The Up Round #25

Hola! Welcome to issue #25 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.

I'm heading to NY Tech Week so keeping this brief (give me a shout if you're in town). What I find interesting is that the only fund debuts for the last couple week are European. Further, both funds made a decision to lean into PR prior to closing a chunk of their target (~ 30% in both instances). Perhaps European regulations are meaningfully different but surely this also reflects the challenging fundraising environment. There are definitely versions of this amongst US managers who "tip" or "leak" pending fundraises in hopes media attention boosts fomo amongst LP backers (see Harlem Capital for the latest example of this - unclear if this is part of a Rule 506c effort).

With that, I'm off to the airport!

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What I'm Reading

The Great Reset (link) by Frank Rotman at QED. "LPs understand that more investments than normal will fail and they know that absorbing those losses will lead to lower fund performance. LPs realize that the VC asset class is cyclical and great vintages can be created by great managers once the ecosystem flushes out the mistakes produced in an abundant and free flowing capital environment. The 'new deal' they’re making with VCs is that they’ll forgive a bad vintage if the VCs will be honest with them about what the back book is 'worth', be more disciplined going forward and they’ll do everything they can to return some cash 'soon'."

Practical Guide to Creating Customer Case Studies (link) by Amy Saper at Uncork Capital. I shared this with a couple of our seed founders who are heads down putting together case studies. This may not be a sexy topic but it's essential in B2B.

Performance and Persistence in VC (link). While the data is imperfect, "There is statistically significant but weak evidence of persistence in more recent data sets (2003-2017), with a top quartile firm getting a 1.7% higher net IRR on their subsequent fund compared to a mid-quartile."

Cycles and DPI in Venture (link). This image has been going around for the last week in venture circles. I think what's interesting is the future of the 2019-2022 vintage and whether we're at the start of a breakout vintage (call it 2023-2025) funds.

Emergence Capita: Beyond Benchmarks 2024 (link). I'd point your attention to the "Company Performance Metrics" on page 24 but this is chockfull of some great data. It is SaaS-centric so I'd caution applying these frameworks too broadly to other business models. In particular found pages 12, 22, 26, 30, and 38 to be interesting.

Fund Debuts

Openseed VC Debuts with $10M Fund (link). Led by former Octopus Ventures and Oxford Seed Fund investor, Maria Rotilu, the fund has closed roughly $3M of it's initial $10M target. Maria is considered to be the first black Solo GP and will invest at inception in operator-led startups both in Europe and Africa. The fund will invest $150k for ~5% of a startup to build a portfolio of 60 companies.

Identity.vc Launches Target €50M Fund for LGBTQ+ Founders (link). This fund is the first of it's kind in Europe and will invest €250k-€1.5M at the pre-seed to Series A stage. To date, the fund has raised €15M vs it's target.

Other Fun(d) Stuff

Space VC Closes $20M for Fund II (link). Led by solo GP, Jonathan Lacoste, Space VC invests in frontier tech companies at Day 0 and maintains a high conviction approach. The $20M fund will be allocated across 15-16 companies with check sizes of $500k-$1M. Talk about strong ownership!

Contour Venture Partners Raises $42M for Fifth Fund (link). Contour is an early investor in the likes of Datadog and MovableInk. It's one of the few funds that's maintained a relatively modest fund size to reduce its fundraising target. The fifth fund was originally slated for $90M. Contour invests $500k-$1.5M in seed stage companies as the lead investor.

Source Code Capital Raising $300M For Next Fund (link). One of the earliest backers of ByteDance (TikTok) is planning to raise $300M for a new US-dollar fund led by partner Samuel Huang. The last fund was raised in 2021.

Clean Energy Ventures Raises $305M (link). This fund follows a $110M debut vehicle and exceeds the original $200M target. CEV will invest at the pre-growth stage with checks of $500k-$8M depending on entry point with 30-40% of the fund earmarked for follow up. Ultimately, each portfolio company can see up to $15M of investment.

Vitruvian Partners Investing in Aduro (link). Aduro has $120B of assets under administration (+150% since 2020). The investment, in part, is expected to accelerate Aduro's expansion and growth plans related to its Fundpanel.io offering.

Talent Tracker

Charlotte Ross Promoted to Partner at Inspired Capital (link). Charlotte joined Inspired in 2019 at a Principal and was previously at NEA as an Associate.

NATO Innovation Fund Announces New Investment Team (link). On the back of hiring Managing Partners Andrea Traversone, Kelly Chen, Patrick Schneider-Sikorsky, Thorsten Claus and Chris O’Connor, the fund has added 12 new professionals to the team across directs and FoF investments.

Lindsey Yi Promoted to VP at Bessemer VP (link). Lindsey joined as an Analyst in 2019 and has quickly made it up the ranks. She's sourced seven investments to date and will continue focusing on opportunities from Seed through Series B across enterprise AI/ML infrastructure, developer platforms, and gaming.

LP Radar

2023 Letter from Yale's New CIO (link) via Marcelino Pantjoa at Amity Ventures. Marcelino highlighted the interesting bits- have a peruse.

🎙️ Swimming with Allocators: Alex Edelson (link). I'd point out the parts around Evaluating Small Funds (2:20), Constructing a LPAC (10:39), and Sector-focused Funds (24:05).

Samir Kaji on Small Funds vs Large Funds (link). I think the comments/conversations there are super interesting. It shouldn't be a small fund vs large fund conversation but understanding how different these two "products" are and where it fits into a LP's overall portfolio.