“Lower barriers to entry doesn’t mean higher probabilities of success.” — Sam Huleatt
Sam Huleatt is the co-founder of The Side Letter, a platform driving network-based research for capital allocators. Prior to The Side Letter, he created and ran the The LP Institute at VC Lab, as well as let On Deck Angels at On Deck. Moreover, he’s a serial founder, active angel investor in over 35 companies, and an active allocator in emerging fund managers, including the likes of Notation Capital, Orange Fund, Inuka Capital, Asylum Capital, and more.
You can find Sam on his socials here:
LinkedIn: https://www.linkedin.com/in/samhuleatt/
X / Twitter: https://x.com/samhuleatt
Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.
OUTLINE:
[00:00] Intro
[01:34] Sam’s childhood
[03:24] The most persistent myth about Sam he never bothered to correct
[05:47] Bottom-up vs top-down investor
[13:37] Can career VCs develop empathy for the founder?
[18:43] Traits of someone who should definitely start a fund
[26:45] Traits of someone who should NEVER start a fund
[28:09] Air of inevitability
[33:44] Why was Outlander VC inevitable?
[36:11] Where should 60% of your Fund I capital come from?
[41:47] Starting a VC fund is hard
[44:46] Do LPs like GP accelerators?
[51:35] Top 3 considerations for first-time LPs
[58:03] How many GPs should 1st-time LPs meet?
[1:01:06] Governing law of VC: Adverse selection
[1:04:40] Incentive alignment on fees
[1:06:36] Terms in LPAs vs side letters
[1:11:16] What is The Side Letter?
SELECT LINKS FROM THIS EPISODE:
- The LP Institute
- VC Lab
- The Side Letter
- Aashay Sanghvi
- Haystack
- Marc Andreessen
- “Why Software is Eating the World”
- Fred Wilson
- Fred Wilson’s blog: AVC
- Union Square Ventures
- Palantir
- Sarah Tavel
- Benchmark
- Bessemer Venture Partners
- Founders Fund
- Sarah Tavel’s Substack
- Ram Dass
- Codenames (board game)
- Ben Choi
- Next Legacy
- “How to Build a Multi-Fund VC Firm” with Ben Choi | Superclusters
- Naval Ravikant
- Paige Craig
- Outlander VC
- Scale AI
- Y Combinator
- Techstars
- 500 Global
- Coolwater Capital
- Secretary problem
- “Side Letters in Venture Capital”
- Abe Finkelstein
- Vintage Investment Partners
- “22 Years in Venture Secondaries” with Abe Finkelstein | Superclusters
- Malcolm Gladwell
- Jimmy Donaldson “MrBeast”
- The Diary of a CEO
- Chris Williamson
SELECT QUOTES FROM THIS EPISODE:
“A career VC has a lot more experience having been on boards. And because of that, because they’ve been a career VC, they’ve seen more companies operating at scale and the issues that come into play in those cases, whereas operators-turned-GPs often have a narrow aperture because they’ve spent most of their career at one or two companies. On the one hand, the operator-GP obviously has a lot of empathy for founders because they’ve been that founder, but they probably haven’t experienced all of the difficult issues that come up as companies scale across lots of different environments. Career VCs have.” — Sam Huleatt
“The best investors have an air of inevitability. It’s not asking for permission or doing something because it’s perceived to be high status.” — Sam Huleatt
“Lower barriers to entry doesn’t mean higher probabilities of success.” — Sam Huleatt
“Most people, after starting a fund, should assume that 60% of that Fund I—you should raise that from first-degree connections—people you already know. It may not be easy, but if you don’t have a network that’s large enough or has those resources, you either need to reconsider your fund target size or maybe you need to spend more time building your network before you start to go out and do that raise.” — Sam Huleatt
“If you don’t have an edge going into [a GP] accelerator, you’re certainly not going to find an edge in the accelerator.” — Sam Huleatt
“Why do the best GPs in the world want you to be on the cap table? A lot of people forget that a key aspect of venture is not just picking, but being picked. That’s true for LPs and it’s true for GPs.” — Sam Huleatt
If you somehow made it to the bottom of these show notes, I’m also trying a new experiment where I write my reactions to the episode on my second blog, Superclusters After Hours. For Sam’s episode, you can find my reactions here.