The Up Round #7

The Memo

Welcome to the seventh 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.

It's certainly a quiet period as summer wraps both in the US and Europe. The one counter to that is the SEC policy changes that are currently in the works. Read more below. If you aren't a subscriber, be sure to sign up to see the entire post including the TVPI and DPI benchmarks.

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A three-way conversation between Sam Lessin, Frank Rotman, and Jason Lemkin on the current state of the seed market. Some of the perspectives shared: price/valuation mattering at seed, the fact that you cannot create startups on a factory line, and YC being too hard of a place for seed funds to play in. (link)

Other Reads, Listens, Watches

Endowments and Foundations are Fueling OCIO Growth (link). If you’re wondering whether the OCIOs you might need to engage during fundraising will endure in a changing capital markets environment, the answer is yes. The OCIO industry is expected to grow as more asset owners, particularly endowments and foundations seek its services. By the end of 2021, assets managed by OCIO providers reached $2.4T and are projected to grow at an annual rate of ~5.6% to reach $3T by the end of 2026.

Goodwin: What to Look for in the SEC’s New Private Fund Rules (link via Michael at Cendana). In summary, the new laws that are due to be announced will impact VC funds - put exempt and non-exempt advisors in three ways: raise the bar on fiduciary duties, reduce side letters, and require fairness opinions on secondaries. Given this regulation is still very much a work-in-progress, it’s worth consulting with legal counsel. At present, there is no clarity on whether existing agreements will be grandfathered in or whether they will need to be renegotiated over the 12-month transition period.

VC Culture? The WhatsApp Groups That Run VC (link) and Crosby Street Hotel is a NYC Hotspot (link). We tend to say that VCs are naturally hyper networkers and connectors. While WhatsApp groups are a fertile place for VCs to ask for intros, share deal flow, and even connect to LPs, Slack has also made meaningful inroads and plays host to several emerging manager, Associate-centric, and even accelerator-like VC support groups. On a more summer-like note, check out The Crosby Street Hotel in New York City next time you’re there. It’s turning into THE place for VCs in the ecosystem.

Fund Debuts, Talent & More

Transition VC is the New Climate Fund on the Block (link). Transition VC’s climate fund aims to bridge the gap between traditional technology, climate science, and policy to promote a society that helps the planet. With offices in London, Reykjavik, and New York, the founders of this climate fund have been working together for the last two years by partnering with climate tech founders at Seed and Series A.

Pretiosum Ventures Does First Close on $20M Fund (link). London-based Pretiosum Ventures has reached the close of its second fund at $20M. Founded by Yana Abramova, the solo GP fund invests in infrastructure startups including enterprise, SaaS, Fintech, and web3. As one of Europe’s few female GPs Abramova backs startups at the preseed, seed, and sometimes the Series A stage.

Knife Capital Closes Third Fund at $50M for Series B Startups (link). Knife Capital aims to address the critical funding gap in growth stages where local investors have fallen short in the past. Africa has become an incubator for international investors who write growth-stage checks but couldn’t provide necessary local support because of the gap. Knife Capital with its third fund aims to fill this void by focusing on South African entrepreneurs in the Series B stage.

Play Ventures Raises $78M Fund 3 (link). Singapore-based Play Ventures has invested in more than 100 gaming studios, content, tooling and game platform service companies. In the past, Play Venture has invested in founders and visionaries, focusing on pragmatic approaches and transparency with investors, team members and founders.

John China Joins JPMorgan to Co-lead Innovation Economy Business (link). JP Morgan has added former SVB Capital President John China to its Innovation Economy (IE) business for Commercial banking alongside Melissa Smith. JPM’s IE business supports high-growth companies, startups, founders, and VC firms in tech, disruptive commerce, life sciences, climate, and healthcare IT. China was with Silicon Valley Bank for 27 years, and before serving as President of SVB Capital, John China led SVB’s North American technology banking teams and its corporate venture group.

MaC Venture Capital hires Jennifer Randle as COO (link). Jennifer Randle has joined MaC from The Chernin Group, where she started 12 years ago and eventually became VP of Finance and Operations. She helped Chernin grow to a global investment firm with more than $1B in AUM. Randle’s hire is a sign of a maturing firm with more personnel and funds to manage for MaC Venture Capital.
Ex-Vanguard CEO, McNabb Joins Venrock (link). William McNabb, previously CEO of Vanguard Group, has joined VC firm Venrock as an exclusive advisor to guide future investments in wealth management technology. While at Vanguard, McNabb pushed the company to embrace new technology as the firm was an early entrant into the automated investing market. Venrock’s appointment of McNabb is a sign of its commitment to investing in the wealth management technology space.

Thought of the Week

Net DPI

Good is 0.5x net, great is 1x pic.twitter.com/eHesgOQsPp

— David ☕ (@cupazhou) August 17, 2023

This is some hard-to-gather data and one of the only benchmarks I've seen to answer the question, "What is a good TVPI or DPI number n years into a fund?" GPs rejoice.