The Up Round #16

Hello and welcome #16 of The Up Round! As a reminder, this is a summary of relevant news and firm-building resources for VCs. Expect us to land in your inbox every other weekend.

Before jumping into this week's curated content, I invite you to read my pondering on the concept of generational firms (here). Be well!

X’s & O’s of Firm Building

Planning for GP Succession (link). I think the cynic might say this is all obvious advice but it's challenging to practically do. One of the key threads in this checklist is time and transparency. Something that is so foundational and impactful to stakeholders should be openly discussed and executed over multiple funds and years.

Update on Venture Firm TVPI Converting to DPI (link). "Comparing latest benchmarks (Sept '23) to peak benchmarks (Mar '22), Top Q marks have come ⬇️ 17% on avg in active VC funds. Despite very few VC exits announced in that time frame, DPI is up meaningfully (likely driven by public stock distributions and secondary sales)."

Hustle Fund's Book on Raising VC (link). In working with our portfolio, I know 90% of our conversations on "how to run a great process" is pretty standard from team-to-team. We've created several internal documents and tools to assist a founder going to market to provide ourselves leverage. I'd add that sharing something like this with founders can help VCs spend time on the idiosyncrasies of a particular startup's contemplated raise.

Modeling Seed Stage Growth (link). I found this to be a thoughtful and contrarian take on asking pre-seed and seed founders for projections. Alex at Moxxie Ventures uses a three part approach where he tries to valuate the quality of the activities related to Looking for PMF, Learning Initial Sales Motion, and Scaling Sales Motion. All said, I ask (and will continue to) for projections but it's less about the accuracy and more about a team's understand of business levers, capital management, and setting a baseline plan (knowing it will and should change).

Reading List for the Aspiring VC (link). A nice baseline for those looking to improve their onboarding, training, and development of junior VCs. Being a sector focused fund, I'd also recommend books on the industry itself. It balances the venture with sector specialization.

Fund Debuts

Darkmode Ventures Launches with $5M Nano Fund (link). Founded by former Twitter exec, Amir Shevat, Darkmode writes $100-200k pre-seed checks in open developer platforms, enterprise AI, and the modern data stack.

Cross-Border Impact Ventures Closes $90M Inaugaral Fund (link). Operating in the US and Europe, CBIV focuses on Series A+ companies with $1-10M in revenues building medical devices, diagnostics, and digital health solutions for women and children's health needs. Some noteworthy LPs include The RockCreek Group, Ceniarth, Skoll Foundation, the McConnell Foundation, and more recently the German government via KfW, among others.

Other Fun(d) Stuff

The Final Foundry Fund (link). After 18 years of being in the game, The Foundry Group announced that their '22 fund will be their last. Bravo on a great run and thank you for all you've done for both the startup and VC ecosystem 🙏.

Act One Ventures Announces $73M Fund III (link). Act One invests $1-2M seed checks in B2B SaaS startups with a focus on vertical SaaS, compliance, and eComm infrastructure. It has led four of five investments out of the third fund already.

ArcTern Ventures Closes $335M Fund III Focused on Climate (link). This is the first climate fund announcement of 2024 and a hot one at that. Fund III is about double ArcTern's second fund which continues their focus on both hardware and software startups in climate. LPs include TD Bank, Credit Suisse, and Church Pension.

Plural Closes On €400M Fund II (link). Just 18 mos after closing a debut €250M fund, Plural follows it up with their second fund. Who said times are tough for fundraising? The fund is led by ex-operators who write €1-15M early stage checks into AI, deeptech, and climate tech startups. The firm touts they've only lost one deal thus far (as have we at Dynamo over nearly eight years... sorry, I had to).

Innovation Endeavors Closes $630M Fund V (link). This is the firm's largest fund to date. It will continue the focus on early stage investments in deeptech across the physical economy, life sciencies, and core infrastructure across industries.

Lightspeed Exploring $1B Continuation Fund (link). “We think VCs can’t just use the excuse that the IPO window is closed, they need to take a page out of the private equity playbook and build more consistent liquidity that LPs can count on.”

Talent Tracker

Adam Boutin Joins Greycroft as a Partner in Sustainability (link). Boutin joins from Capital One Ventures and will lead the $137.7 (yes very specific) Greycroft CCS Sustainability Fund who's LPs are Coca Cola and eight leading Coke bottlers.

Tiffany Luck Joins NEA from GGV as Partner (link). Luck joins from GGV where she focused on B2B SaaS and API-first companies which will be her focal at NEA along with AI startups. Luck's prior investments include Pinwheel, Mindee, Stream, Electric.ai, Fairmarkit, Workboard, and Vic.ai.

Dinika Mahtani Promoted to Partner at Cherry Ventures (link). Mahtani is an operator-turned-investor who will continue to lead Cherry's UK investment and strategic initiatives while also furthering investment in climate.

TCV Promotes Four to General Partner (link). Michael Kalfayan (London), Shalini Rao (Menlo Park), and Julia Novaes Roux (NYC) were the promotees.

Andrew Cleland Joins Techstars as CIO (link) and Techstars Laysoff 20 People (link). Cleland joins from Comcast Ventures where he was MD. Techstars also trimmed headcount in support and ops as part of annual budgeting on the back of a weak venture market.

Clocktower Technology Ventures Promotes Adriana Saman to MD (link). Saman will continue her focus on seed/Series A fintech startups in the US, Europe and Latin America.

Connie Chan Leaving a16z (link). Chan's departure comes as a16z makes changes to it's consumer team but also is continuing to distance itself from China in the face of heightened geopolitical tensions.

Tiger Global Reported to Offer Buyouts to IR Team (link). On the back of fundraising challenges related to poor fund performance, several IR professionals have taken buyout offers and departed the firm. The $12.7B (October 2021 vintage) fund is seeing it's losses slightly narrow to 18% in Q2 '23 vs 20% in Q3 '22.

LP Radar

Allocate's 2024 VC Industry Outlook (link). As a breed, VCs (and LPs) are opinionated individuals. Here's a nice compilation of said perspective from the broader ecosystem. Thank you to Samir, Matt, and the Allocate team for include Dynamo and myself.

Saudi Aramco Expanding Venture Allocation by over 100% (link). The move will take the allocation of VC to $8B from $3B, currently.

Fairview Capital Promotes Aakar Vachhani and Alan Mattamana to Managing Partner (link). Both will retain their role on Fairview's IC but also join other firm leadership around management and strategic leadership of the firm.

The Appeal of Small Funds - Access and Outliers (link). Written last month by one of my new friends, Kyle Thorpe at Pattern Ventures leveraging a data set of 2,500 funds from 1980 to today. I quite like how Kyle goes about laying out his analysis which includes both fund performance but also the ability to access funds the top 5% of large funds as a LP. Turns out more people are realizing small is beautiful 😁.