Replay — GP and LP Alignment, Challenges for Emerging Fund Managers, and How the Explosion in Seed Fund Volume Plays Out (Jaclyn Hester)

On this special replay, Jaclyn Hester of Foundry Group joins Nick on a special Crisis Coverage installment to discuss GP and LP Alignment, Challenges for Emerging Fund Managers, and How the Explosion in Seed Fund Volume Plays Out. Guest Update: Jaclyn is now Partner at Foundry Group. Congratulations Jaclyn!  In this episode, we cover:

• Tell us about your background and path to VC
• For those who don’t know talk about the approach at Foundry with both the LP and GP model
• Foundry traditionally had no apprenticeship model and no junior investors… were you the first?
• Pandemic… Are you making investments currently and what are you hearing from other LPs?
• What’s your advice for GPs re. building relationships and momentum w/ LPs during these uncertain times?
• What’s the biggest mistake emerging managers make when fundraising?
• What do new fund managers underestimate when starting a venture firm?
• Does it matter how specific a thesis is? Do you need to see a unique, focused and compelling edge or are you just as receptive to a generalist w/ a strong network and track record?
• What question tends to trip up GPs?
• What are some of the most important things GPs should ask LPs when raising?
• What do you think are the most important things GPs and LPs need to be aligned on for a successful relationship?
• How does the explosion in volume of seed funds affect you approach to selection?
• How do you think this plays out — most funds fail? Returns more evenly distributed? Power law no longer applies (or is less pronounced)?
• Fast forward 5 years and let’s assume there’s been a fundamental shift in early stage Venture. What do you think is the most likely, largest change that’s occurred?
• What advice do you have for young people that aspire to be a VC someday?
• Not going to ask for favorite GPs but, I will ask, if you could break quarantine to grab a cocktail w/ one GP — who do you choose? ; )
• 3 Data Points…
  • You’re approached by an emerging VC firm raising fund II. The fund manager did not work for a large, brand-name venture firm before and she has never had an institutional investor. Net TVPI is 1.4, and Net IRR is 35% and it’s a 2018 vintage.
  • The catch is you can only ask 3 questions (for 3 additional data points) to make your decision.
  • What 3 questions do you ask?