Pattern Ventures’ John Felix joins David on El Pack to answer your questions on how to build a venture capital fund. We bring on three GPs at VC funds to ask three different questions.
Atria Ventures’ Chris Leiter asked about the common mistakes LPs make when underwriting solo GPs.
Garuda Ventures’ Arpan Punyani asked how quickly do most LPs get to conviction. First 10 minutes? First meeting?
Geek Ventures’ Ihar Mahaniok asked how LPs evaluate Fund IIs when the Fund I has no distributions.
John Felix is a General Partner and Head of Research at Pattern Ventures, a specialized fund of funds focused on backing the best small venture managers. Prior to Pattern, John served as the Head of Emerging Managers at Allocate where he was an early employee and helped to launch Allocate’s emerging manager platform. Prior to joining Allocate, John worked at Bowdoin College’s Office of Investments, helping to invest the $2.8 billion endowment across all asset classes, focusing on venture capital. Prior to Bowdoin, John worked at Edgehill Endowment Partners, a $2 billion boutique OCIO. At Edgehill, John was responsible for building out the firm’s venture capital portfolio, sourcing and leading all venture fund commitments. John started his career at Washington University’s Investment Management Company as a member of the small investment team responsible for managing the university’s now $13 billion endowment. John graduated from Washington University in St. Louis with a BSBA in Finance and Entrepreneurship.
You can find John on his socials here:
LinkedIn: https://www.linkedin.com/in/johnfelix12/
Twitter: https://x.com/johnfelix123
And huge thanks to Chris, Arpan, and Ihar for joining us on the show!
Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.
OUTLINE:
[00:00] Intro
[02:20] What’s changed for John since our last recording?
[04:08] What is Pattern Ventures?
[06:22] Why is Pattern’s cutoff for funds they’re interested in at $50M?
[07:32] How does John define noise?
[09:34] Do non-sexy industries require larger seed funds?
[11:36] How does think about overlap in the underlying startup portfolio?
[15:22] Enter Chris and Atria Ventures
[18:03] Should solo GPs scale past themselves?
[24:14] Partnerships have more risk than solo GPs
[26:10] How does John think about spinouts from large VC firms?
[27:53] The psychology of being a partner at a big firm versus your own
[30:38] Enter Arpan and Garuda Ventures
[31:26] Geoguessr
[32:52] Garuda’s podcast, Brick by Brick
[34:52] How quickly do LPs know they intuitively want to invest in a GP?
[38:02] The analogy to what GPs do to founders
[43:50] There are many ways to make money
[44:57] Quantifying intuition as an investor
[49:12] Enter Ihar and Geek Ventures
[49:36] How do LPs evaluate Fund IIs when Fund I has no DPI?
[53:01] How do you know if a GP did what they said they were going to do?
[54:47] What if the key value driver is off-thesis, but everything else is on-thesis?
[56:21] Is signing 1 uncapped SAFE per fund reasonable?
[57:14] What is the allowable percentage of exceptions in a fund?
[1:01:32] Good vs bad exceptions
[1:06:06] Reminders that we are in the good old days
[1:07:31] John’s last piece of advice to new allocators
[1:09:00] David’s favorite moment from John’s last episode
SELECT LINKS FROM THIS EPISODE:
- Pattern Ventures
- GP Question Submission Form
- “Bringing the Endowment Approach to Emerging Managers” with John Felix
- Allocate
- Boston Terrier
- “ACCESS AND OUTLIERS: The Appeal of Small Venture Funds” by Pattern Ventures
- Y Combinator
- Adam Marchick
- Akkadian Ventures
- “Talent Networks are your Greatest Asset” with Adam Marchick
- Chris Leiter
- Atria Ventures
- Nico Mizrahi
- Tim Connors
- Pivot North Capital
- Kleiner Perkins
- Mamoon Hamid
- General Catalyst
- OpenAI
- Arpan Punyani
- Garuda Ventures
- Geoguessr
- Google Maps
- Scale AI
- Okta
- Rishi Taparia
- Scale Venture Partners
- Matrix
- Brick by Brick by Garuda Ventures (podcast)
- Eric Vishria
- Benchmark
- “Benchmark’s Eric Vishria on Going Zero to $100M ARR in 12 Months, Archetypes of Top AI Founders” on The Peel with Turner Novak
- Turner Novak
- Banana Capital
- David Hornik
- Lobby Capital
- Ihar Mahaniok
- Geek Ventures
- McKinsey & Company
- Sequoia Capital
- The Office (American TV series)
SELECT QUOTES FROM THIS EPISODE:
“In life, it’s always easy to justify ‘why now’ is not the right time. I think it’s hard to justify ‘why now’ is the right time to do something.” – John Felix
“We love investing in things that are contrarian and non-consensus, but there has to be a path to becoming consensus because something can’t remain non-consensus forever. There has to be a catalyst that the market eventually realizes this or else the company’s not going to be able to raise venture capital. It’s not going to be able to sustain it and continue to grow and survive.” – John Felix
“The type of spinouts we want to back are the people who are successful in spite of working at the big brand, not because they worked at the big brand.” – John Felix
“You need to earn the right to start your new firm to do your own thing. I don’t think enough people realize that.” – John Felix