Venture Unlocked: The playbook for venture capital managers

On today’s show we have Beezer Clarkson, Managing Director of Sapphire Partners, the LP arm of Sapphire Ventures. Not only does Beezer have tremendous depth and insight into the world of VC, but she catalyzed the #OpenLP movement, which looks to bring transparency within the LP world. She’s someone I’ve known for nearly a decade and one of the smartest minds in the LP world.

Beezer began her career in financial services over 20 years ago at Morgan Stanley in its global infrastructure group. Since, she has held various direct and indirect venture investment roles, as well as operational roles in software business development at Hewlett Packard. Prior to joining Sapphire in 2012, Beezer managed the day-to-day operations of the Draper Fisher Jurvetson Global Network.

Additionally, she is a judge for 100&Change, a MacArthur Foundation competition that provides funding to solve critical challenges of our time. In 2014, she was named to the Forty Over 40 list of women to watch.

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In this episode we discuss the following topics:

01:51    Beezer’s journey into VC

03:50    Launch of Sapphire Partners as a fund for predominantly Series A funds

05:46    What’s changed (or not changed) in Venture over the last 15 years?

06:56    What “value-add” means in today’s marketplace

11:27    How she evaluates managers and performance.

14:40    Does past performance really act as an indicator for future fund success?

17:25    Her thought process in bringing on a new manager (or not following on an existing manager)

21:22    How to get Sapphire’s attention to invest

24:41    What is Minimum Viable Fund size and when to do a first close

27:33    Giving away economics to get early LP’s; the pros and cons

33:29    What is the diversity audit and OpenLP

35:35  Diversity in emerging manager firms vs. established.

39:03    Best career advice she heard as an LP.

40:45    Her biggest missed fund opportunity

42:15    The best advice for GPs pitching her for the first time

Mentioned in this episode:

Sapphire Partners

I’d love to know what you took away from this conversation with Beezer. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

This episode was particularly a fun one to record in that we moved a bit away from our traditional interview format to more of a water-cooler format with Mac Conwell of RareBreed Ventures and Roy Bahat of Bloomberg Beta for a wide-ranging chat about the state of emerging venture capital. 

As many may now, Mac is using the seldom used 506C provision of Reg D to publicly solicit capital for his new fund (RareBreed VC). While many rolling fund managers use the 506C provision, Mac is not conducting his raise on the AngelList platform.

Previously to starting RareBreed, Mac was an investor at the Maryland Technology Development Corporation’s Minority Business Pre-seed Fund, a partnership between TEDCO and Harbor Bank Community Development Corporation to address the needs of minority entrepreneurs in Maryland, who often lack access to Friends and Family rounds. He also has operating experience from his time as co-founder and CEO at Redberry Mobile and of Given. 

Roy Bahat is the head of Bloomberg Beta, which invests in the main category of the future of work and has a portfolio that includes Slack, Kaggle (acq. By Google), and MasterClass. They occasionally also invest directly into emerging managers to help drive financial performance. Prior to his life as a VC, Bahat founded start-ups, served as a corporate executive at News Corp., and worked in government in the office of New York City mayor Michael Bloomberg. 

In this episode we discuss the following topics:

01:18    The unique structure of RareBreed Ventures

03:09    How a Twitter following and new venture software made it possible for Rarebreed to launch a 506(c) structured fund

07:00    Roy’s view on investing

16:18    Raising a fund versus raising capital for a company. Is it different?

18:45    How the fundraising process helped Mac find his own unique brand.

22:01    Using LP feedback to your advantage

23:32    Searching not selling when looking for LPs

25:25    Is LP capital really scarce?

26:48    Questions LPs often ask to first time managers

29:22    What makes an exceptional GP

33:45    Giving up economics to early investors

36:40    Is the notion of a GP commit outdated when assessing GP-LP alignment?

42:08    What post-COVID VC will look like

Mentioned in this episode:

* RareBreed.vc

* Bloomberg Beta

* Charles Hudson Interview

* Elizabeth Yin interview

* How LPs should really think about GP commits in Emerging Managers

I’d love to know what you took away from this conversation with Mac and Roy. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

We have a special treat of an episode this week with one of the top first generation seed investors in Mike Maples, Jr. of Floodgate. After leading two successful startups, Mike started Floodgate (formerly Maples Investment) in 2006, and has since invested on companies such as Twitter, Lyft, Twitch, and Okta. 

As is always the case when I speak to Mike, he provided many nuggets of investing, firm building, and went deep into his early days of Floodgate.

In this episode we discuss the following topics:

04:54    How Mike raised his first fund from Austin Ventures

07:27    Explaining seed investing to LPs in the early days

13:58    Why he decided to bring on Ann Miura-Ko as a partner early on

20:25    His view on what a “Thunder Lizard” is

23:45    Defining the mental models Floodgate uses for Seed Investing

24:40 Why great entrepreneurs are like time-travelers

31:18   How thinking about “Thunder Lizards” helps inform his portfolio construction.

37:38   How he’s changed his portfolio construction over time.

48:00   The lessons he learned from missing out on companies such as AirBnB.

52:15   Who Mike admires most in the VC world

Mentioned in this episode:

* Floodgate

* Austin Ventures

I’d love to know what you took away from my conversations with Mike Maples, Jr. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Remember to subscribe here on substack, Spotify, or Itunes to get notified as soon as new pods are released. Also follow me @samirkaji on Twitter to get my ongoing thoughts on venture.

Welcome back to another episode of Venture Unlocked. This week we have Apurva Mehta, Managing Partner at Summit Peak Investments.

Apurva and his partner Patrick O’Connor founded Summit Peak in 2018 to invest both in emerging venture funds, and alongside them through direct co-investing. As you’ll hear on the interview, they are very comfortable and excited about backing solo-GP funds.

Summit Peak has backed such solo emerging managers such as Josh Buckley, Raymond Tonsing, and Lachy Groom while making direct investments in Airtable, Virta Health, and Sourcegraph.

Prior to starting Summit Peak, Apurva and Patrick led venture investments for the Cook’s Children Health System.

In this episode we discuss the following topics:

03:36    Why Summit Peak was created to investing in funds

05:52    What it’s like trying to raise a fund of funds.

07:04    Why they though investing in next-gen managers was the right approach.

09:01    The big risk they took at the start of their fund.

10:29    The framework they use to evaluate GPs to invest in.

14:07    Why they believe network can be a killer competitive edge.

16:41    What they view as the intangible factors GPs must have and how try and measure it.

19:20    How they think about founder reference calls.

22:42    The importance of speed in their diligence process.

24:34    How a podcast interview and LinkedIn led to one of their best deals.

29:08   Thoughts on the solo GP model.

34:07    What is an LPAC, and what does it do?

37:54    The pace of new emerging managers entering the market.

44:02    His biggest piece of advice for newer managers.

Mentioned in this episode:

Cook’s Children

I’d love to know what you took away from my conversations with Apurva Mehta. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

We’re excited to release our newest episode with another great guest, Jaclyn Freeman Hester, Partner at the Foundry Group.

Founded in 2007 by Brad Feld, Jason Mendelson, Ryan McIntyre, and Seth Levine The Foundry Group has $2.4B under management and has invested in startups such as FitBit, SendGrid, Beeswax, and Notion. Several years ago the firm, led by Jaclyn and Lindel Eakman, started investing in interesting emerging manager firms, and have acted as LP’s in firms such as Forerunner, K9 Ventures, Founder Collective, IA Ventures, Homebrew, and Ludlow.

Jaclyn got her MBA/JD from the University of Colorado and practiced corporate law advising startups and private equity firms as well as buyers and sellers in M&A transactions. She also worked closely with her husband and his family on their SaaS startup, FareHarbor, from the earliest stages through acquisition.

In this episode we discuss the following topics:

04:59   The catalyst for Foundry starting to invest in Emerging Managers

08:54    Her view on emerging manager trends and opportunities

11:42    What she looks for when evaluating new managers

20:59    Do competitive moats in venture exist?

24:51    What type of characteristics she’s sees a critical for successful VC’s and teams

31:06    How they evaluate managers that are going from proof of concept to raising the first institutional fund.

35:37    Common mistakes emerging managers make pitching

38:45    The best questions that GPs have asked her

41:08    Jaclyn’s biggest career mistake

43:26    Her best advice to new managers

Mentioned in this episode:

* Foundry Group

* TechStars

* Mucker

I’d love to know what you took away from my conversation with Jaclyn Freeman Hester. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Happy New Year! I’m thrilled to announce that Avidan Ross is our first guest of 2021 Avidan is the Founder and managing partner of Root Ventures and one of the most thoughtful newer seed stage managers in the market.

Like many that have appeared on the show, Avidan took a non-traditional path into venture. After graduating from Columbia, Avidan spent time in various engineering roles before becoming CTO at CIM Group, L.P., a private equity firm currently with $30B under management. After nearly 7 years at CIM, Avidan moved on to become a host a Food Network pilot and also co-write a book on the best coffee in the U.S.

In 2013 Avidan founded Root Ventures. Today, he and his partners Chrissy Meyer, Kane Hseih, and Lee Edwards each bring strong engineering backgrounds and a passion for taking a very hands-on roles with their portfolio companies which incline toward very technical in nature.

In this episode we discuss the following topics:

00:35    Avidan’s journey into venture capital

04:15   Getting comfortable with investing in early-stage deep tech companies out of a small fund

09:01   What is the most important thing they look to bring to founders

11:38    Portfolio construction and why they reserve more than most seed funds

16:44    Portfolio sizing

18:54    His thoughts on generalist funds vs. specialists

21:32    How they think about value-add.

25:54    The hiring model Root uses

30:06    The difference fundraising Fund I and Fund II, and building relationships with LP’s.

39:46    Avidan’s biggest career mistake.

41:02    His biggest investing miss.

42:30    The people in the industry he’s inspired by.

Mentioned in this episode:

* Root Ventures

I’d love to know what you took away from my conversations with Avidan Ross. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

As we wrap up what’s been perhaps the most interesting and difficult year in modern history, the holidays still remain a time to to spend with family and reflect on the things we all still do have. I’m incredibly grateful for what I do have, and am looking forward to brighter days ahead for all of us as we move to 2021.

On our final episode of the year, I’m thrilled to share my conversation with Marlon Nichols, Managing General Partner at MaC Ventures. After graduating from Northeastern University, Marlon spend several years in various consultant and operational roles before joining Intel Capital in 2011.

After five years at Intel, Marlon co-founded Cross Culture Ventures along with Troy Carter, a successful media manager that managed the careers of artists such as Lady Gaga and John Legend, and made investments in startups such as Uber and Spotify.  Given the shared vision of Marlon and Troy, Cross Culture Ventures made a name for themselves with their cultural investing thesis that focused on companies centered in the convergence of global popular culture and technology.

In 2019, Cross Culture merged with M Ventures to create MaC Ventures, one of the few venture partnership “mergers” we’ve seen, where he and the team invest in “ technology companies that create infectious products that benefit from shifts in cultural trends and behaviors in an increasingly diverse global marketplace”.

In this episode, Marlon and I discuss the following topics:

00:54 - Marlon’s winding journey into venture

05:23 - The opportunity he saw to invest in diversity

07:40 - How he prepared to launch Cross Culture

8:07 - His unique point of view and value proposition in the venture industry

10:12 - What led to Marlon’s decision to merge Cross Culture with M Ventures

16:29 - How did his LPs react to the merger of the firms?

17:52 - What are the primary things he sees LPs care about the most?

23:02 - The MaC view toward adding values to portfolio founders.

28:11 - How to drive value to LP’s outside of just returns.

30:05 - Why firms struggle to invest in diversity

37:20- Marlon’s biggest career mistake in venture

Mentioned in this episode:

* Mac Ventures

* The tangible benefits of diversity in venture

* Study on women in leadership roles

I’d love to know what you took away from my conversations with Marlon Nichols. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

Deena Shakir is a General Partner at Lux Capital, a firm founded in 2000 and has since raised $2.5 billion. Lux invests in emerging science and deep technology startups such as Auris Health, Cerulean, Zoox, and Bright Machines.

Deena graduated from Harvard undergrad and began her career as a presidential management fellow at the US Department of State, where she built partnerships with tech companies and helped launch President Obama’s global entrepreneurship summit in 2010.

She then joined Google, where she led business development and strategic partnerships for their global civic innovation portfolio before shifting to the investment side at Google Ventures (GV).

In 2019 Deena joined Lux Capital and focuses on companies that are seeking to provide solutions to improve human & environmental health, and productivity.

We covered several topics on the show, including: 

01:12- Deena’s background as the daughter of Iraqi immigrants in California and her early career in journalism and government

08:17 - What prompted her move to GV to Lux

12:35 - What is the behavior trait that drives Lux as a firm

16:39 - How Lux makes decisions as a partnership

18:30 - Why portfolio management is a team sport at Lux.

22:12 - Establishing a company culture and hiring employees that will fit within it.

25:46 - What growth in fund size means in dictating strategy and mindset.

31:12 - Data on diversity in venture is the first step in overcoming unconscious bias 

37:03 - Deena’s biggest career mistake and what she learned about it.

38:38 - Her advice for starting your own fund

40:29: Why Maha Ibrahim of Canaan Ventures is one of Deena’s role models

Mentioned in this episode:

* Lux Capital

* Deena’s article in Forbes, Unlocking a Post-COVID Start-Up “She-Covery”

I’d love to know what you took away from my conversation with Deena Shakir. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Podcast Production support provided by Agent Bee Agency

For daily thoughts on the venture landscape, follow me @samirkaji on Twitter.

Chris Douvos is the Founder of Ahoy Capital, a boutique Fund of Funds that focuses primarily on allocating into early-stage venture capital funds, while selectively co-investing directly into companies.

Chris started his career at Morgan Stanley while still at Yale earning his MBA. From there he worked at Princeton University’s endowment fund where he got his start in venture before moving onto The Investment Fund for Foundations (TIFF). At TIFF he decided that the right strategy was to make “heroic investments” and invest in very early stage, and often unproven managers.

This method paid off as Chris was one of the first institutional Limited Partners to back First Round Capital (and remains so).

Chris then went on to Venture Investment Associates  (VIA) prior to spinning out to start Ahoy Capital in 2018.

Ever engaging, Chris covers a whole host of emerging VC topics and he and I discuss the following:

6:20 Why Chris started a fund that invests in emerging managers and how he’s arbitraging people’s inattention to get to true outsized returns.

9:00 The process for raising a FoF, and what his LP’s are looking for.

10:59  Ahoy’s portfolio model on managers, and why he thinks concentration is the right avenue for them.

11:54 Why looking at past performance shouldn’t always be the leading indicator in evaluating firms, and why he looks at other specific factors.

13:35 His thoughts on GP/Thesis fit

16:51 How he was introduced to Josh Kopelman of First Round Capital 

22:13 Why you need to be able to articulate a sustainable competitive advantage; funds that are good examples of this

25:21 Why Chris looks to invest in Venture business builders, not option seekers

28:18 The “return the fund” mental model managers should use.

33:00 Why there’s currently a need for liquidity in the ecosystem and why SPACs and direct listings are helpful

37:25 Why he’s excited about the diversity, equity, and inclusion GP investments

39:25 Thoughts on Rolling Funds

42:18 Chris’ missed investment opportunities

43:11 How to pitch Chris (and Fund of Funds in general).

Mentioned in this episode:

* Ahoy Capital

* David Swenson’s Pioneering Portfolio Management

* Chris’ blog post: “All About the Benjamins”

* Micro VC - Smaller is better, but the math is hard.

I’d love to know what you took away from my conversations with Chris Douvos; Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest.

Podcast Production support provided by Agent Bee Agency

In this episode, we speak with Nate Williams, Co-founder and Managing Partner at UNION Labs. Nate Co-founded UNION Labs in 2018 with his partner, Chris Kim while an Entrepreneur in Residence (EIR) at Kleiner Perkins.

Nate is a seasoned Operator and angel investor including August Home, where he served as Chief Revenue Officer and Head of Business. Following their acquisition in 2017, he went on to join KPCB as EIR where he spent time helping entrepreneurs and sourcing investments including Proxy. While EIR, Nate formed a thesis on the opportunity in verticalized IoT which he published in TechCrunch and began to see a lane for a new type of fund.

UNION Labs is an early stage firm that both backs and builds companies. They deploy venture investments, as well as manage a structured EIR co-creation program to incubate companies. The core firm focus is on the commercial application of deep technology in artificial intelligence, machine learning, and robotics, that solve real-world problems in smart cities, intelligent homes, or connected transportation. Since its inception, UNION has made five investments, been the lead on three deals, and averages 11% ownership across its current investments.

In this episode, Nate and I discuss the following:

03:04 - What it was like being an EIR at Kleiner Perkins, and what he learned.

06:51 - The dramatic changes in the venture capital industry over the past decade.

13:16 - The venture studio concept and when and why it makes sense for a seed firm like theirs to co-create a company.

16:47 - Why growth in new corporate venture capital funds may signal a lack of alignment between Fortune 500 companies and Sand Hill Road.

17:47 - Nate’s three-pronged approach to raising funds, aka “The Sandwich Strategy.”

23:51 - Why transparency is so important both for both Limited Partners and General Partners

26:11 - A key observation UNION made early in fundraising from LPs.

33:18 - The structural advantages of being a small and specialized fund

35:40 - Why deep tech doesn’t automatically mean capital intensive and doesn’t have to include hardware

Mentioned in this episode:

·       UNION Labs

·       Nate’s thesis on the opportunity on verticalized IoT in TechCrunch

·       Elizabeth Yin on Venture Unlocked

·       OpenLP

·       Charles Hudson’s podcast

·       Laurence Toney’s post on Quora, “What Is An Entrepreneur in Residence? What Do They Do? How Does It Work?

Podcast Production support provided by Agent Bee Agency