The Up Round #22

Hola! Welcome to The Up Round #22. 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.

It's been a busy few weeks here so I'll keep it brief. One observations from the last couple weeks is that we're seeing funds be candid about the challenge of raising with several funds: explicitly noting the challenging fundraising environment, coming in either below target or below the prior vintage, and taking multiple years to close. Stay positive my friends!

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What I'm Reading

⚡ Balancing Story and Spreadsheet: Building Long-Term Value Through the Cycle (link). This is an obvious but refreshing commentary around balancing data and narrative when fundraising and talking about the business. I especially love the concept of "grounding the story in numbers" but also knowing when to "push back on the spreadsheet" as you grow.

📊 Infographics Galore: The Power of Allocating to Specialists Over Generalists (link) and Performance of Vintages After a Market Correction (link). Perhaps this should be, "what I'm staring at" ha. While I have a personal bias as a sector specialists, the 1,000+ data set from Pitchbook over 20 years suggests that specialists outperform generalist peers by a meaningful margin. Further more, those GPs grinding it out in this fundraising environment might get a morale boost from this data around vintages/performance.

Tomasz Tunguz on TAM and Market Sizing (link). My personal take on this is that the TAM or market at time of investment isn't everything- what matters is the market when one exits. I've met many VCs who roll their eyes at market but have no logical approach to testing: 1) how a team will expand to adjacent opportunities and what's required to do so across product and go to market; 2) whether something is really an exercise in "market creation" and the conditions required to foster such; 3) if this market exists, the reasons why a startup reinvigorate the market and win.

Why I Hate LTV/CAC (link). "The three primary issues of LTV/CAC is sensitivity to retention rates, tendency to deteriorate at scale and poor reflection of capital efficiency, especially in the short term. Instead of solely relying on LTV/CAC, startups should consider a broader range of metrics like CAC payback, CAC doubling time, and CAC return at different time intervals."

Vinod Khosla on the Future (link). I don't agree with everything Vinod says but that doesn't mean I can't learn and admire him. I especially love his ability to stay constantly optimistic and forward-thinking as an investor. Check out the slides form his latest TED Talk with AI being at the forefront.

Fund Debuts

None! 👻

Other Fun(d) Stuff

Human Ventures Nearing $50M Fund II Raise (link) via Jon at Dynamo. Perhaps what's more interesting that the fundraise and the commitment from Raja Doddala at Churchill is the PR itself. In an environment where funds will increasingly raise less vs earlier vintages but also miss original fund targets, this piece appears to be leaning into building credibility and fomo on the back of Churchill's commitment.

Maven Ventures Announces $60M Fourth Fund (link). Maven's newest fund is below it's original $100M target but roughly in-line with it's $65M Fund III. The firm will continue to invest in six to eight consumer startups each year with check sizes ranging from $1-1.5M. AI in consumer is a major focus for the new fund.

SpringTide Ventures Rounds Up $65M for Healthtech (link). This is Spring Tide's second fund and will focus on digital health, medical devices, life sciences, and tech-enabled care delivery. The firm seeks to lead Seed and Series A rounds with a 20% ownership target on the back of $1-4M checks.

bValue Closes €90M Growth Fund (link). Exceeding it's €80M hardcap, bValue has raised roughly half it's fund with the backing of EIF and Polish Development Fund to fill the funding gap between VC and buyout/PE investors. It's one of the few Polish funds that have gone on to raise a third vintage.

SOSV Closes A $305M New Fund (link). Dubbed a Deep Tech fund focused on human and planetary health, the capital will support SOSV's HAX and IndieBio programs where it invests as the first check and will follow on in it's winners. It does 200 investments per year given it's accelerator model. The challenging fundraising environment was also noted by SOSV.

Lakestar Closes on $600M Across Early Stage and Growth Funds (link). This will be Lakestar's fourth early stage fund (Seed and Series A) getting $280M of the fresh cash and it's second growth fund (Series B and later) getting $320M in new capital. This raise demonstrates the challenges of fundraising given it took three years to round up the cash with Lakestar noting challenges especially at the growth stage when raising.

a16z Raises $7.2B in New Funds (link). Andreessen Horowitz has oversubscribed it's latest family of funds by roughly $300M ($6.9B original target). The funds will be allocated to the various funds/strategies the firm has. What's interesting is that the funds/strategies are more focused on sectors or technologies rather than the stage of business. Goes back to the statement around specialism above.

Talent Tracker

2048 Ventures Promotes Zann Ali and Julie Wolf (link). Zann has been promoted to GP and Julie to Partner from their prior roles as Principal.

Shashank Saxena Joins Sierra Ventures as Managing Partner (link). Shashank previously founded VNDLY which was acquired by Workday for $510M four years after founding it and served as GM as Workday. He held various strategic and product roles at Kroger and Citi, previously.

Jennifer Li Promoted to GP at a16z (link). Jennifer will continue to invest in enterprise software along side Martin Casado, Anjney Midha, and Zane Lackey with a focus on infrastructure and horizontal SaaS.

LP Radar

Cendana and Kline Hill Launch $105M for Secondary Strategy (link). "Hill/Cendana’s investing vehicle apart is that it’s buying secondary interest in seed-stage firms and individual companies from seed funds. Most existing secondary players are too large to go after this opportunity."

Rosberg Ventures Launches $75M FoF (link). To be backed by Europe's most entrepreneurial families, the FoF is to be allocated to a group of global, Tier 1 VCs. The idea is this allows LPs to get access to a broader portfolio of breakout startups. Note that this appears to be separate from Nico's direct investment efforts. Perhaps it eclipses it?

🎙️ Swimming with Allocators: Eric Sippel (link). This was an intro I was pumped to make when Earnest asked me for recommendations for a new season of the podcast he co-hosts with Alexa Binns. Eric is one of our LP mentors and an amazing thought partner. Listen to this!

Princeton CIO Sees "Worst Ever" Private Equity Liquidity Environment (link). Andrew Gordon will be retiring this June after 30 years and remarked that the current liquidity environment in private equity- accounting for buyout and VC are both the worst he's seen. While he's seen a thawing of late, Andrew was remiss to call it a trend. He did note that Princeton and it's peers are in a far better position vs 2008. Lastly, Andrew is one of the proponents of limiting divestment of assets especially in the face of pressures related to global warming.

NY Life Acquires Minority Stake in Fairview Capital (link). The co-investment is underpinned by a multi-year relationship where NY Life has invested $200M in Fairview's funds since 2021.