The Up Round #8
The Memo
Welcome to the eighth 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.
Hello from the Kauffman Fellows Africa VC Summit in Nairobi! I'm spending the week learning about the ecosystem, catching up with old friends, making new ones, and also having some fun.
We are planning some changes in the coming month - including a new name and brand. Stay tuned! You will notice a new section, "LP Radar" that will include updates from the LP side of things (new funds, talent, etc) - giving the people what they want!
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🎙 Venture Unlocked: Mark Suster on Raising from LPs in a Downturn
I’d suggest you pay particular attention to the segments on building LP pipelines, talking to family offices vs institutional investors, and how LPs are thinking about VC as an asset class. The dialogue around reserves at an emerging fund is also worthy - this advice spans the gamut so always interesting to hear varying perspectives. (link)
Other Reads, Listens, Watches
Why Michael Kim of Cendana Doesn’t Like Special Deals (link via Jon at Dynamo). Fresh off raising $470M across several funds amid one of the most challenging fundraising environments in the last couple of decades, Michael shares his thoughts on the current market and not asking for sweetheart deals from GPs. In my day job at Dynamo Ventures, we have the good fortune of counting Michael and the Cendana team as LPs - happy to see them continue their leadership as the preeminent seed fund LP.
Searching for Fund Unicorns: The Unicorn Manager (link) and Looking at DPI (link). “Of the 656 funds analyzed, just twelve currently surpass a 7x Net TVPI. There are 13 funds that have between a 3x and 10x DPI. Notably, all the funds that have substantial DPI are nano funds - sub $10M. So, if an LP is looking for a unicorn, think small.”
Understanding Hustle Fund’s “Angel Squad” (link). I’ve always been curious about the various models in building “top of funnel” leveraging the network of talented individuals around a fund - scouts, angels, experts etc. This is a great look at how Hustle Fund thinks about their program and how it contributes to pre-seed and seed deal flow for the firm.
Investors Raise Questions on Sequoia During a Turbulent Period (link). “‘Sequoia will do everything to stay on top,’ said Eric Doppstadt, chief investment officer at the Ford Foundation, Sequoia’s longest-standing LP. ‘They are never a firm you could accuse of being complacent.’”
Fund Debuts, Talent & More
Founders Fund Announces New Climate and AI Fund (link). With backing from angels and family offices, the fund has done a first close of €75M against a €150M target. Up to 60% of capital will be invested in climate and AI startups at pre-seed to Series A with check sizes of €250k-3M with the balance invested at Series B and later for €250k-3M tickets.
Apex Launches €50M Fund Focused on Sports, Media, and Entertainment (link). The Elite Performance Fund is backed by Formula One McLaren driver Lando Norris, Scuderia Ferrari driver Carlos Sainz, as well as football stars Raphaël Varane and Christian Eriksen and surfer Kanoa Igarashi. The novel model will rely on the athlete and entertainment LPs to provide insights and participate in the evaluation of potential investments.
Greencode Announces €40M First Close (link). The Helsinki-based firm will invest in digital-first startups accelerating the green transition with an initial investment in the carbon removal marketplace, Supercritical’s Series A. The fund is targeting an ultimate size of €60-100M and counts Nordea Life Assurance Finland, Pohjola Insurance, and OP Life Assurance Company, among others as LPs.
Geek Ventures Closed $23M Debut Fund for Immigrant Founders (link). The fund will focus on pre-seed and seed stage founders, globally. The firm is targeting 60 total investments for Fund I, with investments ranging from $50k to $1M.
Northside Ventures Announces $15M Target Inaugural Fund (link). The Fund I is focused on backing Canadian founders in both the US and Canada at the pre-seed and seed stages with investments ranging from $100k to $500k. The fund has closed $6.25M in commitments and has made 7 investments so far.
500 Global Closes $143M fund for Southeast Asia Startups (link). The core $100M fund is focused on pre-seed companies including its accelerator program while the balance is for the growth strategy. LPs include a sovereign wealth fund, public and private pension funds, a university endowment, and breakout 500 Global portfolio companies.
Connect Ventures Announces $80M for Next Fund (link). Continuing it’s focus on product-centric teams, Fund 4 saw continued support from British Patient Capital, De Agostini, Big Society Capital, Top Tier and Molten Ventures. They are joined by new investors including Aldea, Jason Green, and Sella Venture Partners FoF, among others.
Peter Specht Promoted to General Partner at Creandum (link). Specht was the first hire for the firm in the DACH region after spending time at Bain, Rocket Internet, and Google. He also led the expansion into Spain and the US for the firm before returning across the pond to London. Specht now joins as the fifth and equal member of the Creandum partnership.
Emily Zhen Joins Zeal to Lead Healthcare Investing (link). Zhen was previously at NEA with a similar focus. Zeal aims to narrow healthcare disparities by investing in tech-enabled, early-stage healthcare businesses that are delivering care to traditionally overlooked populations.
LP Radar
Cendana Closes on $470M for Seed-Stage Managers (link). Cendana is the gold standard in seed FoF - I encourage looking at X for the glowing remarks from other GPs who have taken investment from Michael, Kelli, Graham, and team. This fresh capital covers $340M for US-based funds, $67M for international funds, $30M for directs, and $30M on behalf of UTexas all raised during one of the most challenging fundraising markets in recent past.
Thought of the Week
At a startup, stock options can be lucrative depending on the success of the company.
With valuations down, Founders are asking to reprice historical options.
Here’s what it means, why it’s important and when it’s appropriate. pic.twitter.com/LfxcZZJPTQ
— fintechjunkie (@fintechjunkie) September 7, 2023
A thread that can make you look like a rockstar if your founders are staring down a lower valuation and thinking about what to do with outstanding employee options.