?”

“If you see a thread and you pull it, does it come out as a single piece of thread? There’s no integrity right there. If you pull it and the whole fabric starts to warp–… if you pull it and other pieces start to move, there are connections. That thread is actually holding this together.”

December 18, 2023December 18, 2023

S1E5: Courtney McCrea

Courtney Russell McCrea enjoys over 30 years of venture capital and private equity investment experience including 13 years of fund investing and 18 years of direct principal investing.

Courtney is Co-Founder and Managing Partner of Recast Capital, a 100% women-owned platform investing in and supporting emerging managers in venture, with a focus on diverse partnerships.

Prior to co-founding Recast, Courtney was a Managing Director of Weathergage Capital, a boutique fund of funds that provided its clients with access to premier venture capital, growth equity and micro-VC partnerships. Venture fund commitments included both brand name funds and emerging managers. In addition to fund investment responsibilities, Courtney led the direct co investing program at Weathergage. During her 10 year tenure at Weathergage, Courtney made commitments to 100 funds and seven direct co-investments.

Prior to Weathergage, Courtney was a General Partner with Weston Presidio, a leading diversified private equity firm based in San Francisco. After 7 years at Weston Presidio, she left in 2004 and founded Silver Partners, a private equity advisory firm where she evaluated secondary and co-investment opportunities and advised consumer growth businesses. Courtney was also a Director at Sterling Stamos, where she managed investments in buyout funds, venture capital funds and hedge funds.

Earlier in her career, Courtney made equity co-investments as an Assistant Vice President at PPM America. She also spent 5 years at GE Capital where she worked on private equity, senior and subordinated debt investing.

Courtney has an M.B.A., with honors, from the Kellogg Graduate School of Management and a B.A. in Economics from the University of Illinois, Champaign-Urbana. She is a member of the Kauffman Fellows Class 3.

Courtney is a member of the NVCA Forward Board of Directors and the Alzheimer’s Association Northern California and Nevada Board of Directors.

You can find Courtney on her socials here:
Twitter: https://twitter.com/courtneyrmccrea
LinkedIn: https://www.linkedin.com/in/courtneymccrea

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[02:37] What of Courtney’s past helped her co-found Recast Capital
[04:02] Three reasons to invest in emerging managers
[05:17] What does “institutional quality of emerging managers” mean?
[06:52] How to diligence emerging managers
[10:30] How to do reference checks on GPs
[14:40] How has being a Kauffman fellow helped Courtney build Recast’s Enablement and Accelerate programs
[19:51] How do alumni GP stay active in Recast Capital’s community
[20:59] Zoom vs. in-person education for GPs
[23:00] What kind of managers do Recast Capital invest in versus who ends up joining the Enablement Program versus who joins the Accelerate program
[28:33] Why are the Enablement Program and Accelerate program free
[30:25] Spinouts from larger funds
[32:12] What are emerging manager red flags?
[34:03] Should emerging managers have answers to questions on succession planning?
[36:00] Challenging the 1% GP commit: How much should different archetypes of GPs commit to their own fund?
[40:52] Lessons from arguments between GPs
[46:30] Getting Courtney to say yes
[47:46] Courtney may make some enemies with this statement!
[48:54] Thank you to Alchemist Accelerator for sponsoring!
[51:30] Legal disclaimer

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December 11, 2023December 11, 2023

S1E4: Jamie Rhode

Jamie Rhode is Principal at Verdis Investment Management, focused on venture capital, private equity and hedge fund investment sourcing and due diligence.

She joined Verdis from Bloomberg, where she held roles in both equity research and credit analysis. There, she created, managed and leveraged an extensive library of statutory and financial and market data for buy and sell-side clients that use Bloomberg to make investment decisions.

A licensed Chartered Financial Analyst, she earned her bachelor’s degree in Finance and Marketing from Drexel University’s College of Business Administration.

You can find Jamie on her socials here:
Twitter: https://twitter.com/DurationFX
LinkedIn: https://www.linkedin.com/in/jerrcfa/

And huge thanks to this episode’s sponsor, Alchemist Accelerator: https://alchemistaccelerator.com/superclusters

Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[04:27] What skills did Jamie acquire while working at Bloomberg
[08:45] What inspired Jamie to go into equity research
[11:55] Verdis’ original allocation model
[13:27] How Verdis first built their deal flow in 2016
[15:26] What Jamie likes in a cold email
[16:41] What kind of cold email to VCs won Verdis an 80% response rate?
[20:27] Verdis’ inbound vs outbound deal flow over the years
[22:34] Why Verdis’ mandate is to invest in diversified portfolios as opposed to concentrated portfolios
[27:50] The downsides of early distributions
[32:12] The benefits of early distributions
[36:01] Luck versus skill
[40:15] Why does Verdis measure “outliers” as opposed to unicorns
[44:37] The relationship between proprietary deal flow and portfolio allocation models
[45:55] How does Verdis decide which portfolio funds get re-ups
[48:52] Why GPs shouldn’t conform their strategies to LPs’ mandates
[51:08] Why LPs should also have consistent strategies
[53:28] Why Verdis invests a third of their fund in funds based in Los Angeles
[58:50] A case study on what happens when you skip a step in the due diligence process
[1:02:57] The two things a GP can do to win Jamie over
[1:05:32] When does Verdis like to receive their tax documents from GPs?
[1:08:46] Thank you to Alchemist Accelerator for sponsoring
[1:11:23] Legal disclaimer

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“Diversified managers have struggled a lot more to raise capital than more concentrated managers. I think it’s a little bit of a contrarian approach.”

“That venture capital bucket is the compounding machine for the family. We don’t look to that bucket for liquidity.”

“If you’re compounding at 25% for 12 years, that turns into a 14.9X.If you’re compounding at 14%, that’s a 5. And public market which is 11% gets you a 3.5X.”

“90% of your overall return comes from asset allocation, not individual investments.”

“If that asset is compounding at 20%, still the last 20% of time produces 40% of your return.”

“Outliers don’t truly emerge until 8-10 years after the investment.”

“If you provide me exposure to the exact same pool of startups [as] another GP of mine, then unfortunately, you don’t have proprietary deal flow for me. You don’t enhance my network diversification.”

In closing

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