E26: Winter Mead of Coolwater on Building the YC for GPs
Dec 8, 2023
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Winter Mead, Founder and CEO of Coolwater Capital, discusses the importance of emerging managers and building the YC for GPs with David Weisburd. They explore the growth of venture capital, the distinction between good investors and operators, and the qualities needed for venture capitalists and emerging managers. They also delve into the components of the Coolwater program and the significance of building trusted relationships in the industry.
The importance of supporting emerging managers in the early stages of their careers and helping them overcome fundamental mistakes.
The need for emerging managers to develop a strategic understanding of portfolio construction and make well-informed decisions.
The significant role LPs can play in the success of emerging managers by providing advisory support, networking opportunities, and industry-specific expertise.
Deep dives
Supporting emerging managers
Cool Water Capital was created to provide support and guidance to emerging managers who often face challenges in the early stages of their careers. The company aims to help them overcome fundamental mistakes such as lack of understanding in areas like fund management and market context. They offer programs and resources to help emerging managers improve their skills and navigate the complexities of being a successful fund manager.
The genesis of Cool Water Capital
Winter, the founder of Cool Water Capital, was inspired to create the company by the idea of helping emerging managers who often face challenges in the industry. His experiences and mentors at previous firms like Hall Capital and Sapphire Ventures motivated him to support emerging managers who were considered to be in the 'have-nots' category. Winter recognized the changing market dynamics and decided to establish Cool Water Capital as a platform to provide the best coaching and support for emerging managers.
The importance of portfolio construction
Venture capital requires a unique approach to portfolio construction, with an emphasis on factors like power law returns and network access. Emerging managers need to develop a strategic understanding of portfolio construction and make well-informed decisions when it comes to follow-on investments. They must weigh the risk-adjusted bet and determine if it is more beneficial to invest in new opportunities or double down on existing winners.
The value of LPs in emerging manager success
LPs can play a significant role in the success of emerging managers. They can provide advisory support based on their experience, offer networking opportunities, and serve as mentors. LPs can also contribute by bringing industry-specific expertise, strategic partnerships, and potential investment opportunities. Building strong relationships with LPs can increase the likelihood of success for emerging managers and help them navigate the challenges of the industry.
The keys to effective fundraising for emerging managers
Emerging managers often make mistakes in the fundraising process, such as not having all the necessary documents and not fully understanding the market context. It is crucial for emerging managers to have their ducks in a row and adequately prepare their data room, including essential documents like the pitch deck, track record, and compliance information. Developing a strong fundraising strategy that differentiates the manager and demonstrates investment discretion is also important. Engaging with LPs strategically and seeking their input can provide valuable insights and enhance the fundraising process.
Winter Mead, Founder and CEO of Coolwater Capital sits down with David Weisburd to discuss the importance of emerging managers and how Coolwater Capital is building the YC for GPs. We’re proudly sponsored by Bidav Insurance Group, visit lux-str.com if you’re ready to level up your insurance plans.
(0:00) Episode Preview
(1:01) Genesis of Coolwater Capital
(3:11) Learnings from Hall Capital
(4:24) Why venture is fundamentally different than other asset classes
(5:10) The proliferation of venture capital
(8:45) What is Coolwater Capital
(9:53) How Coolwater scaled their emerging manager program
(13:20) Avoiding adverse selection
(14:15) Episode Sponsor: Bidav Insurance Group
(14:57) Operator vs Founder mentality
(16:15) GP Mentality
(21:30) Coolwater Academy
(24:53) How Coolwater helps emerging managers
(25:47) Common mistakes emerging managers make
(28:49) Minimum viable dataroom emerging managers need
(33:38) Operational Due Diligence
(35:43) Is there an ideal follow-on policy?
(42:39) Coolwater’s mission
(44:05) How to find committed GPs
(44:33) LP value add
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