The Up Round #3

The Memo

Welcome to the third issue of The Up Round. As a reminder, this is a "round-up" of relevant news and resources for fund managers building a best-in-class firm. Expect us to land in your inbox every other weekend.

We're trying a few things this week with The Up Round including a new section covering fund debuts, talent headlines, and more. We'd love your feedback on this.

Apart from that, check out the interview with Zoë Chambers at Frontline discussing all thinks related to Associate recruitment and development (link). Five Points will be an on-going series that highlights investors and their perspectives around a specific topic. If there's someone you want to suggest we interview, send us an email and please specify the topic of their specific "zone of genius".

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Tiger is said to be working with Lexington Partners to shed unfunded commitments it had made to seed funds totalling at least $80M. This transaction is separate from the strip sale that Evercore is running from The Up Road #1 and unlike the strip sale, expected to close soon. Lexington is the largest independent manager of private secondary and co-investment funds in the world. Some of the funds in the sale include BTV, Moxxie Ventures, and Maple VC. (link)

Other Reads, Listens, Watches

Mega Fund Reset: Insight Cutting Fund Size to $15B from $20B After Raising Only $2B (link) and TCV Has Raised 50-75% Less Than Target (link). Insight have reduced the target size of its latest fund to $13B in response to the “great reset” in the tech industry as public company valuations and investment activity have slowed. That said, it’s hard to also ignore that Insight’s fundraise itself appears to be going slowly with only $2B in commitments. Similarly, it’s reported that TCV has only raised $1.4B of a $5B target for its next flagship fund and has another $1.4B for another family of funds that appear to have separate mandates. Similarly, TCV has shelved plans for a SPAC they were planning to launch as the capital markets prove choppy, all-around. It's worth noting that the risk profile of both these firms are very different than early stage - one shouldn't interpret this as relevant across VC as a singular asset class - the nuance matters.

Common Mistakes LPs Can Easily Avoid When Investing in Venture Funds (link via Jon Bradford). From the team at Allocate, this is a good reminder for GPs who are raising from LPs in what is considered to be a rocky environment in light of raising rates, resetting of valuations, and lack of liquidity events. I should be pointed out that investing through cycles is important because VC, like other asset classes, are not immune to cycles and it is difficult to judge going-in which vintage years will outperform. In Samir’s words, “It's prudent for investors to establish a desired asset allocation and maintain consistency in annual deployments.”

US Investors Stopping Commitments to Chinese Funds (link). American LPs are slowing or exiting their commitments to Chinese VCs in the face of growing pressure from politicians and peers. It's not news that the US and China are experiencing heightened geopolitical tensions that is manifesting in a trade war, growing defense issues, and increased regulation of Chinese IP and companies, worldwide. This could create issues for private Chinese technology investors who have raised just over $1B this year (vs nearly $20B last year) that have relied not only on capital but global connections to help companies scale. That said, it’s been observed that Chinese funds are cozying up to investors in the Middle East as a way to weather the storm - similar to their US peers.

The UBS Global Family Office Report (link via Peter Ackerson). While this was published about a month ago, it would be difficult to note include it. Of note is the large asset reallocation that's afoot by FOs. We're hearing of more interest in public equities and credit as liquidity and rising interest rates underpin the attractiveness of these asset classes. It's also interesting to note that geopolitics has beat out inflation as a top concern - an opportunity for our friends raising or investment in defense technologies? 😁

Fund Debuts, Talent & More

Founder of Jobspotting Launches New Fund, Robin Capital, Targeting €20M (link). Robin Haak, the former Founder of Jobspotting and a former GP at Revaia Growth One, has closed €3M for Robin Capital’s debut fund. Robin will focus on investing in pre-seed and seed B2B SaaS startups in Europe, Israel, and the US. The fund wants to invest €100-€600K in a portfolio of 35 startups that are using data and artificial intelligence to solve complex business problems.

Boost Capital Launches Debut $30M Fund Focused on UX Startups (link). Boost Capital Partners has closed its first fund at $30M, aiming to invest in pre-seed and seed startups that are developing new and innovative UX solutions for “the real economy”. The fund will invest $300-$750K in startups across healthcare, finance, education, and entertainment; and specifically in companies using data and AI to improve UX.

Springbank Collective Closes $35M Fund (link). The fund led by first time managers, Courtney Leimkuhler, Elana Berkowitz, and Jen Lee Koss is focused on serving the overlooked needs of women and working families which they estimate to be a $1T opportunity. LPs of the fund include various financial services and insurance companies, FoFs, and family offices, among others with noteworthy names including USV, Foundry Group, BofA, AIG, and JP Morgan among others.

Planeteer Capital Announces Debut Fund Targeting $100M (link). Planeteer is co-lead by Sophie Purdom who founded the Climate Tech VC newsletter. The fund has done a first close for about one-third the target with LPs including an Ivy League Endowment and Collaborative Fund. The fund will seek to lead or co-lead pre-seed and seed rounds for B2B climatetech businesses with check sizes of $500k-$3M.

a16z Creates Evergreen Fund Called, "Perennial" (link). Andreessen Horowitz has launched a16z Perennial Venture Capital Fund with a target size of $4.5B. The fund is evergreen in that it never has an end date and as such, is likely to serve as a vehicle to manage the assets of the tenured partners, founders, and leaders in the firm’s network. The fund aims to focus on early-stage and growth-stage companies worldwide, specifically in artificial intelligence, machine learning, and blockchain. Additionally, the fund is looking for companies involved in some of the world’s problems such as climate change and healthcare.

Pete Sonsini Set To Depart NEA Amid Leadership Shakeup, Plans to Launch New Fund (link). Pete Sonsini is leaving NEA after 18 years. Sonisini is one of the most well-known VCs in Silicon Valley due to his part in the early days of companies like LinkedIn, Databricks, and Stripe. It’s speculated that Scott Sandell’s decision to bring in two new partners and excluding Sonsini from the firm’s core leadership created the rift. Due to a strict non-compete, Sonsini cannot join another firm and is instead planning to launch his own venture fund.

Kaitlyn Glancy Joins Eclipse as Partner (link). After spending eight years with venture-backed logistics upstart, Flexport, Kaitlyn Glancy announced she has joined the world of VC as the newest partner at Eclipse. Eclipse looks to fund startups modernizing the legacy industries and as most of the world learned during the pandemic, the shipping industry is one of these industries. Glancy is uniquely qualified given her experience overseeing a team of 400 people spanning 10 offices and is an expert in developing sales teams.

Voima Launches Third Nordic €90M and Baltic Deeptech Fund (link). Voima aims to focus on investing in early-stage deeptech startups in the Nordic and Baltic regions with target check sizes of €200K - 3M. Founded in 2019, the firm usually focuses more on science-based companies with this new fund aiming to invest in startups that aim to tackle pressing global challenges. The closing of this third fund is a sign of growing interest in deeptech startups in these regions.

Tim Chen Announces $27M Essence Fund 3 (link). Tim Chen, who is known for being super connected but under the radar, has closed $27M for his third pre-seed fund focusing on leading rounds in startups focused on data infrastructure, developer tools, and AI. Chen is specifically interested in startups using data and AI to improve efficiency and scalability of data infrastructure. Check sizes will range from $250-700K. The latest fund, backed by VC firms and funds of funds including Cendana Capital, Vintage Investment Partners, Sapphire Partners, Level Ventures, and Crossover.

Tweet of the Week

LP QUALITY, WHY IT MATTERS, AND HOW TO DILIGENCE IT

A thread for investment managers, emerging and not.

These are my suggestions from my own experience - I would encourage GPs to chime in here, I know there are people on here that have put a lot of thought into this.

— Joel Cohen (@joelmcohen) June 13, 2023

It could be argued that LP quality is almost as important as the quality of a fund's investments. But this is easier said than done when you're raising a Fund I or are going through a rocky fundraising environment trying to write your first (or next) check. "Quality" can be subjective as different people have different thresholds of tolerance to BS but in general it's importance to have a LP that can truly supportive (just like a GP desires to be for a portfolio company), not subject you to excessive "check the box" nonsense (especially if their check sizes is on the smaller end), and doesn't create undue stress. It's worth asking questions and taking references before signing up to on on a 10 year+ journey with a meaningful new backer.