Misha Esipov

💡Benchmarks in the investment industry serve as a standard for measuring the performance of securities, mutual funds, or investment managers. They provide a reference point for analyzing allocation, risk, and return of a portfolio, enabling investors to make informed decisions. Thanks Peter Walker for keeping us all informed!! Can’t wait for this!! Follow and get on the waitlist for this one! #benchmarks #fundraising #Capitalraise #founders #womenshealth #femhealth #medtech #wellness

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Want to be a Venture Capital Scout? Scout for Syndicate leads. I’m biased, but I think SPV/Syndicate leads are some of the best connections for VC scouts. As a syndicate lead, I’ve leaned into working with VC scouts the past 3-4 years. It's been a great way to gain unique access to deal flow and many of my most exciting portfolio companies have come from various “scouts”. Given the deal by deal investing strategy and ability to share carry with those who support sourcing & diligence, it’s become increasingly common for syndicate leads to actively partner with scouts and share carry or upside in the SPV. What’s in it for the scout? Deal x deal carry. While there are multiple traditional VC scout models that exist, the syndicate scout model is pretty straightforward. If you source a deal and support diligence, the syndicate lead is going to share some of the carry with the scout, and likely a more meaningful amount than a traditional venture fund. This is of course an SPV, so you are getting carry for the specific deal you sourced and not fund-level carry. A little more background on why the SPV model aligns with VC scout deal sourcing… Syndicate leads are structured (and many times set up) to invest in more companies than a traditional venture fund. In order to consistently bring LPs high quality deals, it makes sense to partner with folks in your network who have strong deal flow. Most times the carry split from syndicates will be more generous than that of a traditional venture fund. Syndicates do not necessarily have a certain number of portfolio companies they can invest in, meaning as long as they are getting access to quality deals that LPs want to participate in, then they will: 1) Be more likely to say yes and run the SPV into that investment and 2) Be more willing to provide a higher carry split, especially if you as a scout show you can repeat this with more future access In summary, if you are going to scout for venture funds, you might as well explore doing so with syndicates and capitalize on deal by deal carry/upside. Disclaimer: If you are scouting deals because you want to get into VC, working with traditional VCs is likely better from a networking standpoint, but if you are scouting to capitalize on carried interest/upside, I think the SPV lead route can be more attractive, and more frequently. -- Interested to see if you are a fit for our new Deal Sheet accredited investor product? Explore Deal Sheet to access 100-200+ of the best SPV startup (pre-seed to pre-IPO) investment opportunities per year. Deals are curated by Zachary Ginsburg & Alex Pattis (deployed > $200M across 750+ SPVs) across 50+ syndicate leads.

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LP Tip #8 of #50: Your LP base should match your fund size. We are back with our regular programming. ➡️ Opinions are always my own and based on my experience.  ➡️ My focus for this post is on sub $200.0M funds. ➡️ The $ amounts I state below are guideposts never absolute rules.  ➡️ Some LPs want to have a certain % of the fund and size their investments in this way; others have set check sizes irrespective of fund size. I continue to be surprised at how much time new GPs waste with LPs that are unlikely to invest. I urge managers to better qualify LP leads and be extremely judicious with how they manage their time. In my experience there are 6 LP types that I consistently come across. See below. ▶️ Non- Institutional LPs:  1️⃣ High net worth individuals (HNWI) - There are different tiers of HNWI but assume that this is someone with at least $1.0M in net worth in liquid assets. In my experience they are the fastest to close and conduct limited diligence. I often see them investing $100K - $500K checks in funds. It is possible for a fund manager to close a $5.0M fund on entirely HNWIs. 2️⃣ Family Office - There are different types of family offices. For simplicity sake let us assume that this is a single-family office with an investment team and a set venture allocation. Keep in mind that family offices are hard to find because they do not want to be found. Typically, you find these via referrals from other GPs or your current LPs. I often see <=$50.0M funds composed of HNWI and family office LPs. I have seen a range of investment checks form family offices. 3️⃣ Corporate - I include banks in this category. Due to the market downturn these entities either halted or slowed pacing. In my experience I have seen corporates invest anywhere from $500K - $10.0M checks. This type of LP is often present in sub < $100M funds. ▶️ Institutional LPs:   4️⃣ Fund of Funds (FoFs) - Unlike the other LP types, FoFs need to raise from LPs. I have seen FoFs invest in fund sizes across the spectrum. Depending on the FoF they can invest in funds as small as $15.0M. 5️⃣ Foundations -  These are often investing to align with their mission. I would spend time understanding how you complement their programmatic work. I have seen foundations invest in $45.0M funds and above.  6️⃣ University Endowments - Endowments is where most new GPs waste time. It is important to ask if the university has an emerging manager program upfront. I have seen emerging manager programs invest in small funds ($25.0M - $65.0M). It also helps if the GP was an active alum of the university or had some unique relationship to the university.  If there is no emerging manager program I am often told that there should be a fund target on the low-end of anywhere b/w $150.0M - $200.0M to be considered.

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This is quite interesting advice and also quite a non-consensus view in the B2B software world. Cross-border founders who are considering the US vs International incorporation question should consider this as valuable input.

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I used to think LPs only invested in emerging VC / PE firms for better returns. That’s true…sort of They obviously first and foremost want high returns, but in building our firm and studying the industry I’ve learned that LP motivations are more nuanced than that To understand why an LP really might invest in us, I start with the assumption that they could invest that $ in Blackstone (or a similar large PE firm with top quartile track record) What could we offer that is incremental, and how should we position ourselves in that way? 1. Smaller funds can be higher upside — LPs may be looking for higher risk / higher return opportunities, so we have to emphasize the path to outlier returns. This means discussing not only their expected value but also the distribution of outcomes, and how that might differ from the rest of their portfolio 2. Harder to partner with successful firms later — LPs are often looking to build long-term partnerships with firms that will be around for many fund cycles, and that is about more than just returns. It’s important to emphasize not just the strategy of this fund but also the vision of the firm we’re building 3. Co-invest opportunities — Some LPs don’t care about co-invest, others only invest in funds for co-invest. When speaking with the latter, we emphasize that we have a disciplined and repeatable process to generate and share co-invest opportunities (easy to say, harder to execute) 4. Learning and thought partnership — We have LPs that invested in us because they have conviction in or personal passion for health & wellness and want to learn more about the ecosystem. For these folks we might talk through investment opportunities they see that are in our industry, or invite them to industry events. We also spend a ton of time writing quarterly letters to help them track the industry and learn from our companies It takes years to know where our returns will ultimately shake out, and we’ll have no reason or permission to exist if they aren’t good In the meantime it’s crucial to recognize and deliver on these other needs of our LPs, to provide the experience that they signed up for

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How do investors price pre-seed rounds?  This is perhaps one of the most misunderstood aspects of fundraising.  Oftentimes, founders want some framework to better understand what market value is when raising capital into their business.  Public equities and later stage privates have a well defined matrix of revenue/margin profiles that dictate valuation, surely there must be some framework for arriving at a pre-seed valuation. So how do investors price startups that are pre-revenue, or have maybe one of two early customers? In reality, pricing is more a byproduct of a VC fund’s portfolio construction model than any metric of the underlying business.  VCs model out portfolios to include a certain number of companies with an ownership target in each startup.  There are variations to portfolio construction, and the chosen strategy will have a direct impact on the types of rounds a fund will participate in. For example, an early stage fund might raise a $60M fund to lead investments in 30 companies and target 12.5% ownership.   After management fees, there is ~$48M in investable capital.  Assuming a fund holds back ~30% for reserves(this number varies across funds) that leaves ~$30M to invest in initial checks.   In this case a fund must average $1M checks at $8M valuations to reach their intended ownership target of 12.5%.   When you are in diligence with a fund, they are first and foremost trying to get to a yes on the investment opportunity.  When arriving at a valuation though, the math outlined above is the determining factor, more so than any multiple of revenue on the business, or the stated desires of where a founder wants to raise capital.  At the end of the day, a VC is trying to arrive at a valuation that works within their portfolio strategy. This means they are very unlikely to price a deal at $15M cap given the aforementioned portfolio construction, as they would either not own enough($1M = 6.67% ownership) or have to cut too large a check( $1.875M = 12.5%). The thing that is most likely to move an investor off their target valuation is another investor in the picture that is driving the price higher, but even then there are upward bound limits of how high an investor is willing to price a deal. I always advise our port cos to ask an investor early in conversations what their ideal check size/valuation is to make sure there is alignment with the founder's objectives.    

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Impactful Biz, Ops & Investment Roles at Early Startups & VCs: • Chief of Staff to Ex. Head of Product at Google • Founding GTM at the most YC product used by other YC companies in the past four years • Chief of Staff to a Partner at a Top-Tier VC Fund • Head of Platform of a NY State Backed Accelerator • Investment Associate at a Seed Stage Fund Investing in Category-Defining Companies • Partner at a Defense-Focused VC Fund • Chief Revenue Officer of a New Space Company in El Segundo • Venture Capital Analyst at a fund investing in overlooked geographies • Investment Associate at a Spirit-Focused Fund • Strategy & Ops Lead at a Company Focused on Helping Improve Autism • Senior Product Manager at a Company Focused on Building Shopify for Content Creators • Program Manager for a Space Security Company • Open-ended Investment Position at a Top-Tier Accelerator • Biz & Ops Lead for One of the Most Loved Digital Consumer Products 💸 All companies are well-funded and backed by top-tier investors. ⬇ You can find links to the roles above, plus many more, in the comments.

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VC Market Update: Riding Out the Post-Boom Bumps. 2021's high-flying valuations and growth have given way to a more complex reality. With longer private timelines, tough exit markets, and capital tightness, startups face unique challenges—but also fresh opportunities. For those navigating today’s VC landscape, strategic planning is key. Whether it's balancing growth with capital efficiency or exploring secondaries smartly, there’s a path forward. And with boosts from AI and future rate cuts, brighter days could be ahead!

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Valuations are starting to (only slightly) be in check. Investors looking for revenue, quality of revenue, margins, and repeatable GTM. This has the best founders focused on what matters, and reaching out to their Boards and advisors for real advice and guidance. Good stuff.

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The state of venture capital is wild right now. We are witnessing a surge of innovation across the spectrum: - Funds merging - VC doing PE - PE doing VC - Secondary funds - Buyout funds - Spin-out funds - Debt funds - Continuation funds - Infrastructure funds - GP turnover - Hard Tech surging - Family Office uptick

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Your sourcing game is the lifeblood of a syndicate Notably Zachary & I have very different sourcing models as do different funds. Funds like Summit are notorious cold calling machines to find great deals. Some funds like Proof built their model as a co-investment / pro-rata fund and work with VC funds directly to source the best opportunities. Another fund we’re close with leverages their deep technical network founders to get introductions into the companies on the bleeding edge of tech. Zachary's sourcing is almost entirely done through partners including other syndicates and VCs; while mine is similar, I do leverage a bunch of deals through direct relationships and VCs in the ecosystem. Point being there is not one size fits all for sourcing. Notably your sourcing may evolve over time. Zach hesitated initially on starting his own venture firm because candidly he didn’t understand how to source. At his prior fund he worked at, his sourcing was built primarily around a lot of cold emailing. When he started Calm that was his primary avenue for deal flow as well - unapologetically emailing any company that looked interesting and filtering/diligencing from there. It worked and he got some extremely strong access through cold and warm introductions. But the model evolved, quite organically, with now his sourcing done primarily through ongoing partners. How did it evolve to this? Well it turns out that there are a lot of network effects built into this ecosystem. The more you’re involved in finding and executing investments, the more people you meet, the large reputation you get, the more people that want to work with you and so on. And that’s more or less how Zach shifted to a network driven firm. In general I’d play to your strengths when it comes to sourcing deal flow. Do you have deep talent networks - if so leverage those. Are you a sales / hustling machine, then perhaps cold/warm introductions are your best bet. Do you have extreme value add - find the best companies that need your skills to win deals. Do you have a media presence and public brand - leverage it to build PR for founders you invest in. Whatever your strength and value adds are - play to them. -- Powered by Sydecar and Forge, Last Money In Media is the most actionable venture capital newsletter. Written by Zachary Ginsburg and Alex Pattis, the global syndicate leaders with 800+ SPVs invested.

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Here's an interesting way for limited partners to exit their investments early! If you're concerned about LP illiquidity, you may want to consider this option.

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Well-written and sourced article describing what's going in seed-stage venture market. At 9point8 Collective we tend to orbit the seed-stage (both ideating and developing companies to reach seed and helping post-seed companies refactor and scale in anticipation of A) and for many companies it's a critical inflection point which determines their long term success or failure. The main takeaways I was able to gather: 1️⃣ Many startups that raised seed rounds in 2021-2022 are struggling to secure Series A funding due to tighter market conditions and increased investor expectations. 2️⃣ Seed investors are becoming more cautious, leading to longer diligence processes and a preference for startups with strong traction or experienced founders. As a result, valuations have stayed relatively high even as deal flow reduces. 3️⃣ Startups are adopting various strategies to navigate this challenging environment, including cutting costs, raising bridge rounds or convertible notes, and M&A/acqui-hires. 4️⃣ Despite the challenges, there are opportunities for both startups and investors in this new landscape, particularly for those who can adapt to the changing market conditions. Investors are accumulating dry powder -- and with rates on the decline -- will be looking to deploy into companies with stronger fundamentals than their 2021-2022 counterparts.

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🔎 A graph every VC manager should be following right now. PE's exit to investment ratio has hit a ten year low Most LPs invest a multiple of their VC allocation in PE. The less liquidity coming from larger buckets, the less divestments that can be made into the asset class 🔮 Similarly if this starts picking up, the allocation doors could start to re-open... #VC #venturecapital

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Perfect explanation of the TronMedia playbook!

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Jamie Rhode, CFA makes an incredibly strong argument for emerging managers in an interview on the 10X Capital podcast. We know fundraising isn’t easy. We know the market is crowded. There are 4,000 emerging managers, with only 3 funds being in more than 3% or more of unicorns at the seed stage. How do LPs decide which managers to invest in? It’s important to consider emerging managers that are bringing new perspectives, who are thinking and investing differently. Some stats on unicorns at the seed stage: 👉70% had underdog founders: women, immigrants, and people of color 👉30% had one founder who is not white 👉82% had one white founder 👉62% had one first or second generation immigrant founder 👉21% of immigrant and female founders have raised from the top 10 VCs This means that there is a whole section of unicorn founders who aren’t raising from the top 10 VCs. LPs don’t necessarily need to invest in big brand names to get good returns. They need to be finding the funds that are investing in founders who don’t have a Plan B, who have the endurance to push through the long feedback loop of early stage venture. Are you a wildly ambitious founder innovating in care, fintech, or commerce? We want to meet you. DM me or comment below. You can check out the full interview linked in the comments. #emergingmanagers #underrepresentedfounders

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Interesting post, Frank Rotman . I'd argue that rather than try to use your markups as traction for raising funds 2, 3 and 4 , emerging managers should consider helping their startups get earlier liquidity via suggesting listing on growth exchanges like the Toronto Stock Exchange, the LSEG (London Stock Exchange Group) or the ASX . DPI > IRR or TVPI when it comes to LPs. A VC that returns >2x in 7 years to LPs is going to have a much easier time raising the next fund than a fund with an IRR or TVPI of whatever. The entire vc industry has drank the kool aid that companies should be doing >$300m in ARR before listing. The LP community needs / wants liquidity before the 12 to 14 years its currently taking to IPO in the US, however. Startups can list on the above exchanges doing $20m in revenue with 30% YoY growth, they don't have to deal with Sarb Ox compliance and follow on raises are orders of magnitude easier for a listed company. Why? There's so many more public market investors than private market investors. The only other option for Emerging managers to stand out is by getting DPI via selling secondaries to a fund like Practical Venture Capital Chris Mayo, CFA Neil Shah Delilah Panio Amit Verma Dave McClure Aman Verjee, CFA Karin Tenenboim

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Data on emerging VCs shows 2022s are hard for them but they still remain on their feet. Funds in the 2022 vintage have deployed about 43% of their committed capital at the 24 month mark, the lowest share of any analyzed vintage. Prior vintages ranged from 47%-60% after 24 months.    30.6% of companies that raised a seed round in Q1 2018 made it to Series A within two years. Only 15.4% of Q1 2022 seed startups did so in the same timeframe.    Less than 10% of 2021 funds have had any DPI after 3 years.

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How much equity do you get when joining an early stage start-up, as one of the first employees? Some great stats by CARTA. Unsurprisingly, being the first employee rewards well, with a big range* Later on pretty standard and bunched together at 0.2% to 1% Data from nearly 5,000 hires made in 2023. *The ranges vary based on the level you consider to be a co-founder, i,e 5% or 10%.

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