The Up Round #9

The Memo

Welcome to the ninth 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.

I'm working on a rebrand and migration to a new newsletter and website host. Bear with me as content slows for a bit (apart from The Up Round 😁). That said, I hope you like this new approach to organizaiton - feedback welcome!

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“[...] Seed (& pre-seed) deals with a below $20M post-money have (on average) 280% the probability of producing a 50x+ hit as compared to their higher valued counterparts. Of course, hit rates are not everything. Indeed, lower valued companies are riskier. As to be expected, if one looks at the death rate (companies that have failed to exit or raise additional capital for 3+ years) and exit rates, investments with above $20M post-money consistently die less, and their tendency to exit is higher” (link)

Other Reads, Listens, Watches

Recap of The Primary NYC Summit (link). “[Fred] Wilson argued that venture investors who held on to the public stocks of portfolio companies were being irresponsible with their limited partners’ money. ‘You look at some of these big funds, and they’re holding positions that they should have distributed [to limited partners] five years ago that went all the way up and all the way down, and they’re still holding on to them. They should be fired, their limited partners should fire them,’ he declared passionately (to much laughter and applause from the audience, I should add). He also criticized VCs who raised large funds during the bull market because limited partners were willing to give them billions. ‘Don’t do what your limited partners tell you to do, that’s a recipe to underperform,’ he argued, adding ‘your limited partners are not your friends.’”

Do Specialists Outperform Generalists? (link). Why don't I show vs tell on this. Clearly I have some bias and might be gloating as a specialist 😆.

GGV Following the Trend By Separating US and Chinese Investment Arms (link). Following Sequoia's decision over the summer, GGV will split the Singapore-based operations from the SF/NYC operations by early next year. Underpinning this move are strained geopolitical dynamics between the US and Europe which are relevant as regulators scrutinize investments in companies in mainland China. The new China and Asia-centric firm will be led by Jenny Lee and Jixun Foo while the US will be led by Glenn Solomon, Hans Tung, Jeff Richards and Oren Yunger.

Armed With First Republic Alums, Citizens Bank Unveils New Startup-Focused Private Bank (link). It feels like the dust is starting to settle from the regional banking crisis that was triggered by the SVB meltdown this spring. First Republic was also a casualty and ended up finding a home at JPM although most startup and tech bankers jettisoned for Citizens Bank.

LPs Urge VCs to Rightsize Fund Targets As Market Outlook Remains Sober (link). A few gems in here: 1) raise with a mindfulness of what the market will bear - bigger isn’t always better; 2) your fund size is your strategy and there is a renewed focus on this; 3) know where you fit into an LP’s portfolio - it won’t be a fit for everybody.

Fund Debuts

Nebular Raising $20M to Back Irish Entrepreneurs (link). The fund is led by former Frontline Ventures Partner, Finn Murphy who has done a first close on $15M already. The fund will focus on seed stage companies and write ~$1M per company, on average.

GFT Ventures Announces $140M Fund I to Invest in AI and data science (link). GFT is led by Jeff Herbst formerly of NVIDIA and Jay Eum formerly of Samsung Ventures and TransLink Capital. The fund will invest in Seed and Series A companies in both the US and Israel.

Touring Capital Launches Led by ex-M12 Team (link). The $300M-target fund will focus on Series B and C investments in AI startups. It’s interesting to note that the fund will partner with Oakley Capital for infrastructure, fundraising support, and early capital.

Other Funds

Ocean Ventures Closes $31M Fund II (link). Led by former Four Square President, Steven Rosenblatt, the firm now includes former leaders from Facebook, Twitter, and DFJ Growth. Focused on teams vs "hero founders" the fund is opinionated on staying disciplined around fund size so that it can lead or co-lead seed rounds.

EIF Invests €40M into Climate Specialist, Blume Equity (link). “The €40mn comes from the InvestEU program as part of the EIF’s mission to support high-growth and innovative SMEs across Europe, along with a regional mandate from the Dutch Future Fund. EIF joins other Blume Equity investors, including Swedish pension fund AP4 and Visa Foundation.”

Haystack Announces Fund VII at $75M (link). The seventh fund continues Haystack's focus as a pre-seed/seed fund with $700k entry checks on a median entry post-money valuation of $15M. The announcement also included two promotions to the ranks (see below)

Cortado Ventures Closes $80M Fund II (link). The firm focuses on early-stage tech companies across energy, logistics, life sciences, and future of work sectors.

Japanese VC, NordicNinja Closes €200M Fund II (link). The fund will expand it’s focus to the UK and Benelux beyond the original thesis of investing in Nordic and Baltic startups. NordicNinja focuses on Series A investments, with investments of €2.5-10M and looks to bridge the European scene to opportunities in Japan.

Astanor Raises €360M Fund II Focused on Agriculture and Climate (link). The new fund will continue Astanor’s focus on driving efficiency and sustainable solutions in the agriculture industry.

Blockchain Capital Secures $580M for Two New Funds (link). Crypto winter-be-damned because capital is flowing plentifully into the space. The funds will be allocated ⅔ and ⅓, respectively into the firm’s sixth early stage fund and it’s first opportunity fund.

Follow the Talent

Seth Rosenberg is Promoted to Partner (link). Rosenberg will lead the firm’s NYC office and focus on Greylock’s AI investments - a practice he’s been integral in since he joined the firm from Meta in 2017.

Greycroft Hires Marcie Vu as First SF Partner (link). Vu joins from investment banking boutique, Qatalyst after advising several Greycroft portcos sense 2016. She will lead the firm’s SF office.

Haystack Promotes Aashay Sanghvi to Partner (link) and Divya Dhulipala to Principal (link). The news comes on the heels of a seventh seed fund - see above.

Camille Ricketts Joins Emergence as Operating Partner (link). Ricketts is be an Operating Partner focused on all things marketing, brand, and communications. She was previously Co-Head of Marketing, Brand, and Communications at Notion.

Head of Prosus Abruptly Resigns (link). Bob van Dijk lead both Prosus and Naspers and abruptly left both organizations. van Dijk oversaw the carveout of Nasper’s investment in Tencent into Prosus as well as the recent unwinding of a complex shareholder structure that he also instituted. The CIO of Prosus, Erwin Tu has been named interim CEO of both organizations.

Malin Posern Leaves Passion Capital to Join Project A (link). Posern will be based in London to invest in and support UK and Nordic Startups. The UK office will remain focused on pre-seed through Series A startups like the broader Project A group.

LP Radar

Sapphire Partners to Manage CalSTRS Emerging Manager Strategy (link). Taking over for Invesco, “Sapphire Partners will assume investment management responsibilities of five CalSTRS “New and Next Generation Manager Funds” existing funds, representing approximately $1.4 billion in assets under management.(2) Sapphire Partners will also have capital available to continue making commitments to new and emerging venture capital managers.”

Nicole Musicco Leaving CIO Post at CalPERS (link). Musicco is leaving after less than two years at the firm to spend time w/ family in Canada. Other outlets suggest that the departure had to do with Musicco's push into sports investments that others couldn’t get behind. Deputy CIO Dan Bienvenue will serve as interim CIO.

Allocate Closes $10M for Five Years of Runway (link). Allocate allows advisors to invest and manage private assets on behalf of investors. “Through Allocate, advisors can invest in VC funds across 58 manager strategies that are vetted by Allocate’s team. The company currently works with over 600 RIAs and family offices and has deployed about $500 million through advisors to VC funds.”

From the Social Networks

No “heard from VC LPs” this week thanks to COVID 😷, so I thought I’d throw together a 🧵 on Five LP Communication Principals. Just reflections from a long time working with LPs. Applies to communicating both good and bad news. Enjoy!👇

— Meghan Reynolds (@MeghanKReynolds) September 23, 2023

A great primer on communications within a venture firm. Point #2 is especially important and extends to beyond just LPs but employees and portfolio founders.