OpenLP

?? How do two legendary venture investors, one at seed and one at growth, pick a winner? In the latest episode of Origins, co-hosts Elizabeth "Beezer" Clarkson (LP at Sapphire Partners) and Nicholas Chirls (GP at Asylum Ventures) are joined by two of the best in the business ?????? Mike Maples, Jr, founding partner and seed investor at Floodgate, and Jai Das, President and Partner at Sapphire Ventures, share what it takes to identify pattern-breaking founders and companies of consequence at their respective stages, plus: - How to spot a founder can shape the future - Recognizing inflection points in a computing and cognition sea change - Are there more opportunities in the market for VCs today? - The throughline that doesn’t change from seed to growth: team - The first mover advantage at seed - Do pivots happen at growth? - You don’t always have to create a new category to win enterprise software? - How are seed and growth investors thinking about exits in this market? Tune in to the full episode wherever you get your podcasts, linked in the comments! ?? #OpenLP #Origins #VC #SeedInvesting #GrowthStage

??The unspoken secret to making more money for founders, GPs and LPs… QSBS is a powerful but often overlooked tax incentive that can significantly boost after-tax returns. In a brand new blog, Laura Thompson, Partner at Sapphire Partners, breaks down QSBS—the qualifying and disqualifying factors, how emerging managers can leverage this provision, and just how big the impact can really be. ??Take “Taylor” for example, a founder who raises $5M at a $20M valuation for her AI-based tech that perfectly applies red lipstick and ensures it lasts at least four hours... or the duration of an NFL overtime game. ??She initially funds the company (essentially no cost basis, or $0.0001/share) and then raises $5M at a $20M valuation to finish the technology, manufacture and distribute the product. ??An angel investor – call him Travis – commits $1M, and hypothetical venture firm KC Capital puts in $4M. After 4 years and 10 months, Taylor receives an acquisition offer of $100M. By negotiating and waiting to close the deal after the 5-year QSBS threshold, Taylor and her investors save millions in federal capital gains taxes. ????Taylor’s after-tax proceeds increase by $2M, while Travis, the angel investor, sees an additional $800K —a 22% boost. KC Capital also benefits, adding potentially $3.2M in additional after-tax proceeds for individual GPs and LPs. As we mention in other articles (see link in comments), we believe fund management alone cannot make a great fund (you also need spectacular investments??), but good fund management can make returns even better for GPs and LPs. Read the full QSBS blog found at the link in comments - including the four tactical steps emerging managers should be taking now to leverage QSBS. *We noticed a mistake in the visual below. The correct version of the graphic is now available on our blog. #VentureCapital #QSBS #EmergingManagers

Launching a VC fund isn’t as simple as it seems. Carmen Alfonso Rico shares the unexpected challenges of setting up Cocoa ??, her first-time fund, from navigating fund structures to managing the complex operational tasks involved. If you’re an emerging manager, this is a must-read for insights into avoiding costly bottlenecks and building a sustainable venture. As Carmen puts it, "when you start a fund, you go from being a full-time investor to a part-time lawyer, accountant, and PA." Ready for the challenge? Check out the full article in Sifted (linked in the comments) to learn from her experience and hopefully save time, money, and avoid common headaches. #VentureCapital #GPs #EmergingManagers

The secondary market saw $112B in total deal volume in 2023 alone, and in today’s venture market where liquidity is hard to come by, secondaries are a vital tool for startups and investors. They provide much-needed cash flow without signaling distress. Nate Leung, Partner at Sapphire Sapphire Partners, shares insights in a recent Secondaries Investor byline on how secondaries can boost employee morale, attract new hires, and restore momentum for startups facing delayed IPOs or layoffs. He highlights four key questions for startup founders and employees, LPs and GPs to ask before considering secondaries: 1?? What are you looking to solve for liquidity-wise? 2??What’s driving your liquidity needs? 3??Has your team or investment strategy changed?? 4??How have your risk/return expectations changed? Read the full article in the comments. #VentureCapital #Startups

Since launching OpenLP in 2016, Elizabeth "Beezer" Clarkson, Partner at Sapphire Partners, has been pivotal in providing transparency and access to the LP perspective. Congratulations to Beezer and to all the inspiring women featured in this year’s Woman of Influence in private markets by the Venture Capital Journal! ?? #WomenInVC

?? Emerging Managers — Pear VC wants to empower up-and-coming VCs with its new emerging managers in residence program. Pear will bring three pre-seed and seed venture funds into their offices for collaboration, invest $250K, facilitate LP intros, and provide early access to companies in Pear’s accelerator. More information at the link in comments. #VC #EmergingManagershttps

“You’re not the same fund manager you were when you started.” ?? Charles Hudson’s latest blog drives home the point that time, experience, and changing circumstances reshape who you are as a VC fund manager—and that’s a good thing. When Charles first sought advice for starting Precursor Ventures, he was surprised to hear an experienced VC admit they couldn't remember what it was like to be at the beginning. Over a decade later, he understands why: growth and change are inevitable, and the world looks very different once you've been in the seat for a while. Here are the key takeaways for fund managers: ?? Strategy Evolves: Precursor started with a focus on pre-seed investing when few understood the category. Today, that differentiation isn’t what it used to be. What worked when you launched may not be what sets you apart now. ?? Personal Circumstances Matter: Family, life goals, and personal values can shift dramatically over time. What motivates you or dictates your professional boundaries now may be entirely different from when you started your fund. ?? Market Dynamics Shift: Early-stage investing has grown up. Seed and Series A rounds today involve much larger funds and different players than they did ten years ago. Staying relevant means adjusting your strategy to match the market reality. Read the blog at the link in comments. #OpenLP #VentureCapital #GPs

Is it time to rethink VC classifications beyond just emerging vs. established? Take a large VC firm, for example: a $500M Fund IV following a $250M Fund III. Funds I and II delivered 3.5X and 2.0X DPI respectively, while Fund III is still in early stages. These swift moves signal a strategic shift in investment focus. So, despite solid performance over the past five years, should we consider this manager truly established? Preface Ventures' Farooq Abbasi introduces the concept of 'developing managers'—firms that are evolving and delivering consistent returns but still have significant growth ahead. This is a must-read for LPs refining their approach to fund selection and support. Check out the full article below to explore why it might be time to think beyond traditional labels in #VC.

The below is a good analysis. Fund size small = good and large fund size = bad is too simplistic and lacks necessary nuance. The other factor that people often miss is risk. Big funds and small funds are different financial products. Fund size is a good proxy for business model and likely stage exposure on a look through basis. A large vc fund is likely going to have 60-70pct of capital in B and later (cost dollar averaging up per follow-on, but more visibility into compny prospects. I realize 2021 is a violation to this general rule). Small seed funds that succeed will generally be top performers each year, but requires high level picking and discovery. Larger successful funds are more access driven. Both can be important in a well balanced portfolio.

?? Calling all emerging managers—Yale Investments is committing $50M to 5 emerging managers through its Prospect Fellowship, an 8-week intensive program supporting investment management entrepreneurs. Fellows will refine their investment strategies, receive funding to build their businesses, and benefit from a community of peers and mentors. They will also have access to Yale Investments' resources and network. Applications are due by Oct 14! Link to learn more and apply in comments. #openlp #emergingmanagers