Tag: superclusters

Posted on

What is the Density of your Founder NPS? | El Pack w/ Charlotte Zhang | Superclusters

charlotte zhang

“We’re going into a world where there will be an increase in inequality in terms of the have’s versus have-not’s. And so if you are invested in some of the have’s, I would actually bet on their acceleration of value aggregation in the later stages of scaling which is why I, personally, think a winning strategy is to hold onto them for as long as possible.” — Charlotte Zhang

Charlotte Zhang from Inatai Foundation is back! And if you’ve tuned into her first episode on Superclusters, you’ll know exactly why. Charlotte has been one of my favorite guests on the podcast, marrying both her profound ability for deep analysis with strong framework-oriented assessments. You might remember her 4 P’s to underwriting every manager from our prior episode.

Naturally I had to have her back for an El Pack episode to answer your questions on how to build a venture capital fund. We bring on 3 GPs at VC funds to ask 3 different questions.

99VC’s Lisa Yu asks about what LPs look for in Fund I’s beyond track record.

Escape Velocity’s Mahesh Ramakrishnan asks about recycling and what happens when you have 30% of your fund size as distributions in the first few years of the fund.

Founder Embassy’s Helena Gagern asks about investing in AI frontier labs where the first round of financing already puts the company at $400M+ in valuation. And also, how do you communicate to LPs that you have an “exceptionalism” bucket to invest out of?

As the director of investments at Inatai Foundation, Charlotte Zhang oversees the selection of external investment managers, conducts portfolio research, and helps to institutionalize processes, tools, and resources. She previously served as a senior associate at ICONIQ Capital and, before that, Medley Partners. When not working, you can find her globetrotting (18 countries and counting), writing a Yelp review about the best bite in town, or cuddling up with a book and her two adorable cats.

You can find Charlotte on her LinkedIn here:
LinkedIn: https://www.linkedin.com/in/charlotterzhang/

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

OUTLINE:

(00:00) Intro
(01:04) What’s new in Charlotte’s life?
(04:06) LPs Charlotte would love to meet
(05:41) Who is Lisa and 99VC?
(09:31) What qualities does Charlotte look for beyond track record?
(14:55) How does a GP know if they have a differentiated strategy?
(15:49) Charlotte’s pet peeve
(17:29) The bottoms up exercise of building a fund strategy
(18:00) Consistency of execution
(20:05) The highest level of signal you can get from a founder reference
(22:18) The ask
(22:51) Who is better at bowling: Mahesh or David?
(24:44) Who is Mahesh and Escape Velocity?
(25:20) Why is Escape Velocity spelled as EV^3?
(27:10) What happens when you have 30% DPI in the first 2 years of your fund?
(30:19) Does early DPI matter more in Fund I than Fund III?
(33:26) Should you sell secondaries at the Series B as a pre-seed/seed GP?
(37:34) Venture is under siege for no DPI
(38:18) Would Charlotte rather have 4X in 10 years or 7X in 15 years?
(39:42) Have’s and have-not’s
(40:35) Who is Helena and Founder Embassy?
(44:45) What is Charlotte’s reaction when a pre-seed GP invests in a $400M post valuation?
(49:23) How do the best GPs communicate betting off-thesis?
(50:44) How many GPs have an “exceptionalism” bucket to invest out of?
(55:56) How much underwriting goes into a GP breaking the rules?
(58:10) “A-players are obvious” but what isn’t?
(1:00:38) Charlotte’s last piece of advice for LPs
(1:03:43) Charlotte’s last piece of advice for GPs
(1:07:18) Why you should talk about the anti-portfolio
(1:09:33) David’s favorite moment from Charlotte’s previous episode

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“In venture capital, although the top quartile of emerging managers outperforms the established funds. On average, you would actually be better off investing in established funds than in an emerging manager because the dispersion of returns is so much wider in emerging managers.” — Charlotte Zhang

“Because incumbent brands create access flywheels, the most important thing for an emerging manager is having a clearly differentiated strategy. Otherwise, it’s fighting an unwinnable war.” — Charlotte Zhang

“Investment strategies are simply financial products serving the market of what founders and management teams in businesses need.” — Charlotte Zhang

“The best founders will know who the best VCs are.” — Charlotte Zhang

“It’s all about the density of the NPS you have amongst the best talent. Of course, if they have a good experience with you, they’re more likely to refer others they think highly of to you. And that’s the reason why it becomes a leading indicator and therefore, a self-fulfilling prophecy as to who rises to the top.” — Charlotte Zhang

“It’s actually a higher signal to me if it’s someone referring you that didn’t take money from you.” — Charlotte Zhang

“When we’re conducting diligence as an LP, you should be looking under the rocks where you are more likely to find disproving evidence.” — Charlotte Zhang

“If [venture] does not produce any realized returns, how will it be self-funding? And how can you continue pacing sustainably into this asset class?” — Charlotte Zhang

“We’re going into a world where there will be an increase in inequality in terms of the have’s versus have-not’s. And so if you are invested in some of the have’s, I would actually bet on their acceleration of value aggregation in the later stages of scaling which is why I, personally, think a winning strategy is to hold onto them for as long as possible.” — Charlotte Zhang

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
For Superclusters After Hours: ⁠https://superclusterslp.substack.com/⁠
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP

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.

Posted on

“You don’t have enough dopamine in your pitch!” | El Pack w/ Asher Siddiqui | Superclusters

asher siddiqui

“How you modulate a good story is by inserting dopamine, oxytocin, serotonin, and endorphins at the right times to be able to deliver that story so that the person listening to that story can form an opinion.” — Asher Siddiqui

Asher Siddiqui from the Song Family Office joins me on El Pack to answer your questions on how to build a venture capital fund. We bring on 3 GPs at VC funds to ask 3 different questions.

Inuka Capital’s Gautam Shewakramani asks about what GPs typically overshare and under-share when they’re pitching an LP. As well as how an LP identifies if a GP has great sourcing if they’re a generalist fund.

Unshackled Venture’s Manan Mehta asks if VC is still only one asset class. Is early stage now a combination of discovery and validation capital?

Keymaker VC’s Tim Wang asks what do most LPs overvalue in GPs.

Asher Siddiqui is a global tech investor, M&A dealmaker, and venture fund builder with over 25 years of hands-on experience across venture capital, entrepreneurship, and more than $15B in executed M&A transactions.

He began his career as a software engineer and entrepreneur in the US and UK before spending a decade leading M&A and corporate venture at Etisalat Group (now e& Group), one of the world’s largest listed TMT investment groups. There, he led acquisitions, exits, and strategic transactions across multiple continents.

In 2016, Asher joined the global leadership team at 500 Startups in San Francisco, helping scale the platform to $2B+ AUM, with a portfolio that includes 35+ unicorns and 160+ centaurs.

Since then, he has helped launch and scale several institutional VC firms—including Race Capital, Lumikai, Sukna Ventures, Zayn VC, and Humanrace Capital—and serves on the advisory boards of funds such as FootPrint Coalition Ventures, Merus Capital, and The Treasury.

To date, Asher has made 100+ venture investments (both direct and LP), raised hundreds of millions in LP commitments, mentored hundreds of emerging VC managers globally, and advised countless founders.

You can find Asher on his socials here:
LinkedIn: https://www.linkedin.com/in/ashersiddiqui/
X / Twitter: https://x.com/ashercdkey

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

OUTLINE:

(00:00) Intro
(02:09) The DOSE framework for underwriting pitches
(04:19) Asher’s new role
(05:38) Who is Gautam and Inuka Capital?
(09:19) What do most GPs overshare and undershare on?
(15:19) How does Asher differentiate sourcing ability in generalist funds?
(20:01) The first date analogy
(22:38) What emotions do each of DOSE represent?
(27:23) Too much dopamine, not enough endorphins
(30:02) Who is Manan and Unshackled Ventures?
(31:33) Unshackled’s most recent big win
(32:46) Discovery capital vs validation capital
(33:31) Is venture still only one asset class?
(43:29) The Song Family Office portfolio construction
(51:41) Asher’s stance on reserves
(55:00) Why it makes sense to go to zero AGMs
(56:23) The ask
(57:27) Who is Tim and Keymaker VC?
(58:45) What do most LPs overvalue in GPs?
(1:04:40) A new way to share the team’s personality on the deck?
(1:08:09) Asher’s last piece of advice
(1:14:57) David’s favorite moment of Asher in S5

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

““Happiness is amazing. It’s so amazing it doesn’t matter if it’s yours or not. A society grows great when old men plant trees the shade of which they know they will never sit in.” — from Ricky Gervais’ After Life

“How you modulate [a good story] is by inserting dopamine, oxytocin, serotonin, and endorphins at the right times to be able to deliver that story so that the person listening to that story can form an opinion.” — Asher Siddiqui

“There’s no point of perfect information, especially in venture, where you say ‘I have enough information’, this is the thesis, the timing is now—… No, there’s a lot of belief involved.” — Asher Siddiqui

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
For Superclusters After Hours: ⁠https://superclusterslp.substack.com/⁠
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP

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.

Posted on

The Hardest Fund I to Underwrite | Zach Ruchman | Superclusters | S7E7

zach ruchman

“The question at Fund IV is, ‘Okay, you’ve proved that you’re a great firm builder. Congratulations, you’re raising Fund IV. Are you still a great investor?’” — Zach Ruchman

Zach Ruchman joined HB Wealth in 2025 as a Shareholder after working with WMS Partners since 2023. In his role as Managing Director, Private Markets, Zach leads the team responsible for research and due diligence of private market investment opportunities across a variety of asset classes, including private equity, growth equity, venture capital, private credit, infrastructure, and real assets.

Before joining HB Wealth, Zach was a Senior Vice President at RockCreek and a Vice President at BlackRock, where he led direct co-investment transactions as well as manager research for both primary and secondary commitments in the Americas, Europe, and Asia on behalf of both institutional and family office clients. He began his career as a consultant with Alvarez & Marsal. In this episode, we also talk about how he worked out of the National Democratic Institute’s DC office writing grants and tracking political regimes in the Middle East, including the Arab Spring.

In the community, Zach serves as a member of the finance committee for the Howard and Geraldine Polinger Family Foundation.

You can find Zach on his socials here:
LinkedIn: https://www.linkedin.com/in/zruchman/
X / Twitter: https://x.com/zmrphoto

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

I’m also including my reactions to Zach’s comments here.

OUTLINE:

(00:00) Intro
(03:04) When 9/11 entered Zach’s life
(12:20) Interest in the Middle East
(15:00) Returning to the US
(17:49) What’s in the foreign service exam?
(22:29) From pursuing the state department to consulting
(25:39) Consulting to allocating
(32:20) Business school and mentors
(36:34) The ask
(37:07) How Zach makes re-up decisions?
(40:15) The difference between a Fund I and Fund IV
(43:26) Alignment between senior and mid-level investors
(45:33) Deal attribution at big VCs
(46:40) Questions to ask to references to find deal attribution
(49:12) Avoiding a reference’s scripted answer
(52:14) Top 1% performers leaving organizations
(53:45) The hardest Fund I to underwrite
(1:00:57) Does radical transparency work?
(1:06:15) “Private assets work best when they’re inefficient.”
(1:09:20) Does AI change VC investing?
(1:11:33) Sourcing that AI cannot do
(1:14:26) Can AI write good memos?
(1:19:11) Pattern vs exception recognition
(1:25:03) An example of how a GP proved he worked hard
(1:28:00) Best advice for action photography

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Consulting is almost like the liberal arts degree for the beginning of your career. You get to see a tremendous number of different business problems in a tremendous of different geographies. It’s like you have distribution requirements for your career.” — Zach Ruchman

“There are plenty of great investors that are not great firm builders.” — Zach Ruchman

“The question at Fund IV is, ‘Okay, you’ve proved that you’re a great firm builder. Congratulations, you’re raising Fund IV. Are you still a great investor?’” — Zach Ruchman

“If it was as easy as, ‘Hey GP, send your attribution spreadsheet,’ and I say, ‘Ok, great, that’s the attribution,’ my job would be so easy.” — Zach Ruchman

“If that person is an on-sheet reference for a spinout firm, the question then is, ‘Ok, you have a great relationship with this person, did you really do the deal with the person because you liked the person so much and you thought they were bringing something of value to you and that their money was a little greener than everyone else’s because there was a value-add or was it you really liked the name on the back side of the business card—the name of the firm?” — Zach Ruchman

“The hardest Fund I to underwrite is a brand new team. The easiest thing to underwrite is a team that lifts up together.” — Zach Ruchman

“Private assets work best when they’re inefficient.” — Zach Ruchman

“The more money you have going at a limited opportunity set, the more the perfectly priced that opportunity set will be.” — Zach Ruchman

“AI is only going to write what you tell it to write. So an AI memo is only going to be as thoughtful as the reasoning that you put into it, at least here in 2026.” — Zach Ruchman

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
For Superclusters After Hours: ⁠https://superclusterslp.substack.com/⁠
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP

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.

Posted on

What Your Lawyer Isn’t Telling You About LPA Terms | Apurva Mehta & JD Montgomery | Superclusters | S7PSE1

apurva mehta, jd montgomery

“Our best GPs are talking to their founders all the time. And our best GP relationships, we talk to all the time.” — Apurva Mehta

“If you can’t handle something going to zero, then you shouldn’t do one.” — JD Montgomery

Apurva Mehta is the co-founding Managing Partner of Summit Peak Investments, a fund-of-funds that boasts a portfolio of both venture fund investments and direct investments, including the likes of Affirm, Anduril, Airtable, Opendoor, and Wish, just to name a few.

Prior to starting Summit Peak in 2018 with his co-founder, Patrick O’Connor, he previously served as Vice President and Deputy Chief Investment Officer for the Children’s Hospital Endowment Portfolio in Fort Worth, Texa. From 2008 to 2011, he was the Director of Portfolio Investments at The Juilliard School in New York City. Apurva began his career in investment consulting and investment banking at Citigroup and Lehman Brothers. He was recognized for his expertise when he was named to aiCIO Magazine’s Top Forty Under Forty in 2012 and 2013 and honored as a Rising Star by Institutional Investor. He holds a BBA in Finance from The George Washington University.

You can find Apurva on his socials here:
LinkedIn: https://www.linkedin.com/in/apurvaamehta/

JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.

You can find JD on his socials here:
LinkedIn: https://www.linkedin.com/in/jd-montgomery-6161341b/

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

OUTLINE:

(00:00) Intro
(01:53) How did this episode come to be?
(06:56) What do LPs get right/wrong with co-invests?
(12:06) GP best practices for co-investments
(14:35) How do you know a GP is capable of pre-empting a round?
(16:37) How often should GPs be talking to their portfolio founders?
(17:52) Why Apurva goes to AGMs
(18:17) How Apurva/JD stays in touch with GPs
(23:33) The ask
(24:01) Solo GPs
(31:42) Types of solo GPs who join multi-stage firms later
(34:32) What’s the skew in the benchmarking data?
(39:22) What lawyers don’t tell you about carveout capital in LPAs
(44:46) LPA terms that LPs redline
(45:44) Carry ratchets that LPs hate
(48:15) How higher fees impact IRR
(49:39) Outlandish fees on SPVs
(50:49) How much should a GP’s salary be?
(52:56) Cashless GP contributions
(53:59) Do $1T outcomes change venture math?
(59:17) Should private market investors be public market investors?
(1:04:30) What made Apurva nervous? What does he love?
(1:07:57) What does JD love?

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“If you can’t handle something going to zero, then you shouldn’t do one.” — JD Montgomery

“Our best GPs are talking to their founders all the time. And our best GP relationships, we talk to all the time.” — Apurva Mehta

“If I’m going to an AGM to learn about what’s going on in our portfolio, I am not doing my job.” — Apurva Mehta

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
For Superclusters After Hours: ⁠https://superclusterslp.substack.com/⁠
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP

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.

Posted on

How Value Add Differs in PE vs VC | Julia Rees Toader | Superclusters | S7E6

julia rees toader, princap

“In private equity, some of the older tricks about just picking on more leverage are not going to work as well now because rates are higher. We need to have more focus on operational improvement and margin expansion. And in venture, you’re not expected to have good margins.” — Julia Rees Toader

Julia Rees Toader is the Founding Partner of PrinCap, an independent investment portfolio strategy firm working with institutions and individuals on manager selection, asset allocation, and strategic advisory. Prior to PrinCap, she was the Head of Portfolio Strategy and Head of Relationship Management at Heritage Holdings, a multi-family office. Before Heritage, Julia was the head of Portfolio Strategy at Goldman Sachs Asset Management ($3Tr assets under supervision). She and her team advised sovereign wealth funds, pensions, financial advisory firms, private banks, and other long-term asset owners on asset allocation. She studied mechanical engineering and computer science at Princeton University and is a CFA charterholder. Before Goldman Sachs, she worked on M&A and business development for an early-stage medical device biotech firm.

You can find Julia on her socials here:
LinkedIn: https://www.linkedin.com/in/julia-rees-toader-cfa-22871030/

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

OUTLINE:

(00:00) Intro
(01:38) A ‘happy accident’ at 16
(04:03) Julia’s first startup experience
(06:32) Why did Julia join Goldman Sachs?
(07:30) When did Julia’s appreciation for finance start?
(08:05) Conversations around the Rees and Toader dinner table
(09:48) Finance vs mechanical engineering
(13:26) On exceptional talent
(15:18) How to keep a cool head when you’re successful
(20:19) Do small emerging managers outperform?
(22:27) How do you know if a GP is founder-friendly?
(23:39) The bad pitch meeting
(25:00) Value adds in PE vs VC
(29:49) Difference between PE vs VC portfolio construction models
(31:19) Timelines to return in PE and VC
(33:17) Secondaries
(34:34) The ethics of continuation vehicles
(36:07) The subscription ask
(36:40) Are all secondaries created equal?
(38:30) What is 10+1+1?
(40:32) Hedge funds looking like private market funds
(41:16) What do you do when you have $3B?
(44:43) What is home country bias?
(46:40) How do you know you’re overweighted on allocation?
(47:15) The endowment effect in secondaries
(48:32) Leaderless investment committee sessions
(49:52) The merits of GP stakes
(54:10) Why private credit is interesting
(56:21) The duration of GP stakes
(57:36) The duration of hedge fund GP stakes
(58:11) How much GP stake is worth it?
(1:00:33) Hedge funds: How much is a good GP stake?
(1:02:00) How much is the max an LP wants to own of a hedge fund?
(1:03:12) Tax structuring is another form of alpha
(1:06:52) Cheetos Pelotazos
(1:09:15) Advice to women in finance
(1:12:28) Post-credit scene: Age of Empires, Starcraft, and Zelda

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“In private equity, you want to have that strong value creation playbook. It used to be that you could do quite well doing mostly financial engineering, roll-ups, that kind of thing. That still works, but I think a lot of the money in the next part of the cycle is going to come from improving the margins or increasing EBITDA, so making operational improvements. So private equity, some of the older tricks about just picking on more leverage are not going to work as well now because rates are higher. We need to have more focus on operational improvement and margin expansion. And in venture, you’re not expected to have good margins.” — Julia Rees Toader

“The providers of liquidity always get paid.” — Julia Rees Toader

“LPs and GPs both don’t want to be forced sellers.” — Julia Rees Toader

“Home country bias is the tendency of people to overallocate to their home market.” — Julia Rees Toader

“The endowment effect, which is the idea that if you own something, you think it’s more valuable than what anyone else is willing to pay for it.” — Julia Rees Toader

“Tax structuring is another form of alpha.” — Julia Rees Toader

“Alpha’s three things: information asymmetry, access, and, actually, taxes.” — Vijen Patel

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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.

Posted on

Does a VC’s Value-Add Even Matter? | Stacey Kline & Ben Gallacher | Superclusters | S7E5

stacey kline, ben gallacher

“GPs over-index on how that value-add ties into a portfolio strategy.” — Stacey Kline

Stacey Kline and Ben Gallacher are co-founders of February Capital, a fund-of-funds dedicated to providing access to the best in venture. Prior to starting February, they’ve each held roles as professional athletes, corporate lawyers, startup founders, emerging managers themselves, family office allocators, just to name a few.

We spend much of this episode talking about their backgrounds that led them to where they are today, but also on why Stacey and Ben spend so much time underwriting emerging managers’ value-adds, as well as their controversial take on it.

You can find Stacey on her socials here:
LinkedIn: https://www.linkedin.com/in/staceykline/

You can find Ben on his socials here:
LinkedIn: https://www.linkedin.com/in/benjamingallacher/

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

OUTLINE:

(00:00) Intro
(04:03) Why did it take 22 months to set up fund of funds in Canada?
(07:22) Toughest moments when building February Capital
(10:12) How did Ben know he wanted to be an LP?
(12:58) How did Stacey know she wanted to be an LP?
(16:53) The doctor’s advice no one expected
(18:32) Ben’s first NO from Stacey
(23:06) Why is it called February Capital?
(23:58) What is the role of the LP today?
(27:59) What Ben and Stacey look for in GPs
(31:08) When does non-consensus thinking lead to portfolio divergence?
(36:28) How much portfolio overlap is fair for February?
(39:31) How large is February’s portfolio?
(43:17) Picking an ecosystem vs picking an investor
(46:24) What types of GPs did Stacey change her mind on?
(47:56) Underwriting a GP’s story
(49:44) Stacey’s controversial take on value-adds
(53:07) Why value-adds affect sourcing
(57:10) Examples of negative value-add
(59:19) Refreshing your value add
(1:03:36) An example of when GP and founder incentives are misaligned
(1:05:12) The February Capital OS you don’t see

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“What we’re looking for are GPs who are highly convicted in their strategy, where they’re focused on, how they articulate that, and then the proof points that tie the story together.” — Ben Gallacher

“At the end of the day, our job is to take risks.” — Ben Gallacher

“You have to refresh your network every seven years.” — Ben Gallacher citing Josh Kopelman

“It really is fundamentally our job to figure out not to uncover unobvious ecosystems, it’s to figure out who to back in the obvious ones.” — Stacey Kline

“If there’s someone in the operator seat, that’s amazing because they are boots on the ground. It’s really hard to see around corners and they’re the ones who are best positioned to see the world today super, super clearly and know what needs to be built.” — Stacey Kline

“[GPs] can potentially over-index on how that value-add ties into a portfolio strategy.” — Stacey Kline

“Do you end up spending the most time with the companies that are performing really well or with the companies that aren’t? It’s often that companies in a portfolio that are doing really well don’t actually need that much help.” — Stacey Kline

“If I were to defend the GP here on value-add and helping, at the end of the day, you’re just trying to better your sourcing because if you really help a company that’s struggling and they decide it doesn’t work and they start another business, they want to look back and be like, ‘That GP was super helpful to me and they were with me during my hardest times. I’m going to call them because I’m starting a new company and I want them to back me again.’” — Ben Gallacher

“70% of VCs are not value-add at all. They’re just capital and that’s fine. 15% are generally value-add. And 15% are actually negative value.” — Ben Gallacher

“The question is say-do ratio. An old mentor of mine used to say that to me, ‘What’s your say-do ratio? And then our job is basically to audit that. Are founders telling us what you say you’re doing? And does that matter?” — Ben Gallacher

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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.

Posted on

The 3 Big Family Office Transitions That No One Talks About | JD Montgomery Pt 2 | Superclusters | S7E4

jd montgomery

“To whom much is given, much is expected.” — JD Montgomery

JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.

You can find JD on his socials here:
LinkedIn: https://www.linkedin.com/in/jd-montgomery-6161341b/

And in case, you’re curious about my reactions during and after recording that episode, you can find my thoughts here on Superclusters After Hours.

You can also find Part 1 of JD Montgomery here.

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

OUTLINE:

(00:00) Intro
(02:00) The definition of family offices
(03:01) Generation 1 vs 2
(06:25) Building a family office at Gen 1
(07:48) The 3 considerations for succession planning
(11:14) The “why” of succession planning
(12:59) Building self-esteem in children
(17:14) How do you help children choose their long-term passions?
(20:16) When should next gen of family offices know how rich they are?
(23:35) How do next gen family office members first get exposure to VC?
(32:25) When do you give next gens influence over the family’s capital?
(35:28) What % of the family capital should you give a next gen?
(37:42) The ask
(38:09) The hard and soft issues of wealth
(42:41) How often do next gens inherit their parents’ support system?
(46:35) How does a GP know how sophisticated an FO is?
(53:43) How does an advisor know an FO’s sophistication?
(59:10) Sophisticated simplicity
(59:50) When’s the last time JD’s OS changed?
(1:05:23) Post-credit scene: Time is a construct

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“[A family office] is a living, breathing organism that is built around people—a family—that’s there to serve them to accomplish their missions.” — JD Montgomery

“There are three considerations: When do I give the next generation visibility? When do I show them all of the zeros? Secondly, when do I give them influence? And lastly, when do I give them control?” — JD Montgomery

“To whom much is given, much is expected.” — JD Montgomery

“It’s impossible to wealth-transfer self esteem. There is some level of wealth that allows next gen to be able to do anything, and there is some level of wealth that allows the next generation to do nothing.” — JD Montgomery

“I don’t want to belong to any club that would accept me as a member.” — Groucho Marx

“I don’t view venture as an asset class. I view it as a methodology to allocate capital to every sector on the planet that’s changing. And oh, by the way, every sector on the planet is changing right now.” — JD Montgomery

“I call it the hard and soft issues of wealth. The hard issues are tax and legal and the economic side. The soft issues really relate to people. Is this individual mature in the development? Have they launched? Are they ready to be a good steward?” — JD Montgomery

“We do surgery with chainsaws, and just hire people to clean up blood.” — JD Montgomery

“Time is something man invented to be able to coordinate action. It doesn’t exist otherwise.” — JD Montgomery citing something a Navy Seal once taught him

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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.

Posted on

Who Should NEVER Start a VC Fund? | Sam Huleatt | Superclusters | S7E3

sam huleatt

“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:

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.

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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.

Posted on

“I Write-Off Every Sourcing Slide” | Alex Felman | Superclusters | S7E2

alex felman

“The game you play as you’re building a reputation becomes a different game than when you have a reputation. And I tend to find, from an LP’s perspective, when you’re building reputation, that’s actually when you deliver the most value.” — Alex Felman

Alex Felman is an entrepreneurial and family office professional. For over 10 years, as a second-generation member, he has run his own family office, Felman Family Office, and works with family offices around the world through his family’s multifamily group, MSF Capital Advisors. Using his expertise in Molecular Toxicology and Bio-entrepreneurship (B.A from University of California -Berkeley, MBA from Copenhagen Business School), he advises them in biotechnology, healthcare, and other futuristic tech industries with the goal of maintaining long-term wealth through innovation. He regularly speaks at family office and private wealth events on topics such as tech investment, manager selection, generation and succession issues, rising generation trends, and more.

He has used his experience within the family office industry and 20 year background as an educator to create Exponential U, a family office education program designed to help families become multigenerationally sustainable. His proprietary L3 framework (Learn, Leverage, Legacy) allows the holistic development of family members to ensure a smooth leadership transition.

You can find Alex on his socials here:
LinkedIn: https://www.linkedin.com/in/alexwfelman/

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

OUTLINE:

[00:00] Intro
[04:36] The ‘tastemaker’ for family offices
[05:54] Exploration vs discipline
[08:15] The hero’s journey in investing
[09:49] The life line
[13:39] Building and having reputation
[16:06] Risk appetites for asset owners & allocators
[18:44] Why won’t an institution invest in me?
[19:50] The quiet thing LPs don’t talk about
[25:15] When did Alex get involved with his family office?
[29:09] Writing off sourcing slides
[35:33] Different flavors of “sourcing from YC”
[38:41] Emerging GPs are “investments-as-a-service”
[40:08] Fund power law is greater than startups’
[43:44] Emotional value of investing in funds
[44:45] Most VC funds are scams!
[50:01] Optimistic cynic
[51:43] Reminders today about the good ol’ days
[54:17] Late stage capitalism
[59:10] Post-credit scene: Dave Chappelle and podcasts

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“Every great conversation dances on the line of your understanding. You dance between both sides of the line and try to find out where what you know and what they know intersect and end. Good conversation is like play.” — Alex Felman

“With my background from the family offices, I almost believe that most family offices moving forward will need their own personal tastemaker or sommelier. Someone who’s curating the world specifically for the needs of that family.” — Alex Felman

“People get into trouble when they’re using the wrong tool or trying to do something for a different purpose. For example, I’m going to try to do discovery when I’m in my routine. Ok, you’re probably running into problems. Or routinizing my discovery. Those two things are in conflict with each other.” — Alex Felman

“One of the things people always forget—… What they remember from the hero’s journey is adventure, and we fight the dragon, and we get the treasure. But at the end of the hero’s journey, you’re supposed to bring that back to your community. And you’re supposed to forward it to your community. And you’re supposed to make your community better from the dragons and the treasure that you fight or find. Most people often leave off that last part. And I actually think that last part is extremely important.” — Alex Felman

“The game you play as you’re building a reputation becomes a different game than when you have a reputation. And I tend to find, from an LP’s perspective, when you’re building reputation, that’s actually when you deliver the most value.” — Alex Felman

“If you have a family office where you’ve actually outsourced it, your employee is more of an allocator than an owner. And in that case, that allocator is often making decisions to save their own job. Or to ensure that they continue to have a job.” — Alex Felman

“What I find is slightly sad is that ultimately because of security and comfort reasons, things like people’s pensions which should be more secure, are actually, in my opinion, taking riskier bets. And bets that will lead to worse outcomes.” — Alex Felman

“I believe that the amount of due diligence you do doesn’t matter depending on the deal size. So let’s say they’re writing five $100 million checks compared to 100 $5 million checks, that is literally 20 times the amount of work. So even if they’ll get a better return on that 100 $5 [million checks], on a realistic level, it forces them to play certain types of games.” — Alex Felman

“With at least funds on a standard two and twenty, somewhere around $75-100 million fund size is where the incentives shift from being carry-oriented to management-fee oriented. Once you get larger than that, then it actually becomes more incentivized for the fund managers to build up their funds than the actual returns itself.” — Alex Felman

“I would argue that power laws apply even more to funds than to startups.” — Alex Felman

“The intersection of venture as a product or service meets venture as a job career. And there are a lot of fund managers who see venture as a job career and essentially want to use it as a way to get a paycheck. And because of that, they’re going to put out a fairly boilerplate fund.” — Alex Felman

“Many venture funds are basically scams. I believe it’s a scam if you knowingly sell something you know you can’t deliver on. And the dirty secret in venture is if you purely look at venture from a financial point of view, most fund managers know they cannot hit their targets and yet they still sell that promise anyway. And I think that starts to become kind of scammy.” — Alex Felman

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 Alex’s episode, you can find my reactions here.

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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.

Posted on

“Venture is a Who Business, Not a What Business” | JD Montgomery | Superclusters | S7E1

jd montgomery

“One thing that is unique to private equity and venture capital is persistence is a little easier because of the brand. ‘They did good deals, so therefore, the good deals come to find you.’ If you were in a long-only private equity shop or hedge fund, Amazon is not going to come find you because you invested in Shopify.” — JD Montgomery

JD Montgomery leads the Family Office division at Canterbury Consulting and is a seasoned advisor with nearly four decades of experience serving prominent families with a focus on strategy, organization and measurement. Based in Newport Beach, he serves a select group of multi-generational families and helps them navigate the complexities of wealth, purpose, and legacy. Mr. Montgomery partners with his clients to help them optimize the allocation of their resources across generations. Over the years, Mr. Montgomery has developed a deep network of relationships in the venture capital industry. He has helped his clients gain meaningful exposure to venture funds and direct investments and develop relationships with leading innovators and investors globally. He is a Managing Director, shareholder, and board member at Canterbury Consulting. He graduated from Stanford University and holds the Chartered Alternative Investment Analyst (CAIA) designation.

You can find JD on his socials here:

LinkedIn: ⁠https://www.linkedin.com/in/jd-montgomery-6161341b/⁠

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

OUTLINE:

[00:00] Intro
[02:18] The “some day” exercise
[11:12] Why does JD do “some day” every 6 months?
[12:33] JD’s life line
[16:44] When JD is 85 years old…
[18:05] JD’s relationship with fatherhood despite the trauma
[22:40] Annual dad report cards
[25:33] Intentionality with GPs
[28:41] How to avoid one-hit wonders
[33:43] How to transfer self-esteem
[36:05] How do you get GPs off of their talk track?
[37:36] Non-obvious things JD looks for in GPs
[41:43] Is selling 0.2X DPI in the first 4 years meaningful?
[44:27] Should you recycle capital or deploy out of the next fund?
[46:34] Why did JD choose to work with families?
[48:07] “Never eat alone”
[51:34] How does JD think about time allocation?
[55:06] How many new GPs does JD meet with?
[59:07] How did JD pass on then back Founders Fund?
[1:03:22] The difference between unexplored gold veins and rotting trash
[1:08:13] Mayan Mocha at Austin’s Picnik
[1:08:58] JD’s secret street taco recipe
[1:11:09] JD’s reminder that we’re still in the good ol’ days
[1:13:20] Post-credit scene: No garlic and onions

SELECT LINKS FROM THIS EPISODE:

SELECT QUOTES FROM THIS EPISODE:

“I don’t have a mentor per se. My mentor is hundreds, probably thousands of people—I’m sure thousands—people that I’ve met where I try to learn just the amazing talent that person has and I smush it with the next person that I meet that might be most kind person that I meet or the most organized. So it’s this blend of a lot of people that really becomes the mentor.” — JD Montgomery

“DOD – dear old dad.” — JD Montgomery

“Kids grow up like trees and saplings. And a sapling needs a guiding post to hold them up when it’s windy.” — JD Montgomery

“One of the other questions I will ask is: ‘Tell me about the hardest thing you’ve ever done in your life.” — JD Montgomery

“To whom much is given, much is expected.” — JD Montgomery

“In estate planning, you can transfer money, but you can’t transfer self-esteem. Self-esteem is gained by going through the school of hard knocks and doing things and relying on yourself.” — JD Montgomery

“One thing that is unique to private equity and venture capital is persistence is a little easier because of the brand. ‘They did good deals, so therefore, the good deals come to find you.’ If you were in a long-only private equity shop or hedge fund, Amazon is not going to come find you because you invested in Shopify.” — JD Montgomery

“If they’re passionate about something—if they want to leave the world just a little different—their ding in the universe—and they want to give back, money doesn’t ruin them.” — JD Montgomery quoting a North Carolina professor

“I am not in a ‘what’ business; I’m in a ‘who’ business.” — JD Montgomery

“Gross IRR; gross performance. I don’t care. I care about net. It’s okay to show gross and then net. I prefer net. But if you show gross only, it’s just gross.” — JD Montgomery

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 JD’s episode, you can find my reactions here.

Follow David Zhou for more Superclusters content:
For podcast show notes: https://cupofzhou.com/superclusters
Follow David Zhou’s blog: https://cupofzhou.com
Follow Superclusters on Twitter: https://twitter.com/SuperclustersLP
Follow Superclusters on TikTok: https://www.tiktok.com/@super.clusters
Follow Superclusters on Instagram: https://instagram.com/super.clusters

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.

Proudly powered by WordPress