Cendana Partner Kelli Fontaine on Why Cendana Invested in Behind Genius Ventures, Capital Call Line of Credits, Supporting Solo GPs, and What Makes A Memorable Annual Meeting | Seed To Harvest Ep48
Jan 31, 2023
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Kelli Fontaine, a Partner at Cendana Capital and former Director at Trinity Capital Investment, dives into the intricate world of venture capital. She discusses why Cendana chose to partner with Behind Genius Ventures and the rise of smaller funds focused on investments under $15 million. Kelli also shares insights on the importance of storytelling and networking in securing startup funding. Plus, she navigates the challenges solo GPs face and the evolving landscape of seed-stage investing, making for a captivating conversation.
The active involvement of lead investors not only enhances fund operations but also strengthens the collaborative relationships with emerging fund managers.
Small funds are gaining traction for their agile investment strategies and potential for outperforming larger funds, particularly through initiatives like the nano fund program.
Deep dives
The Role of Lead Investors in Venture Funds
Lead investors play a crucial role in shaping the trajectory of venture funds by adding value through operational support and investment decisions. They actively engage with fund managers, offering assistance in portfolio construction and overall strategy, similar to how venture firms lead discussions in board meetings. This active involvement not only enhances the fund's operations but also fosters a collaborative relationship where the lead investor becomes a trusted partner for emerging managers. The significance of this engagement is underscored by the fact that around 80% of the funds they back are in their initial stages, reflecting their commitment to entrepreneurship and innovation.
The Advantages of Small Funds and the Nano Fund Program
Small funds are increasingly seen as having a higher probability of outperforming larger funds due to lower capital requirements and the ability to adapt more quickly. The nano fund program, initiated to invest in funds under 15 million, capitalizes on this trend and focuses on early-stage investments. This program not only aims to leverage the potential of small funds but also seeks to establish deeper connections with fund managers, understanding their networks and sourcing capabilities. Noteworthy examples from the past include significant returns from small funds, illustrating the potential for exceptional performance in this space.
Evolving Practices of Fund Managers in a Changing Market
Fund managers are facing increasing challenges in today's market, necessitating a shift in strategies and operational practices. For solo General Partners (GPs), mitigating team risks is a critical focus, as scaling can be challenging without the right organizational setups. Successful practices include establishing robust pipelines for evaluating companies and conducting thorough portfolio tracking, all of which aid in managing growing funds effectively. As the landscape evolves, the emphasis on building resilient networks and maintaining strong relationships with Limited Partners (LPs) remains vital for fund managers looking to thrive in a competitive environment.
Today, I’m joined by Kelli Fontaine, Partner at Cendana Capital who previously served as Director for Trinity Capital Investment. Cendana Capital invests globally in very early stage funds, and now manages over $2.2B. They are our anchor investor for Fund 2, and I could not be more excited to have Kelli on the show today.
Seed to Harvest is a podcast focused on stories & tactics from a diverse array of investors, founders, and creators, hosted by Paige Finn Doherty, a founding partner at Behind Genius Ventures and author of Seed to Harvest, an illustrated children's book for adults.
00:00 Welcome to Seed To Harvest: Kelli Fontaine 04:42 Why Cendana chose to partner with BGV 10:33 How Kelli's role has evolved as Cendana has grown 15:44 What stands out to Kelli in initial meetings with managers? 21:58 Seed stage venture firms evolving in the next 10 years