I was talking to an emerging manager raising a $10M fund recently. He shared a comment, likely off-the-cuff, but something I’ve heard many other emerging managers echo. “This year, most of the dollars deployed into venture has concentrated in only a few big funds.”
Not this manager in particular, but I’ve heard so many other Fund I or Fund II GPs say that. Blaming their struggle with fundraising on the world. It’s not me, but the world is conspiring against me. Or frankly, woe is me. But there is no LP who ever wants to hear that. Building a firm is hard. Building a startup, likely harder. No one said it’ll be easy. So let’s not pretend it’ll be all sunshine and rainbows. If you thought so, you’re deeply misinformed. If you’re going to be an entrepreneur of any kind, you need to take matters into your own hands. You cannot change the world (at least not yet). But you can change how you approach it.
That said, the mega funds who are raising billions of dollars are raising from institutions whose minimum check size is in the tens, if not hundreds of millions. These same institutions would never invest in an emerging manager. Their team, their strategy, and their institution isn’t built for it. When they have to deploy hundreds of millions, if not billions, a year into “venture” with a team of four or less, you’re not their target audience. So as an emerging manager, those mega funds are not your competition at least when it comes to LP capital.
You’re competing against all the other funds (likely emerging managers) at your fund size. Who can take the same check size you can take. That’s who you’re competing with. So whether you like it or not, billions going to the mega funds has, from a fundraising perspective, nothing to do with you.
If you are looking for reasons to fail, you will find one.
As the great Henry Ford once said, “Whether you think you can, or you think you can’t, you’re right.”
#unfiltered is a series where I share my raw thoughts and unfiltered commentary about anything and everything. It’s not designed to go down smoothly like the best cup of cappuccino you’ve ever had (although here‘s where I found mine), more like the lonely coffee bean still struggling to find its identity (which also may one day find its way into a more thesis-driven blogpost). Who knows? The possibilities are endless.
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.
One of the most interesting lines I heard on a podcast that Mike Maples was on was: “90% of our exit profits have come from pivots.” Which I first wrote here. Then here. It’s a line that lives rent free in my mind. Ideas, startups, roadmaps, and goals change all the time. I get it. That’s life. Very, very few folks are folks who unilaterally pursue one thing their entire lives. And of those who do, they’re not all successful.
Another friend of mine whose track record speaks for itself, having invested and involved herself in multiple boards before those companies became unicorns and even after, once told me that the idea she invests in is irrelevant. As long as it has grounds and can be adjacent to a large market. The primary thing she looks for is the founding team.
Early-stage investors obsess about people. They’re not wrong. Some are misled by these “VC-isms.” Others still have their own way of underwriting them. I don’t have a crystal ball. I’m also not the smartest person to be dishing out predictions. I have a rough idea of what will change, though I may not always be right. But I don’t know how they’ll change. Or when. So I’ve lived an investing career obsessing over things that don’t change. Or as Naval Ravikant puts it: “If you lived your life 1000 times, what would be true in 999 of them?”
I’ve written about flaws, limitations and restrictions before. But to quickly surmise:
Flaws are things you can overcome. Limited track record. Never managed a team. Never scaled a product. Limited access to capital.
Limitations are imposed by others and/or the environment. Gravity dictates that objects don’t fall upward. There are only 24 hours in a day. If you’re not based in the Bay Area, it’s harder to raise capital. Certain investors prefer co-founders and partnerships. Certain investors care about warm intros. The list goes on.
Restrictions are rules imposed on yourself by yourself. Batman can’t kill. You only invest in solo founders. You only invest in healthcare. You don’t invest in anyone outside the Ivy League schools. But some restrictions go deeper. You’ll never hire from a job portal again. You never hire or invest outside of your network. You won’t invest or hire having never met someone in person. You need to meet their spouse before you make a hiring decision. You don’t invest in single parents. You don’t hire anyone who doesn’t read at least one book per month. You micromanage. You don’t hire anyone who cannot curse. And yes, I’ve heard all of the above and more. My curiosity is always: Why do you impose such restrictions on yourself? What is the story you’re not telling me? Is out of a fear or admiration?
All that to say:
Flaws will and can change if it is a priority. But won’t change if they’re not.
Limitations might change, but it’s outside of your and my control. And I don’t get paid to pray to the weather gods.
Restrictions often don’t change.
Whether you admit it or not, certain habits are hard to change and unlearn. It’s possible. But that requires you to not only be aware of it, but also actively want to change it. Other habits are second nature. How you treat others. How you start each conversation. Why you look both ways before crossing even an empty street. Why you’ve sold yourself a particular personal narrative. Why you have to invest a certain thesis.
The world seems to always be trying to stay on top of things, but there seems to be far less dialogue around how to get to the bottom of things. To me, when it’s underwriting a person and their team, it’s about underwriting what doesn’t change rather than underwriting what could.
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.
“The intuition part comes from activities of creativity that change your perspective.” — Yiwen Li
Yiwen Li is a seasoned investor with a successful track record of investing in AI, blockchain, and healthcare tech while developing global business partnerships to fast-scale the business.
Yiwen is currently Head of Venture Investments at Bayview Development Group, a global family office with diverse exposure public market, private equity, venture, and real estate. Prior, she was a Principal at Alumni Ventures, responsible for end-to-end multi-stage investments focused on blockchain and fintech. She was Director for Corporate Strategy at Masimo (Nasdaq: MASI). She built an innovation pipeline in healthcare connectivity and data analytics. She was Director for Corporate Development at NantHealth (Nasdaq: NH), where she established the international business division. Yiwen started her career at Capital Group in equity research.
Yiwen is an Advisory Board member of C-Sweet. She served on the board of Give2Asia as the chairman of the finance committee and a member of the investment committee. She was an advisory board member for the Asia Society where she co-founded the “Asian Women Empowered” initiative. She was recognized as the” Top 50 Women Leaders in San Jose 2024 and 2025”, “Top 50 Women in 2019” and the “Most Inspirational Women in Web 3”. Yiwen is also the author of one of the best sellers “Make the World Your Playground”, inspiring women to find their unique path. She is a frequent speaker on innovation and emerging technology trends.
Yiwen holds a Master from the London School of Economics and a Master from the University of Vienna. She also graduated from the Venture Capital program at UC Berkeley and the Private Equity Program at Wharton. She was selected to be one of the ” Young American Leaders” at Harvard Business School. Yiwen is a recipient of the European Union’s Erasmus Mundus scholarship. She is fluent in Mandarin and German, worked and lived in Europe, Asia, and US.
[00:00] Intro [02:07] Yiwen’s childhood [05:00] Jazz singing [06:14] The value of learning languages [09:01] How to build intuition around emerging managers [14:51] Getting to the bottom of a GP’s motivation [16:33] What percent of GPs are not in VC for the right reasons? [19:47] Does success fuel or inhibit ambition? [24:17] The cost of knowledge is cheaper [24:56] Competitive edges in the current world [27:06] Why creative activities matter [31:21] Advice to emerging LPs [32:42] Post-credit scene
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.
Writing this “Dear Emerging Manager” reached more people than I thought, so people asked me to write the same version for LPs.
You’re not special. No matter what GPs say, you’re not. I’m sorry. Refer to Danny Meyer’s line in Setting the Table: “You’re never as good as the best things they’ll say, and never as bad as the negative ones. Just keep centered, know what you stand for, strive for new goals, and always be decent.”
If you don’t believe me, imagine if you were broke, but you got to keep everything else you have. Knowledge. Network. Would the best GPs still give you carry if you had no money?
You’re likely not going to win the best co-investment. There’s very little incentive for a GP to. An experienced later-stage investor will do better than you. Will likely be more helpful than you. Even if by brand association alone. Will likely be better connected than you.
Even worse is if you can have the full pro-rata amount. Worse still, you get the “opportunity” to lead. If you do, you’re just telling everyone your child is the smartest kid on the planet. If no one else says that, it’s just you. Don’t believe your own bullshit. See Richard Feynman‘s line: “The first principle is that you must not fool yourself and you are the easiest person to fool.” Do note, it’s different if you get access to a Series D deal through your manager.
As of now, we’re investing in “innovation” when we should be investing in innovation. Let me lay down the incentives. You want liquidity, so you look at deals that generate such. The lowest hanging fruit here is companies who IPO. So you start looking for funds, and sometimes deals, that are in the same sector. And because you are, because you’re looking for that story, large organizations are pitching you that narrative. They restructure and hire teams so that it feeds that narrative. Because the multi-stage funds are doing so, early stage funds and “smart” first checks are pitching strategies and picking companies where they know the multi-stage funds will follow. The co-investor (much less the follow-on investor) slide in the deck gets the most attention these days. The established early stage programs are telling me, in confidence, that they invested in X deal because Big Firm Y will do so. And they’re optimizing for that. The larger platforms are telling me they’re hiring team members around which types of companies are getting late-stage funding and/or going public. Fintech became interesting because of Chime. Prosumer became interesting because of Figma. (Circa 2025). AI is interesting because of large secondary opportunities into OpenAI and Anthropic. Yes, these industries are all transforming the world, but note the incentives. These are the IBMs.
Because of all the above, funds really only have a 10-20% allowance to make venture bets. Any more than that, GPs risk career suicide, at least from the perspective of LPs. These GPs are “unbackable.”
I don’t want you to stake your careers on it. I’m just a stranger on the internet whom you shouldn’t take advice from. But this same stranger is frustrated at the collective risk appetite of an industry that’s supposed to be known for eating risk for breakfast, lunch, and dinner.
Venture has become too big of an asset class if you can describe emerging managers, established firms, growth equity, secondaries all within the same umbrella. The decision-making and the underwriting is different from each. Some see normal distributions. Others do not. Do not conflate a normally-distributed asset with a power-law-driven one.
A slow ‘no’ is worse than a fast ‘no.’ Some will thank you for a fast ‘no.’ Most won’t. But most will talk behind your back if you give them a slow ‘no.’ Time is the only resource we cannot win back. Yours and theirs.
Marks before Year 5 mean very little. You’re welcome to use them as directional headings, but never rely on them. Even if you do, do your own adjusted TVPI and IRR measurements outside of what GPs tell you and keep that methodology consistent across all investors you come across.
Lemons ripen early in venture. Early losses are not always a clear sign of a bad portfolio.
Another LP passing is not always a bad sign. Find out why. Find out how many other similar funds they saw.
It’s okay to pass on a deal if you don’t have the network to diligence the deal. Not having the network means you don’t have people who’ll tell you the cold truth. These are the people who’ll tell you that you have spinach in your teeth.
Don’t ask for data rooms in the first meeting. Or worse, before the first meeting. You’re likely not going to do anything with the data. In the words of my friend, “it’s like asking someone’s net worth on the first date.” Too early. The deck and a conversation is all you need to figure out if the juice is worth the squeeze.
Be transparent with your timing and decision-making process.
If you do not have the time, energy, budget, or network to do the work in true venture, hire someone to do it. Usually that means an oCIO, fund-of-funds, MFO, or a consultant. Make it their job. But make sure it is their ONLY job. The infamous fictional philosopher Ron Swanson once said, “Never half ass two things. Whole ass one thing.”
Your institution will thank you more for whole-assing one job. So, will your GPs.
In the words of Thomas Laffont, “Focus is a luxury.” You sit on more privilege than the vast majority of the world. More privilege than your childhood friends. It’d be a shame to not use the luxury that comes with that privilege.
Don’t torture the data. “If you torture the data long enough, it will confess to anything.” Let the data guide you to questions. Then form your own hypotheses. Understand you cannot grill any hypothesis until it dry ages for at least 7 years. Any sooner and it’s not worth the premium you paid for it.
Trust your intuition enough that you don’t regret in 30 years that you didn’t take the bet of the lifetime, but not enough that you live to regret a lifetime of (undisciplined) bets.
This letter is as much of a reminder for you as it is for me.
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.
“Once you hit a billion dollars, you should probably consider some sort of internal team. Just to mitigate risk. There’s audit risk involved when you have such a small number of people managing a huge pool of capital. It’s going to differ for everyone. That’s probably a good benchmark.” — Trish Spurlin
Trish Spurlin is the Investment Director at Babson’s $800M endowment, covering private markets investing with a large focus on venture. In fact 70% of their private equity portfolio is venture capital. Quite a unique strategy for an endowment to take. Why? An endowment is required to provide, in this case, the university money every single year, anywhere from 5% to 60% of a university’s annual budget. And to invest in an illiquid asset class aka venture capital that doesn’t return capital till a decade later, if not longer, takes courage.
[00:00] Intro [01:45] Sports in Trish’s life [05:10] How does success fuel inhibit ambition? How does it inhibit ambition? [07:35] How do you underwrite long term motivation? [13:21] How fast you order something might matter [16:04] Can Trish angel invest outside of Babson? [17:08] Endowment with a $80M budget [19:54] Should you hire an outsourced CIO? [24:18] Endowment with a $8B budget [27:47] Babson’s liquidity requirements [30:33] How to ask about a senior partner leaving [34:05] How does Trish build trust with her GPs? [37:48] Trish’s interests vs Babson’s interests [45:24] Hank Sauce [47:26] Why is Ocean City Boardwalk special? [48:51] What serves as a reminder to Trish we’re still in the good ol’ days?
“What have [ambitious people’s] transition periods looked like? A lot of times when people do really cool things, there are 2-3 years after where they just don’t know what to do with themselves. That’s very normal. You see that with Olympians. You see that with astronauts.” — Trish Spurlin
“Once you hit a billion dollars, you should probably consider some sort of internal team. Just to mitigate risk. There’s audit risk involved when you have such a small number of people managing a huge pool of capital. It’s going to differ for everyone. That’s probably a good benchmark.” — Trish Spurlin
“If you want to be told things when they aren’t going well, you can’t freak out when somebody tells you something that’s not going well. No emails in caps. No yelling. Take a moment to digest what you’re being told. You’re collecting information. You can discuss that information when the time is appropriate.” — Trish Spurlin
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.
“There’s this thing called alpha, which is returns driven by skill not market return. And when you start to think about what does that mean, skill means you’re doing something that other people aren’t. You have to be different from the average. What can drive that? How are you going to have that be positive expected value? You need to have unique information, unique insight, unique access, or get uniquely lucky.” — Jacob Miller
Jacob Miller is the Co-Founder and Opto’s Chief Solutions Officer, a key figure in its leadership team and central to its growth strategy. He spearheads initiatives for Opto’s fiduciary partnerships and the systemization of institutional-quality private markets investment techniques and programs.
Before co-founding Opto, Miller spent nearly five years as an investor at Bridgewater Associates. Miller has a passion for sensible long-term investing, systematizing investment processes, and distilling complex market dynamics into clear, logical linkages that help people better understand their investments. Having managed money for family and friends since he was 16, Miller is a certified market junkie. While he has a background in macroeconomics and high-yield debt, he finds the challenges and opportunities in the private markets space far more interesting and important, both for investors and society.
[00:00] Intro [01:49] Why did Jacob start investing at 8 years old? [07:20] The fallacies of storytelling [08:49] Inputs, framework, and outputs [09:21] Jake’s mental framework for alpha [12:31] Pete Soderling’s unique access [13:49] Jacob on defense tech VCs [14:57] How does Jacob underwrite relationships in defense? [16:30] How do you know if someone’s been preaching a story before it became a story? [20:16] The difference b/w an opinion and an insight [23:07] Why does Jacob write? [25:42] Running with Joe Lonsdale at 8:30AM [29:12] 2 wildly different billionaires [31:48] What does Jacob want for the world? [36:23] What keeps Jacob humble?
“A jack of all trades is a master of none, but oftentimes better than a master of one. — William Shakespeare
“If you didn’t have stories or branding, it would take you four hours to choose which cereal to get based on solely merit — if you did cost comparison versus ingredients, nutrition, et cetera. You need the story to make a decision in two seconds rather than six hours.” — Jacob Miller
“You need to know what are the assumptions that underpin those stories so you can know if and when they’ve been invalidated.” — Jacob Miller
“You have inputs; you have a framework; you have outputs. The story is the output. You can be wrong on your inputs. You can be wrong on your framework. Better to be wrong on your inputs than your framework. Because if you were wrong on your framework—and it’s garbage— it’s garbage in, and garbage out.” — Jacob Miller
“There’s this thing called alpha, which is returns driven by skill not market return. And when you start to think about what does that mean, skill means you’re doing something that other people aren’t. You have to be different from the average. What can drive that? How are you going to have that be positive expected value? You need to have unique information, unique insight, unique access, or get uniquely lucky.
“As investors, we probably don’t want to bet on getting uniquely lucky. And access and information counts as insider trading in public markets. And so if you’re going to a public market asset manager who claims to have alpha, you need to be defending why you have unique insight. Why can you take information that everyone else has and derive conclusions that other people won’t, which is a very high bar. […]
“But in private markets, we can look to what are unique sources of access and information. Are you in founder networks that other people are not in? How can you show me you see deals before other people do? Do you have benefits as an LP or GP that you can bring to founders that might lead to preferential pricing that would lead to them choosing you first? Do you have a reputation that will attract the right kind of talent? And then on top of that, do you have really insightful frameworks about what makes a great founder, about how to assess TAM, about how to help a company scale through product-market fit to expansion and et cetera? I always start a private market analysis with: ‘Let’s talk about access and information. What do you see that others don’t? What do you know that others don’t?” — Jacob Miller
“Too much source-citing is honestly a red flag for me. This should be stuff you’re learning in the market that’s evidence of your unique access to information.” — Jacob Miller
“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” — Alvin Toffler
“That which Fortune has not given, she cannot take away.” — Seneca
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.
Recently, I met an LP who told me an interesting framework, derived from something Warren Buffett once said. “Every pitch needs to have energy, intelligence, and integrity. And without the last, the first two can lead bad outcomes for the LP.”
Energy — Why now for the world? Why now for your LPs? Why is now the time for you? Why do you have to do this and nothing else? Can your pitch get people really excited about the opportunity? About you? When they wake up the next morning, are they still thinking about your conversation, or have they moved on with their morning to focus on sending the kids to school or what their schedule looks like for the day?
Intelligence — Do you know what you’re talking about? Have you done so much research and have so much lived experience here that you are the one of the world’s foremost experts here? Are you a thoughtful and intentional person around all aspects of your life?
Integrity — Can I trust you? Why should I trust you? Do you have a track record of maintaining long friendships? What’s the longest friendship you’ve maintained? Do you have an strong moral compass? How is it exhibited in even the smallest actions you take? If your and my interests ever clash, what is your course of action? Where do you sit in the Maslow’s Hierarchy of Needs? What set of needs are you primarily motivated by?
Interestingly enough, just a few hours later, I was catching up with a good old friend who’s putting together a pitch for his new venture. And he was telling me one of the pieces of feedback that he got was that there wasn’t enough dopamine induced from his pitch. Which was an interesting piece of commentary. The person giving him that piece of feedback believed that all pitches should induce three types of hormones:
Dopamine — known for joy, excitement, and motivation. To draw a parallel, “energy” under Warren Buffett’s framework.
Oxytocin — known for building trust and empathy. Or “integrity.”
Serotonin — known for calmness, well-being, but in the context here: optimism. I’m not sure if this draws a strict line of correlation to Warren Buffett’s framework, but nevertheless, something useful to think about. Why will the world tomorrow be better than the one today? What can I look forward to?
In my buddy’s pitch, he included a lot of facts and research, promoting oxytocin in the reader. But the pitch lacked excitement and an urgency to take action. In other words, dopamine.
Most decks charting new territory and betting in the non-obvious carry too much oxytocin, responsible for creating trust (i.e. data, information, synthesis of market trends, why the GP is legible, testimonials, track record, etc.). So much to prove factually why this should exist. A very left brain approach.
Most decks betting on a hot topic, industry or idea index heavily on dopamine. Why this is exciting? Why we have to do this now?
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.
“There are a thousand ways to put lipstick on the pig and there are a thousand skeletons [in the closet]. I’ve only seen five or six because I’ve only seen three startup experiences. And so you need to deputize as many people as you possibly can to essentially triangulate.” — Anurag Chandra
Anurag Chandra has spent over two decades in Silicon Valley as an investor, operator, and allocator. He has helped lead four venture capital funds, managing over $2.0B in aggregate AUM. Anurag has also been a senior executive in three enterprise technology startups, two of which were sold successfully to public companies. He is currently the CIO of a single-family office with an attached venture studio and a Trustee for the $4.5B San Jose Federated City Employees Retirement Fund, serving as Vice Chair of the Board, and Chair of its Investment and Joint Personnel Committees.
[00:00] Intro [02:10] Why is what Anurag is wearing a walking contradiction? [06:08] The man without a home, but comfortable in everyone’s home [10:17] The Stanford Review [12:55] The four assh*les of America [20:13] How did Anurag schedule regular coffee with Mark Stevens? [25:31] Mark Stevens’ advice to Anurag about staying top of mind [26:42] How often should you email someone to stay in touch? [30:33] Why should you be an asymmetric information junkie? [34:21] Where should you find asymmetric information in VC? [36:02] The ‘Oh Shit’ board meeting [40:09] How San Jose Pension Plan views GPs [43:55] Defining the ‘venture business’ [49:09] Process drives repeatability [54:06] How San Jose Pension Plan built their investment process from scratch [58:43] What is a risk budget? [1:01:52] What did San Jose Pension Plan do about their risk budget? [1:05:05] The people who changed Anurag [1:11:10] Post-credit scene
“You seem like a good guy. I’d love to find ways to work with you, but I’m going to forget you in two or three weeks. And you got to make sure that you stay in the front of my mind when I’m in a board meeting and there’s a company that could use your money. The best for you to do that is to shoot me an email from time to time and let me know what you’re working on. But do not make them long. I don’t need dissertations.” — Mark Stevens’ advice to Anurag
“There are a thousand ways to put lipstick on the pig and there are a thousand skeletons [in the closet]. I’ve only seen five or six because I’ve only seen three startup experiences. And so you need to deputize as many people as you possibly can to essentially triangulate.” — Anurag Chandra
“You can do two weeks or two years of due diligence on a company, in particular if you’re a mid-stage or later-stage investor. And it’s after the first board meeting—I have a friend who affectionately refers to it as the ‘Oh Shit!’ board meeting where you show up, and now you’re on the inside and you learn all the bad stuff about the company that was hidden from you. Now is that to suggest you should just invest after two weeks because even after two years you’re still going to end up with skeletons you were unable to uncover? No. I still think process matters.” — Anurag Chandra
“Look for GPs who are magnets, as opposed to looking for a needle in a haystack.” — Noah Lichtenstein
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.
“You need to make space for weird types of conversations to happen on the fringes that really inform you what’s going on at the frontier.” — Thorsten Claus
Thorsten Claus is a venture investor and builder with more than 15 years of private equity and venture capital experience. He has raised nine funds, managed over $4.8B across global platforms, and led or overseen more than 120 direct investments, generating returns of 3x–7x net to investors.
His current work focuses on dual-use technologies at the intersection of defense, security, and national resilience. Guided by the discipline of Howard Marks, the systems-level thinking of the Consilience Project, and a commitment to internalizing externalities, he invests in teams and technologies that strengthen sovereign capability and long-term societal stability.
Beyond capital, Thorsten is a hands-on builder. He machines defense-critical and space components, restores historic race engines, and writes on production systems and resilience at blog.thinkstorm.com. This grounding in physical production complements his investment practice, keeping judgment tied to real-world constraints.
[00:00] Intro [02:31] Downhill skateboarding [05:58] How do you see behind a corner when downhill skateboarding? [07:42] Hill hunting [10:15] How long does it take to go down the Sierras? [11:41] The most important part of the body for downhill skateboarding [16:02] David’s dumb question of the day [17:25] The accident that pivoted Thor’s life [19:34] The first race car Thor bought [20:51] Why Thor is a terrible race car driver? [23:52] How did Thor come to use the race oil that Porsche Racing uses? [24:59] The 3 things you need to welcome fringe conversations [27:07] Just another David misattribution [27:34] Truth is difficult these days [29:20] How do you prioritize which advice to take? [30:33] Thor’s weird definition of risk [31:59] How do you know if someone is giving you authentic advice? [34:40] How does Thor understand someone’s past without asking about it? [39:42] Lessons from fictional storytelling in diligencing GPs [43:22] Questions and responses that reveal a GP’s past [46:10] Books that Thor read to ask better questions [49:18] What is the USMC Christmas Tree? [53:40] The Christmas Tree in an investor’s portfolio [57:49] Can beggars be choosers? [1:00:41] The difference between capital formation and fundraising [1:03:00] Production vs product for a GP [1:06:54] Thor and cardistry [1:10:21] What are moments that reminds Thor we’re still in the good old days? [1:13:50] The post-credit scene
“You need to make space for weird types of conversations to happen on the fringes that really inform you what’s going on at the frontier.” — Thorsten Claus
“Risk is the probability of a fatal outcome within given resources.” — Thorsten Claus
“Is it really out of conviction that they’re acting on [the advice] or is it just a belief? You know, I believe in many things, but do I act accordingly? That’s the difference between belief and conviction.” — Thorsten Claus
“The self audit of our actions, behaviors, processes, and decisions is so important.” — Thorsten Claus
“What I find more interesting than the question about ‘what’s the one thing you don’t want me to know about you’ is what it reveals about what you think about me. So, a social interaction is always with me with others, or you with me as well, and a group with others. If I’m worried that you know something about me, that reveals something more about what you fear my attitude is or how this is seen or how you would think I would act. And that is super insightful.” — Thorsten Claus
“If you want to find out something about the why and the what, you ask open-ended questions. If you confirm bad news, you voice it for them.” — Thorsten Claus
“There are no bad teams, only bad leaders.” — Jocko Willink
“There was a whole time when I grew up here in America where everything was great. […] Everyone gets a participation prize. I hated that because it really devalues people who are truly great. And the fact is that there are only very few truly great people.” — Thorsten Claus
“Capital formation is a design principle. Fundraising is a sales process. Without true design around a customer base and a product, you will fail eventually.” — Thorsten Claus
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.
I’m fortunate enough I get to work with some of the most interesting and stellar GPs out there. It’s never been a business I’m actively trying to grow. Outside of me backing managers myself, every so often I’ll get a friend who refers their friend to me and asks me to help them out with thinking through fundraising. It’s always been opportunistic. And even when I work with folks, it’s not primarily about intros. In fact, in all my working relationships, I never offer intros as part of the agreement. But more so working with them to understand how the GPs can better tell their story and run a more institutional fundraising process. Occasionally, I would get asked to advise when a firm should bring in an investor relations professional. But that last part, a piece for the future. So, all that to say:
I’m not an expert in everything, but I do try to actively learn best practices in the market. If I don’t know something, I will find it out for you and/or put you in touch with the best practitioner on it.
I’m now overcapacity. I don’t have the bandwidth to work with every manager that comes my way. I have other things I want to do and am working on.
My primary job is still to support the GPs I back myself.
So, I’m just going to share below exactly what I do when I work with a GP, so that you don’t have to come find me for help. Because we do effectively the below. This approach has also evolved over time. And this is my current approach, circa September 2025. My job is also to help GPs better understand LPs and where they come from. So, while the saying goes as “If you know one LP, you only know one LP,” my job (and personal fascination) is to define and delineate the nuance. The only things I cannot help with if you’re only reading the below are:
Be your accountability partner. Part of my role with GPs is also making sure GPs stick to their promises. Discipline. It’s easy to plan. Hard to execute.
Debrief on LP conversations and pipeline management.
And figure out your LP-GP fit, or your ideal LP archetype as a function of your fund size, your strategy, your experience level and your story.
This might also be one of the few pieces I write that some pre-reading may help contextualize what I will write below.
Most of the time I work with folks who are mid-raise. Not always, but most of the times. So I’m stepping in where there’s already some infrastructure, but not a lot, usually bootstrapped and duct taped together. Not a bad thing. As long as it works, I don’t touch much during the raise itself. Then we work on things and cleaning up systems post-raise or in-between raises. The best time to strategize and plan for a raise is at least six months in advance. But that’s neither here nor there. So what do I do?
I ask the GP(s) to pitch me the fund. We simulate email exchanges, first meeting, second meeting, and due diligence as if I were the target LP persona. I offer no commentary. I am purely the observer. You can do this with most people who do not know your strategy well. Friendly LPs. Other GPs. But I find it most helpful if you can to do this with people who have a great attention to detail, specifically in the literary sense: lawyers, authors, therapists, podcasters, professors, editors, scriptwriters, showrunners, and so on.
Then, I share all the risks of investing in said manager that I can think of. What are the elephants in the room? What parts of the GP, the GP’s story, the strategy, the track record, and the complexity of the story would make it really hard to pass the investment committee (IC)? What might be moments of hesitation? No matter how big or small. There’s a saying that a friend once told me, “When your spouse complains about you not washing the dishes, it’s not about the dishes.”
Label and categorize each risk as a flaw, limitation, or restriction.
Flaws: Traits you need to overcome within 1-2 fundraising cycles (~2-5 years). The faster, the more measurable, the better. You can’t just say you’re going to overcome these flaws. You need to have KPIs against each of these.
Limitations: Risks that the world or that particular LP believes is true. Like being a Fund I. Or being a solo GP.
Restrictions: What you prevent yourself from doing. Think Batman’s no killing code. In GP land, it’s only investing in a particular demographic or vertical. It’s only investing in the Bay Area. And so on.
Stack rank all of them. Depending on the LP you’re pitching, figure out the minimum viable risk list that LP may be willing to accept. It’s not always obvious.
You should always address limitations as early on in the conversation. My preference is in the email exchange or at the very minimum, in the first two slides of the deck. In other words, “here are the primary reasons you shouldn’t invest in me if you don’t like…” Think of it like the elephant in the room. Make it explicit. Don’t wait for LPs to have private investment committee (IC) conversations without you in the room. Or worse, they implicitly, whether consciously or subconsciously, think of the limitations in their head. Having been in multiple LP conversations and a fly on the wall in IC meetings, sometimes an LP can’t fully describe why they’re passing, just that they are.
Next, figure out for each LP in your existing and future pipeline when are flaws also limitations. When are restrictions also limitations?
When a restriction is a limitation, there isn’t an LP-GP fit. So, you need to go find LPs, who don’t see your restrictions as limitations. Another reason you should address elephants in the room as early as possible.
When a flaw is a limitation, you need to fire yourself before the LP fires you. You need to say “No” before an LP does. Be respectful of their time, but maintain that relationship for the future. Reaching back out every 1-2 quarters to catch up is something I highly recommend. Any longer, LPs will forget about you. And no, that does not mean, “Can I add you to my monthly/quarterly LP update?” No LP will say no, but almost always will your updates die in their inbox. If you don’t care about your relationship with them, why should they?
Are you ready for an institutional fundraise? How much of the institutional data room (use this as a reference if you don’t know what that means) do you have ready? And for each flaw and restriction, do you have something in the data room (even if it’s in the FAQ/DDQ) that helps hedge against it?
All that said, you also need to figure out what your superpower is. And you usually only need just one, but you have to be god-tier in that one superpower. There cannot be a close second. Oftentimes, it’s less obvious than you think it is. With all the hedging of risks above, you also need to give an LP to be your champion. You must spike in something that impresses the LP and despite all your flaws and restrictions, that you’ll still go far. And the more closely your superpower is aligned with at least 2-3 of the five (sourcing, picking, winning, supporting, exiting), the better. And you must make sure that it is made explicit to the LP as early in your conversations as possible.
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.
