lp - Cup of Zhou

November 11, 2024November 16, 2024

The GP Data You’ve Never Collected Before | Kelli Fontaine | Superclusters | S4E1

“Neutral references are worse than negative references.” – Kelli Fontaine

From investing in great fund managers to data to investor relations, Kelli Fontaine is a partner at Cendana Capital, a fund of funds who’s solely focused on the best pre-seed and seed funds with over 2 billion under management and includes the likes of Forerunner, Founder Collective, Lerer Hippeau, Uncork, Susa Ventures and more. Kelli comes from the world of data, and has been a founder, marketing expert, and an advisor to founders since 2010.

You can find Kelli on her socials here:
X/Twitter: https://x.com/kells_bells
LinkedIn: https://www.linkedin.com/in/kellitrent/

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
[02:11] How Kelli became a figure skater
[06:59] Kelli’s football fandom
[08:47] Picking schools for critical thinking for children
[10:55] The difference between likeability and founder-friendliness
[13:35] Correcting biases as LPs
[15:07] Examples of what makes GPs unique
[19:53] What kinds of data was Cendana NOT measuring when Kelli joined?
[21:58] What are datapoints that LPs should measure but aren’t?
[23:45] Startup metrics that LPs should track
[26:16] Can you trust the data out there?
[32:05] How does one start building a GP dataset from scratch?
[37:38] Why does Cendana do 40 reference checks per fund?
[39:47] Neutral references are worse than negative references
[42:28] The questions Kelli asks founders when diligencing GPs
[43:44] How Cendana does monthly calls with all their GPs and large LPs
[47:57] How often does Cendana send investor updates?
[49:13] The difference between monthly calls and taking an LPAC seat
[51:19] Kelli’s indelible sports moments to witness
[52:37] What makes Kelli laugh?
[56:14] Thank you to Alchemist Accelerator for sponsoring
[57:15] If you enjoyed this episode, it would mean a lot to me if you shared it with one other friend!

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Neutral references are worse than negative references.” – Kelli Fontaine

“What is unique about their background that gives them a right to win today?” – Kelli Fontaine

“Everybody uses year benchmarking, but that’s not the appropriate way to measure. We have one fund manager that takes five years to commit the capital to do initial investments versus a manager that does it all in a year. You’re gonna look very, very different. Ten years from now, 15 years from now, then you can start benchmarking against each other from that vintage.” – Kelli Fontaine

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Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

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.

October 18, 2024October 17, 2024

DGQ 24: Guessing a number between 1 and 100

Eight years back, at least at the time of publishing this blogpost, Steve Ballmer, former CEO of Microsoft, shared one of his favorite interview questions.

“I’m thinking of a number between 1 and 100. You can guess. After each guess, I’ll tell you whether high or low. You get it the first guess, I give you five bucks. [Second guess], four bucks. Three. Two. One. Zero. You pay me a buck. You pay me two; you pay me three… And the question is, do you want to play or not? What’s your answer?”

While he didn’t go too much in depth on all the answers he’s gotten to it over the years, I imagine different people would have given different proposals on how the game might be played. Of course, the classic engineer is likely to approach it was as an expected value problem.

Most people will lose money. There are far more numbers to guess on which one loses than wins. The question really comes down to… do you know the odds of the game you play?

I find it interesting as an investor to hypothetically ask to founders and/or GPs. That said, I never did. But equally so, I usually spend the first conversation with an entrepreneur (whether the product be software or a fund model) trying to understand a person’s motivations. And, if they understand the rules of the game.

Those who don’t understand the rules will often jump head first in, and take care of the consequences later. Asking for forgiveness than for permission. An attitude that is more excusable in a startup founder than a fund manager.

Those who do understand will take a more measured approach. It’s interesting how little some people understand the game they’re playing. Be it in a two-year financial projection that encapsulates all their assumptions, or a portfolio construction model to understand the enterprise value to return the fund 3X.

For the former, it’s less so of how accurate a financial projection slide is. Hell, your guess is as good as mine. But I always ask founders to unpack it to understand how they’re thinking about the future as a function of their reality today.

For the latter, it’s to understand the true power of the power law, no pun intended. For instance, if you have a $10M fund, writing 20 checks of $500K for 5% ownership. Obviously, I’m assuming a bunch of things for the sake of keeping the math simple. No fees, no recycling, no reserves, and so on. You need to return $50M to 5X your fund. Accounting for 80% dilution, you’ll own 1% on exit. So you need $5B in enterprise value. Given the power law, one of out of the 20 companies should get to at least $3-4B in exit value.

Then again, those who understand the game too well will never take the risk necessary for serendipity to stick.

There’s an interesting blogpost an LP shared with me for my blogpost on evergreen content that VCs and LPs consume. A piece written by the legendary Graham Duncan. “The Playing Field.” A piece I highly recommend reading, even if to shape your own thinking about how the game you play evolves over time. In it, a line worth underscoring.

“[I]t’s the way you learn to play the cards you’ve been dealt, rather than the hand itself, that determines the worth of your participation in the game.”

Photo by Towfiqu barbhuiya on Unsplash

The DGQ series is a series dedicated to my process of question discovery and execution. When curiosity is the why, DGQ is the how. It’s an inside scoop of what goes on in my noggin’. My hope is that it offers some illumination to you, my readers, so you can tackle the world and build relationships with my best tools at your disposal. It also happens to stand for damn good questions, or dumb and garbled questions. I’ll let you decide which it falls under.

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

October 10, 2024October 3, 2024

DGQ 23: What’s the most interesting question you’ve been asked so far?

I use this question quite often as a discovery tool. My job as an early-stage investor is to find crazy, interesting people building interesting things. By the time things look less crazy (at least at face value, without digging), I’m likely too late.

To founders who are fundraising, I often ask this question with respect to VCs. Most VCs default to the usual.

Tell me about your company.

How much revenue do you have? Growth rate?

Tell me about your 2-year plan. Your financial projections.

Tell me about your competitors.

How much are you raising?

Who else is investing?

And I’ve probably missed a plethora of usual suspects when it comes to questions VCs ask founders. But I love people who ask different sets of questions. People who think different, see different, and as such ask different. How are they slicing the cake differently? What might these people be seeing that most others are not? And then, I go back and reflect… is there alpha in that way of thinking.

But first, it’s about the questions. Some examples of such… here, here, here, and here, and also here and here.

So when I ask, “What’s the most interesting question you’ve been asked so far?” to founders, they can help me uncover new VCs I may not have noticed before. Probably investing in ways the industry has not seen before. And probably also investing in companies uncorrelated with most others. At least in the early stages. When I ask it to GPs, I can find LPs whose portfolios may look different from others. Or at the very least, will have arrived at their conclusion differently than their peers.

Photo by Nick Karvounis on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

October 7, 2024October 7, 2024

When VC Funds Become Firms, Part 3 | Lisa Cawley, Ben Choi, Jaclyn Freeman Hester | Superclusters

“When you bring people in as partners, being generous around compensating them from funds they did not build can help create alignment because they’re not sitting there getting rich off of something that started five years ago and exits in ten years. So they’re kind of on an island because everybody else is in a different economic position and that can be very isolating.” – Jaclyn Freeman Hester

We’re doing a three-part series with some of our fan favorites over the last three seasons on the LP perspective of succession-planning and VC firm-building.

Lisa Cawley is the Managing Director of Screendoor, a highly respected LP of GPs, investing in firm-builders by firm-builders, with a unique model for partnering with allocators to access the emerging manager ecosystem.

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.

Jaclyn Freeman Hester is a Partner at Foundry. Jaclyn helped launch Foundry’s partner fund strategy, building the portfolio to nearly 50 managers. Bringing her unique GP + LP perspective, Jaclyn has become a go-to sounding board for emerging VCs.

You can find Lisa on her socials here:
LinkedIn: https://www.linkedin.com/in/31mml/
Screendoor: https://www.screendoor.co/contact

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

You can find Jaclyn on her socials here:
Twitter: https://twitter.com/jfreester
LinkedIn: https://www.linkedin.com/in/jaclyn-freeman-hester-70621126/

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.

You can also find Part 1 and Part 2 of this 3-part mini series.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[01:55] Lisa on documenting the how and why behind decisions
[05:52] Ben on leadership transitions at VC firms
[08:08] GP commits by young GPs at established firms
[11:56] What makes Kauffman Fellows special
[14:33] Should Kauffman sponsor Superclusters?
[15:34] A rising tide raises all ships
[16:41] Partnerships that choose to stay together
[18:21] Jaclyn on leadership transitions at VC firms
[25:48] The economics of succession planning
[31:28] Lisa on succession planning vs wind-down planning
[33:10] Jaclyn on pros & cons of succession planning & committee decisions
[41:50] Thank you to Alchemist Accelerator for sponsoring!
[42:51] If you liked this 3-part series, do let us know with a like or a comment below!

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“If it’s not documented, it’s not done.” – Lisa Cawley

“If somebody is so good that they can raise their own fund, that’s exactly who you want in your partnership. You want your partnership of equals that decide to get together, not just are so grateful to have a chance to be here, but they’re not that great.” – Ben Choi

“When you think about succession planning, you actually have to take a step back and think: Is that even going to be my approach? Do I need to think about succession planning or am I really talking about wind-down planning? And when I stop raising a subsequent fund.” – Lisa Cawley

October 4, 2024October 3, 2024

Starting from Yes versus No

Last week, I was chatting with an LP about decision-making processes at institutional LPs, whether a large family office or a pension or an endowment. And I asked her:

“When you come across a new investment opportunity, do you often find yourself starting from a yes and working to find ways to disprove yourself to get to a no? Or do you start from a no, then spend the next few years working your way to get to a yes?”

(To be honest, I could have phrased the question. But alas, you get the gist.)

She gave a light chuckle. Thought for a moment. And said, “In the first conversation I have with a GP, I either get to a quick no or a tentative yes. And in the next few months, I try to find signs of why this investment could be a no. But if I don’t find any strong disproving evidence in that exploration, that’s when we choose to invest.”

Of course, she’s not alone. I haven’t actively gone out to measure the distribution. But out of 20 or so LPs I’ve asked, I’d say anecdotally, it’s about half who start from a yes, and half who start from a no.

There’s no hard and fast rule here. But what I seemed to notice is that it depends heavily on how easily people get to conviction.

Some people are more prone to saying yes. They get easily excited about new opportunities. The feeling of love at first sight. As such, their investment process accounts for that by delaying gratification and impulse purchases. The discipline of their investment process allows to take time to find clues that may either prove or disprove their intuition.

Among thousands, if not tens of thousands of opportunities, for others, it’s easier to say no. Most LPs don’t have a time horizon they have to commit capital before, barring fund of funds, and potentially some large institutions who act as fiduciaries for others’ capital. Unlike a GP whose mandate is potentially stage-specific, to most LPs, a Fund I commitment versus a Fund II or a Fund III is virtually the same to them. If a pre-see-only fund says no at the pre-seed, they lose that window of opportunity because they’re not allowed to invest net new checks at seed or Series A.

For LPs, this takes the possibility of a near-term transactional relationship out. Then as the relationship matures over time, one might stumble across something about a GP that gets them over the activation energy to dig deeper. And eventually, when enough evidence is collected, they’ll pull the trigger. More often than not, it’s not “enough evidence,” but rather enough time to realize the one or two brilliant things about a GP.

Photo by Diane Picchiottino on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

September 30, 2024September 30, 2024

When VC Funds Become Firms, Part 2 | Lisa Cawley, Ben Choi, Jaclyn Freeman Hester | Superclusters

“We overcomplicate almost nothing as LPs. And this is a criticism of myself. And I think we oversimplify almost everything. Because by definition, we’re the customer of the end product. […] LPs watch the movie, but don’t read the book.” – Ben Choi

We’re doing a three-part series with some of our fan favorites over the last three seasons on the LP perspective of succession-planning and VC firm-building.

You can find Lisa on her socials here:
LinkedIn: https://www.linkedin.com/in/31mml/
Screendoor: https://www.screendoor.co/contact

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

You can find Jaclyn on her socials here:
Twitter: https://twitter.com/jfreester
LinkedIn: https://www.linkedin.com/in/jaclyn-freeman-hester-70621126/

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.

You can also find Part 1 of this 3-part mini series here.

Brought to you by Alchemist Accelerator.

OUTLINE:

[00:00] Intro
[02:00] Questions Ben asks GPs to see if they’re thinking long-term
[06:50] Questions Jaclyn asks GPs to assess long-term thinking
[09:45] What does leverage look like for a GP?
[20:13] The role of AI internally at a firm
[21:06] Advice to people looking to take junior VC roles
[25:33] Questions Lisa asks GPs to assess long-term thinking
[29:19] When does a fund turn into a firm?
[31:26] Lisa: What do LPs often oversimplify vs overcomplicate about firm-building?
[35:31] Ben’s answer to oversimplification vs overcomplication
[41:00] What do emerging and established GPs oversimplify and overcomplicate?
[45:06] Thank you to Alchemist Accelerator for sponsoring!
[46:07] If you can’t wait for Part 3 of this conversation, leave us a like or comment!

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“How do you get the most out of the least amount of people? […] I don’t think getting more bodies solves it. I think getting high leverage from a smaller set of resources is better.” – Jaclyn Freeman Hester

“If I hire someone, I don’t really want to hire right out of school. I want to hire someone with a little bit of professional experience. And I want someone who’s been yelled at. […] I don’t want to have to triple check work. I want to be able to build trust. Going and getting that professional experience somewhere, even if it’s at a startup or venture firm. Having someone have oversight on you and [push] you to do excellent work and [help] you understand why it matters… High quality output can help you gain so much trust.” – Jaclyn Freeman Hester

“What’s your right to win? Why are you going to be a founder and talent magnet? Why does the world need you as a firm? Why does the world need you as a VC? And how do you define success?” – Lisa Cawley

“We overcomplicate almost nothing as LPs [about the firm building process]. And this is a criticism of myself. And I think we oversimplify almost everything. Because by definition, we’re the customer of the end product.” – Ben Choi

“LPs watch the movie, but don’t read the book.” – Ben Choi

“Ultimately, Job #1 as an emerging GP is to be a great investor. We want you to be a great investor that lasts the test of time. But if you’re a mediocre investor that lasts the test of time or a great investor that doesn’t last the test of time, we prefer the second.” – Ben Choi

September 23, 2024September 23, 2024

When VC Funds Become Firms, Part 1 | Lisa Cawley, Ben Choi, Jaclyn Freeman Hester | Superclusters

“There’s this amazing, amazing commercial that Michael Phelps did, […] and the tagline behind it was ‘It’s what you do in the dark that puts you in the light.’” – Lisa Cawley

We’re doing a three-part series with some of our fan favorites over the last three seasons on the LP perspective of succession-planning and VC firm-building.

You can find Lisa on her socials here:
LinkedIn: https://www.linkedin.com/in/31mml/
Screendoor: https://www.screendoor.co/contact

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

You can find Jaclyn on her socials here:
Twitter: https://twitter.com/jfreester
LinkedIn: https://www.linkedin.com/in/jaclyn-freeman-hester-70621126/

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
[02:03] The job that goes unseen by others at a VC firm
[09:01] The psychology of curiosity
[11:12] The story of Charlie Munger and Robert Cialdini
[14:17] Lisa’s perspective on the intangibles of firm-building
[17:41] Heidi Roizen and why glassblowing builds relationships
[21:09] The people you surround yourself with
[23:06] Jaclyn’s perspective on the intangibles
[26:23] Examples of how to communicate strategy drift
[27:34] Ben’s perspective on the intangibles
[33:19] The metric many LPs don’t use but should use to evaluate GPs
[36:16] Thank you to Alchemist Accelerator for sponsoring!
[37:17] If you enjoyed Part 1, and want to see Part 2 and 3 sooner, leave a like or a comment!

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“The job and the role that goes most unseen by LPs and everybody outside of the firm is the role of the culture keeper.” – Ben Choi

“You can map out what your ideal process is, but it’s actually the depth of discussion that the internal team has with one another. […] You have to define what your vision for the firm is years out, in order to make sure that you’re setting those people up for success and that they have a runway and a growth path and that they feel empowered and they feel like they’re learning and they’re contributing as part of the brand. And so much of what happens there, it does tie back to culture […] There’s this amazing, amazing commercial that Michael Phelps did, […] and the tagline behind it was ‘It’s what you do in the dark that puts you in the light.’” – Lisa Cawley

“At the end of the day, the job is to take a pile of money from your LPs and give them a bigger pile. And giving them back a really big pile is the legacy thing. […] And consistently insane returns are hard. That, to me, are the firms that go down in history.” – Jaclyn Freeman Hester

“In venture, LPs are looking for GPs with loaded dice.” – Ben Choi

September 6, 2024September 11, 2024

Timeless Content for the Weary Investor

“If you don’t read the newspaper, you’re uninformed. If you do read it, you’re misinformed. […] What is the long term effect of too much information? One of the effects is the need to be first, not even to be true anymore. So whatever responsibility you all have… to tell the truth, not just to be first.” — Denzel Washington

Since I’ve first started this blog, I’ve always had a bias towards sharing evergreen content. Lessons that can be applied to any era. Of course, not all my thoughts withstood, nor will withstand the test of time, but the goal was to be intentional with what I was putting out there. The bias was also due to the fact that I didn’t think I was best in class in being first to news updates (although opportunistically I could be).

And while not SEO-optimized, I find peace in delivering content that is hopefully as useful today as it will be tomorrow. In that regard, this blog will forever stay a blog, as opposed to any semblance of the traditional definition of media, which at the end of the day is the acquisition and monetization of attention. The latter of which I don’t plan to do for this blog, ever.

That said, the consumption of information is often just as if not more important than the production of information. In the words of my friend, one’s information diet. And if you’ve been around this blog long enough, you’ll be no stranger to that term. Of which about 50% of my information intake is ephemeral and 50% evergreen. But for the purpose of this blogpost, this one is less about me, but about the information diet of friends and colleagues. Where do many of the VCs and LPs I respect consume their evergreen content?

So I went around and asked the simple question:

Do you have 1-2 examples of evergreen content you love revisiting or stays in your mind rent-free?

In other words, what do you read when you need to get to the bottom of things, not just to stay on top of things?

By nature of being friends with everyone I asked, and to reduce the noise in the below list, I’ve excluded every mention of a specific blog whose first word is a synonym to ‘mug’ and a specific podcast whose name is inspired by astrophysical concepts. I asked about 20 VCs and LPs each. Whose fund sizes ranged from 7-figures to 10-figures. Whose tenures in investing ranged from five years to thirty years. Geographically, all except two I asked reside in North America, but many also invest into geographies external to the star-spangled banner and the home of the maple leaf.

There was no particular reason as to why I sampled as such, other than an availability bias. All of whom I could text or ping pretty quickly and get a response. After all, I incubated the idea for this post earlier this week. Also, by default, all recommendations were kept anonymous.

But without further ado, I’ve compartmentalized the below content into:

What VCs consume
And, what LPs consume

You’ll notice some do overlap, which goes to show how timeless some things are.

What VCs consume

Blogs:

Books:

Thinking, Fast and Slow by Daniel Kahneman
Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear
The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby
Poor Charlie’s Almanack: The Wit and Wisdom of Charles T. Munger, edited by Peter Kaufman
When Breath Becomes Air by Paul Kalanithi
Setting the Table: The Transforming Power of Hospitality in Business by Danny Meyer
Meditations by Marcus Aurelius
The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change by Stephen Covey
Charlie Munger: The Complete Investor by Tren Griffin
Competition Demystified: A Radically Simplified Approach to Business Strategy by Bruce Greenwald
Principles by Ray Dalio
Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Perez
The Most Important Thing: Uncommon Sense for the Thoughtful Investor by Howard Marks
Tuesdays with Morrie: An Old Man, a Young Man, and Life’s Greatest Lesson by Mitch Albom

Papers:

Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation by Michael Mauboussin
10 Practical Ways to Increase Conviction While Simultaneously Saving Time by Coburn Ventures (see below)

increasing conviction while saving time Download

Podcasts:

The Startup Solution with Heidi Roizen
- “The Case for a Relationship-Driven Life”

People to follow:

Ho Nam

Manifestos:

What LPs consume

Blogs:

Books:

The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness by Morgan Housel
The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby
The Big Picture: On the Origins of Life, Meaning, and the Universe Itself by Sean Carroll
Thinking in Bets: Making Smarter Decisions When You Don’t Have All the Facts by Annie Duke
- The amazing Jamie shared the below bullets as to why Annie Duke’s book is just that good, and Jamie’s words were too good not to include:
  - Embrace Uncertainty: I can make more rational and less emotionally driven decisions
  - Resulting: People judge the quality of a decision based on its outcome rather than on the decision-making process. THIS HAPPENS ALL THE TIME IN VC!!!! Annie argues that a good decision can lead to a bad outcome and vice versa, so it’s crucial to focus on the process rather than just the results.
  - Probabilistic Thinking: Think in probabilities rather than absolutes. By estimating the likelihood of different outcomes, individuals can make more informed decisions. This approach helps in managing risks and setting realistic expectations.
  - Learning from Feedback: Learning from both wins and losses is crucial, instead of attributing success solely to skill or failure to bad luck, understand what contributed to the outcome
  - Decision Groups: Forming decision groups where members can share insights and challenge each other’s thinking- this can help identify biases and improve the quality of decisions, I would say a key part of what happens at Screendoor
  - Importance of process: Developing and following a structured approach, individuals can make better decisions even in the face of uncertainty.

Lectures:

Podcasts:

People to follow:

Additionally, one LP shared their more comprehensive list of content they revisit often. One that’s well-worth bookmarking.

I don’t know about you, but I know what I’m doing this weekend.

Big thanks to all the LPs and VCs I reached out to for recommendations, including Jamie Rhode, Eric Bahn, John Rikhtegar, and everyone else who shared their thoughts on short notice before we had a chance to get the compliance’s blessing.

P.S. John had probably the most unique pieces of evergreen content he regularly revisited. While I won’t spoil which, you can probably guess based on which of the above seem like recommendations off the beaten path.

Photo by Anthony Rosset on Unsplash

Stay up to date with the weekly cup of cognitive adventures inside venture capital and startups, as well as cataloging the history of tomorrow through the bookmarks of yesterday!

August 30, 2024August 30, 2024

Hustle as a Differentiator

One of my favorite Pat Grady lessons is the one he shares about his wife, Sarah Guo. The short of it is that while Pat was just enjoying his weekend down the wine country, Sarah had used that same car ride over to make several phone calls and several messages over the weekend. A time that most VCs take off for themselves, their family, or their hobbies. But Sarah took to get to know the founders, the team, key executives and everyone who was at the company.

13/ A lesson from @saranormous: Suck the Oxygen out of the Air https://t.co/CMxLqB3gKN
— Pat Grady (@gradypb) March 7, 2022

For a deal that Sequoia, a16z, and Benchmark were also fighting over, the firm that won the deal was Greylock. And it was because of Sarah. She had spent so much time with said founders that they couldn’t imagine working with any other partner except for her.

Similarly, rumor has it that Mark Zuckerberg was able to buy Instagram also because of a flurry of conversations over Easter weekend in 2012, when no one else was expecting to be working. And while one can argue the ethics behind how the deal went down (i.e. the intensity of communication, threats or that Zuck was driven by paranoia), the fact stands that Facebook acquired that 13-person company with no revenue at a time when Twitter had offered supposedly $500M to acquire the photo-sharing company, and that Sequoia had also offered to mark the company at half a billion. But when literally anyone else could have won the deal, Facebook did.

I wrote about responsiveness being a telltale sign of excellence earlier this month. So this one is more or less an expansion of that.

I’ve always appreciated the ability in others who are able to make things happen. The hustle. Time doesn’t wait for you to wake up. From my buddy Andrew flying across the nation to close a candidate to Blake Robbins who cold emailed Nadeshot three times per week and bought him tickets to the Cavs NBA Finals game to win the chance to fund 100 Thieves. I hear about these stories every so often, from simple things, like flying to meet a founder and not expecting the founder to fly to the Bay, to more wilder stories to a lawyer cold emailing his way to Elon to get an exec position at SpaceX or sending fan mail to a music artist to put a song into outer space. And I can’t help but feel an immense amount of respect (also often inspired to take action myself).

The truth is most people don’t. Not because they physically can’t send an email on the weekend or jump on a phone call at 10PM. But because they won’t.

As an LP, one of the wavelengths I measure emerging GPs on is their ability to win deals. Too often these GPs brag about their networks and operating experiences. More often than not, not differentiated. I kid you not. Like 99% of the time. But in an age, where every GP has a podcast or a newsletter. Or a community. Hell, every GP knows someone who knows an Elon or a Bill Gates or a Jensen Huang (or they know them themselves).

Admittedly, they all start looking the same. But every so often, I meet a GP or a founder who can’t boast a crazy network or crazy set of prior exits. And the only thing they can boast is their hustle. And they are able to show for it. Those are the folks who I think will change the world.

I will admit, hustle is hard as hell to share in a pitch deck. In many ways, I advise GPs and founders to not include it because there is almost no way that a deck is the best platter to share one’s hustle. Then again, the people who are the greatest hustlers don’t need me to tell them that.

They know. And as the Nike slogan goes, they “just do it.”

Photo by Garrhet Sampson on Unsplash

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August 26, 2024August 26, 2024

How to Get Access into Top Tier Funds | Felipe Valencia | Superclusters | S3E9

Felipe Valencia is one of the co-founders of Veronorte, a venture capital investment firm based out of Colombia. In the first decade, Veronorte focused on managing Corporate Venture Programs for some of the largest Corporations in Latam.

These days, they’re diving into a Fund of Funds investment strategy in the Venture Capital space. For the last 12 years, Veronorte has invested in over 25 startups across the U.S., India, Europe, Mexico, and Colombia, and in more than 12 Venture Capital funds, primarily in the U.S.

With over 20 years of experience under his belt, Felipe has dabbled in various fields like robotics, the internet, international trade, and infrastructure project management.

Felipe graduated summa cum laude with a Mechanical Engineering degree from EAFIT University. He also holds a Master’s in Web Communication from the European Institute of Design in Rome and an MBA from the University of Chicago, where he focused on entrepreneurship and finance.

Felipe’s journey has taken him all over the world: He worked for AVG – Robotics in Los Angeles, did research and development in Mechatronics at Siemens in Germany, and was the Commercial and Strategic Director of Indexcol in Colombia. He also served as the Commercial Attaché at the Colombian Embassy in China and led the Proexport office there. Most recently, he was involved in business development at Pierson Capital in Beijing and managed infrastructure projects in Mexico.

You can find Felipe on his socials here:
LinkedIn: https://www.linkedin.com/in/felipevalencia/
Veronorte: https://veronorte.com/

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
[02:54] Felipe’s teenage years under a life of terror
[10:01] How Medellin has changed over the years
[13:12] Tales from Felipe’s travels across 10 cities in 4 continents
[17:53] How did Felipe made his foray into VC?
[22:46] How did Felipe meet his co-founding partner Camilo?
[26:31] How Felipe pitched a VC fund without a track record
[39:16] How did Felipe and Camilo think about compensation in Fund I?
[47:40] How did Veronorte transition from a VC fund to a fund of funds?
[55:14] The Monte Carlo simulation of fund of funds strategies
[1:03:04] How much better does a venture fund need to do than public markets?
[1:05:46] How did Veronorte get into top tier established funds?
[1:12:00] What coffee brand did Felipe bring on his visits to the US?
[1:13:38] How did Veronorte close Latam family offices in their fund of funds?
[1:17:04] How does Veronorte communicate with their LPs?
[1:23:58] The difference between an emerging firm and a frontier firm
[1:28:55] Portfolio construction at Veronorte
[1:34:50] What podcasts does Felipe listen to?
[1:38:19] Felipe’s advice for the wanderlust
[1:43:39] Thank you to Alchemist Accelerator for sponsoring!
[1:44:39] If you enjoyed this episode, albeit longer, please do leave a like and share it with one friend who’d enjoy this episode!

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Diversification is a good way to control dispersion of returns.” – Felipe Valencia

“Every time they go to a meeting, they go with a present.” – Felipe Valencia, on building relationships

“This is an access class, not an asset class. And to show access, you need to bring these established firms. It’s not that we will invest in any shiny name, and we have passed on amazing firms that have an amazing brand because they don’t fit in our strategy.” – Felipe Valencia

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