Kindred Capital's unique model creates camaraderie among invested entrepreneurs for mutual success.
Challenges in fundraising led Kindred to build trust with LPs through resilience and honesty.
Balancing innovation and practicality in fund structuring is vital for growth and adaptation.
Deep dives
Unique Investing Model at Kindred Capital
Kindred Capital, led by Leyla Zenil, deploys a distinctive approach where each entrepreneur they invest in becomes a co-owner of the fund. This innovative model aligns the fund's interests with the founders', fostering a sense of camaraderie and support among the invested entrepreneurs. By sharing the fund's success with every founder, Kindred Capital creates an 'army of kindred spirits' focused on mutual success and collaboration.
Challenges in Fundraising and LP Engagement
During the fundraising process of their first fund, Kindred Capital faced numerous challenges and fruitful conversations with potential Limited Partners (LPs). Initially, they engaged in hundreds of discussions and overcame inherent biases and expectations in the venture capital ecosystem, showcasing resilience and tenacity to secure LP commitments. Additionally, building lasting relationships with LPs through transparency and persistence was crucial in gaining trust and navigating the fundraising landscape.
Structural Innovations and Lessons Learned
In their fund structuring, Kindred Capital encountered the necessity of balancing innovation with practicality, notably in implementing a dual fund structure to manage reserves effectively. While embracing a novel approach, such as the co-owner model, the team also learned from practical challenges, like administrative complexities of unique fund structures. Additionally, seeking feedback from experienced funds and adapting lessons learned, like accountability for reserves, highlighted the importance of continuous learning and strategic adjustments for growth and success.
Building Trust with LPs through Consistency and Transparency
The process of fundraising for subsequent funds involved maintaining trust with Limited Partners (LPs) by delivering on the promises made in earlier funds. The speaker highlighted the importance of demonstrating consistency in fund strategies and investment approaches across different fund generations. By adhering to stated objectives, such as fund size and investment pace, the team built credibility and alignment with LPs, which ultimately facilitated easier fundraising efforts for subsequent funds. The speaker emphasized the significance of providing concrete results, such as meaningful distributions, to reassure LPs and showcase a track record of success.
Long-Term Commitment and Building a Strategic Partnership
Embarking on the journey of starting a fund was likened to a long-term entrepreneurial commitment, with the speaker emphasizing the extensive time horizon and dedication required for success. The discussion underscored the analogies between founding a fund and raising a child, highlighting the profound responsibility and enduring dedication needed for both endeavors. The speaker advised against starting a fund purely for the sake of entrepreneurship but encouraged identifying unique value propositions and filling existing gaps in the market. Establishing a strong partnership based on shared values and a clear vision was depicted as crucial for enduring success in the competitive fund management landscape.
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Description
To kick off Season 8, a series on ‘How to raise a venture fund’, Francesca and Tunde are talking to Leila Zegna, one the founding partners of Kindred, a stalwart of the European venture ecosystem. Hailing from the US, Leila boasts a background from Yale, Harvard and Bain before becoming an operator ultimately working as the COO of Genapsys before raising Kindred. Alongside operating she was also a prolific angel investor investing in companies such as Matterport, ID.me, Bloom & Wild, and Thread. Leila has served as a board member of several companies, including LabGenius, Gaia, Eleven Therapeutics, Ori Biotech, and Pave.
Kindred Capital is Seed fund known for its unique approach to investing, where every entrepreneur they invest in becomes a co-owner of the fund, called 'equitable venture.’ Kindred was founded in 2015. They have raised and deployed two $100m funds since then and when we spoke to Leila were extremely close to closing their largest ever third fund at around $130m.
Leila covers how she and her partners came up with the idea for Kindred, raising multiple fund while pregnant, finding the right LPs and building trust with them inside and outside of the fundraising cycle and much more.
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