How to Increase Dialogue with your LPs | El Pack w/ Kelli Fontaine | Superclusters

Superclusters is where we demystify the secrets, stories and tactics behind the money that moves the venture capital world. This is our new series elpac, where we bring on previous guests on the podcast. Answer your questions on how to build your venture fund. If you're a fund manager and need advice, you can submit your questions to me@cupojoe.com contact C-U-P o f Z-H-O-U.com contact and maybe we'll have you on the podcast next. So today we have a good friend of the show, Kelly Fonda Fontaine at Sandana Capital. She's a former founder, operator, competitive ice skater, and now capital allocator. If you want to hear more about how she's investing into venture as an asset class, I'd highly recommend you to check out season four episode one, which we'll link in the show notes below. So not to dilly dally any longer. Kelly Fonte, I'm curious for you, is there any, like, every time I talk to you, I learn something new about data? I've got to ask Kelly a data question because the last time we had you on I kid you not, and I quote a friend who said this, but you were literally throwing rap lyrics like you're like, we do 40 references per GP. We do. Neutral references are worse than negative references. And obviously around data. And I think at the time the most recent structured data that you were adding to your backend were the schools and the sectors in which GPS were coming from. I'm curious for you, is there any new discoveries in relation to data you made as of late?

I mean, I think the biggest thing that we've applied is lower reserves. Because if you back test most of the funds that reserves, if reserves hurt performance, which we like having your ownership in your best companies, I just think that takes time for pattern matching. And when you're an emerging manager and you haven't seen a company grow to unicorn status, like how do you are you catching the right signals very early on? Because there are some companies that ramp really quickly before Series A and then stall out. And so understanding like false positives, sustainability, market, tam, all of these things I think takes practice. And so obviously I think a lot of the new venture models, I mean look at Thrive, Green Oaks, etc, it's piling in Founders Fund, you know, is the first probably where they just back the truck up into winners. But I think that, you know, it's kind of like you need to raise a seed round, a Series B, a C round as a company and operator to like grow into the capital. I think the same thing is true for funds and where you have to really know what that N of 1 looks like. And so really reserves for a seed fund of protecting at the series A when the series A at $100 million post that's not the same portfolio construction that we were just advised. So I say we the data advised us to really limit reserve in most of the funds we're investing in. Outside of that my big initiative is really just like enriching people data more on you know, we're looking at any ways like there's a lot of hand input information because a lot of what you can ingest is incorrect. Right. So if people are looking at oh how quick was the follow on how quick was the round next round. Unless you're like Carta who actually like or a fund administration firm that actually has these or cap tables pitchbook, all of that is incorrect on you know, what the valuations were, what the round construct was, et cetera. And so I really think like that's just something we can't give up proprietary revenue numbers but a lot of the stuff can be automated as far as like you know, people augmentation, etc. Although you know, we just back to GP who doesn't or in process of investing in a GP who doesn't have a LinkedIn. So no LinkedIn, no Facebook, no socials. So it's like how would you have been able to spot him understand his network, et cetera if you're just focused on data enrichment. And so again I think it's always having the balance of understanding that this business is relationships first but really augmented with data.

I'm curious for you, you don't have to mention the name especially since we're recording. But what was interesting about this GP who didn't have a LinkedIn and socials for you to continue that conversation to eventually commit to that.

Yeah, I mean it's someone with such strong networks that they don't need a LinkedIn. It's the strength of the networks. And you know, he had macro thoughts and had been right about where he had spent time and invested in companies and trends. He saw defense tech being one of those four or five years ago where you know, you got to be first to the trend. If you're investing it now, you're a little too late at seed in my opinion. I mean I think there could be some white space but so again very smart macro wise and just you know, notable networks where you don't need a LinkedIn, their network is that strong.

So that's fair, I imagine. Also in defense, most people who are active decision makers in defense don't have a LinkedIn or are active on socials either, so don't necessarily need one again.

I anymore, to be clear, because that was like what he viewed as like five years ago, what the opportunity was. But it's just again going back to like why you get conviction in somebody. It's really like their understanding of the macro, them seeing around a corner, which is definitely necessary. At seed, you can't be investing with the momentum or you're a little late and competing with every 2,000 firm out there for the first check in now. So yeah, that's okay.

Question for you, how much data is too much data? Is there ever such thing as that? And I can give context to the question if you want.

I don't think there is because I think it's, you can have all the data in the world. And you know, we brought on Erwin Gross's chairman of our advisory board. He's always been on, he's been on the advisory board for a while, but he, he was the founder of Sequoia Heritage. And he's more ingrained with us in a more, you know, formal capacity. And we are talking to him about data. And it really is how you use the data, right? Are you like using it to. To agree with your story, right? Like, are you looking for backup of like this is why we're investing this way or are you looking for it like, how are you utilizing the data and apply to our businesses? And so I think for us that's the important piece. Like the data can say one thing, but there can be context around it where we know. And especially because venture takes so long, it's really hard for data to have meaningful signals very early on. You know, you can extrapolate that like, you know, certain funds were a signal, but you know, that could have been signal 10 years ago. Are they still a signal today and is it a partner at that fund? So you really have to dig into the like why of data. And so you need all of those underlying data points if you want to dig into the why. So that's why I go to like, there's no such thing as too much because if you're doing data analysis right, there will be another thread you want to pull and you need additional data to do that additional analysis. But I think it's really the application of how you're using it.

That's fair. So it sounds like also similarly to what you said earlier, which is are you using data pre decision or using data post decision?

Right. And I think, you know, for us, for our own portfolio construction, looking at how what we're investing in, we use it to check ourselves. You know, we talked about it. But looking at somebody and benchmarking them against Carta, Cambridge, that's one part of the market we want to benchmark them against our own portfolio. But if that fund deployed over a year versus what manager of ours that deployed over four years, they're going to look very different. And so we do vintage year benchmarking to see, you know, how their MOIC stack up against how the revenue of companies stack up.

Right.

So if you are investing, you know, in fintech, what is, you know, a company that's five years old, what's the quartiles of revenue in our portfolio? So we understand where your companies are actually falling versus like okay, let's benchmark deep tech company against you know, traditional SaaS company and revenue metrics, which is like, it's just different trajectories. And so again I think it's always the application, how you're using it and not just saying okay well you've got great revenue, but have those companies been able to raise, follow on or these like PE outcomes. Understand like you have to take nuance versus just benchmarking companies and portfolios.

There's this conversation I had with a friend earlier this week where and keep in mind this is all like hypotheticals, so take it with a grain of salt. I'm going to preface with all of that where we were thinking about how much analysis is too much analysis because there's that quote where it's like if you torture data long enough, it'll eventually lie to you. And we were, and this is just again hypothetical and we were just looking at people like, like gps, like Instagram profiles and like Facebook profiles and all that just because they were publicly available. And like we'll just like look through some of these things and are there telltale signs to their personality? And one of the things in which we notice and of course obviously not like a correlation of one kind of thing, but there was, we were looking at like people who enjoyed posting pictures of themselves versus of the family, versus of other people around them, versus of there are no people in them. And with what we knew for us, like the people who had obviously posted pictures of themselves a lot like the majority of their pictures were of themselves on vacation posing whatever it is, typically had more of an ego. And that was One of those things, those things where it's like, hey, we're walking. It's not that this is like gonna help us decide, but this does help inform us that are they really championing their founders and promoting their founders and pushing their founders forward or are they, for lack of better words, more self absorbed?

No, no, I definitely agree. I mean we talking about what data we collect? I haven't collected it yet, but I wanted to collect like the number of conferences and public appearances GPS make because I think there's something where you have to be a known entity to founders. You have to get the word out. But it distracts from doing work. You know, I think having a selected few places you show up that are high and authentic relationships can be built versus a CNB scene. I'm here so I'm, you know, I think there's just differences of it. So we were wondering if there's correlation to performance and how time is spent and one of that, one of those would be like how many conferences and where people are spending time. So it goes to the Instagram. Like how are you choosing to. What you're showing to the world on social media is probably another one we have thought about. Not like, how do we put it? You know, we thought about do you capture like how many followers they have on social media or Twitter or LinkedIn and try to extrapolate. The issue is there's just so different types of posting. Is it like engagement posting? Is it intellectual? Is it like which type of poster are they? Like, so then it's kind of a subjective score of ours on like what type of presence they have on social media.

Oh my God. I recently I sat down with a bunch of friends and they're far more influential and or literate in this than I am. But they're like, most of them are YouTubers or Instagrammers. Like that's their full time thing. And one thing we talked about is like the death of the newsfeed where, I mean Twitter, I think it's still semi. Okay, there's the for you newsfeed and there's the following newsfeed. But on LinkedIn there is just, there's one newsfeed on, on YouTube it's a lot of like if you don't click, you don't watch kind of thing. Right? So it's, it's a choice based kind of consumption pattern instead of like a natural scroll consumption pattern where most social media is these days. And that said, even if you follow someone on a lot of these social platforms, their Content, even if you like and you want to look for those things don't always surface up because the algorithm deems other things more important. For example, you post about a new job, a new position, you leaving a job like that, those are just deemed on LinkedIn at least more important and more engagement for, for their algorithm.

Yeah, I, you know, I wish there was a LinkedIn 2.0. My biggest thing is in LinkedIn is even using it for yourself. When did I meet this person? How have you worked with this person? You know, what was the context? You get 20 years into your career and I wish I had better memory but some space has to be made for new information. And so I think, you know, I've always thought like, okay, I'm connected to somebody, I know them socially, right? But like who have, who has this person actually worked with? Who would be the best? And that's like affinity and attio. And all these people try to do it off of engagement of emails, but that's within your network. And so it's like wanting to know how even like diligency gps. This would be amazing. But like what is the strength of score? Like how much work have they actually done with other people in the network? Because just being connected to somebody doesn't show like, you know, I wish there was like project tags that like people worked on together. We did this investment together. This is the role they played. Like something to actually give credibility to the product versus just sheer connections.

Um, yeah, and the thing is LinkedIn has a lot of this data. They just don't. I mean maybe there's not a team to do this, but there's, there's no. They don't publicly share this because LinkedIn does know how often we like certain people interact with each other in terms of DMs versus kind of like, and.

That'S why I always wonder like, I mean it's probably not a big thing for Google but like for me like Gmail would be the ultimate like. Career network, right? Because you actually are seeing how much people engage follow up response rates to certain people like, etc. So like they ultimately could, Google could create the ultimate like you know, career feed and a lot of these, you know, there are other ones like Clay and other ones trying to do this based on email. And I do think, you know, at some point hopefully there's some disruption there because.

I could make the world a lot easier. I 100% agree. 100% agree. Well Kelly, you and I can go on and on about this. I'd love to Let our first caller in. Amber, over here to ask our first question as we play around with this new format. Amber, what's up?

Hey, good to see you guys.

Hi. Good to see you, Amber. Good to see you, too.

The whole setup. Yes.

We're launching a podcast soon, so it's like, you know, full setup here.

Are you allowed to share what the name of the podcast or what the podcast is on yet or not yet?

We haven't announced it yet. I've been sharing that I'm working on a podcast, but I can share with you guys. I don't know if I'll share it on this thing. I'll share the name.

We are. We are rolling.

Okay.

But I will say this episode will probably be a couple months.

Oh, perfect. Yeah, I'll share it then.

Yeah.

So do you want me to share it now or later?

I don't know, Kelly, but I would love to hear it. Cool.

Yeah, we're launching a podcast called First Builders. So the whole premise is, you know, if you look at where unicorn companies historically have come from, there are kind of two clusters that stick out and align with our thesis, which is entrepreneurs that have previously worked at entrepreneurial startups or founded entrepreneurial startups. And those people are more likely than normal to found unicorn companies, but they also sometimes are more likely to land executive roles and just kind of keep on the operator track. So we are basically interviewing a lot of those sort of folks, and we're calling them First Builders. And the name of the podcast is First Builders because many times they're building processes, teams. Teams and systems from scratch. So we're learning about the journey, and then many of them have already taken the founder leap, but not all have yet.

So, yeah.

Oh, it's fascinating. Do you have the guests already or not yet? Oh, we have a cameo in your background.

Yeah, we have. Oh, is it my dog?

She's.

Yeah, she's a good one. But, yeah, we've got about nine guests so far already recorded, and then we're just continuing to go. So, yeah, we'll be launching them weekly pretty soon.

All right, you got to let us know, especially when this episode goes out. Happy to link your podcast as well into the show notes so people can tune in.

Awesome.

So why don't we start with this, like, Amber, for those uninitiated here, could you give a little background of yourself and how you came to be and how the council came to be as well?

Yeah, absolutely. So my background, actually, I was an operator for many years before I went into VC. Full time started out at Fortune 500 companies like Eli Lilly and Apple, and then kind of worked my way down to seed stage. So spent some time at snap pre IPO and post IPO. And then I was at cruise for three and a half years as we were scaling from 200 employees to 2,500 employees. And then I was at a seed stage startup through series A in construction tech called Atmos as their head of operations. And so first half of my career was all hardware, crossing over with supply chain manufacturing and logistics. And then second half of my career was more focused on software. But still kind of touching these sort of legacy industries like transportation and construction. So that feeds a lot into our thesis. Today we invest in pre seed stage companies, usually run by operators that are spinning out of other top companies, but really focusing on these sort of essential industries and critical problems within them.

And I'm curious for you, how do you define top companies?

Oh yeah, that's. That's a good question. It's also a loaded question. So there are a lot of top companies out there, but we're less excited about folks that have been at only Fortune 500 companies. Like, you know, the average person might think of a top company as like Facebook or Google, but what we're more interested in is people that have previously been at companies during key growth stages. So maybe they were there from seed to series B or series A through growth stage, but they've really had to build things from scratch, similar to first builders in the podcast we were just talking about that I'm launching. But they've been there during those formative years because to me, they had to be entrepreneurial to even take that role in the first place. They've also often worked closely with the founding team and they kind of know the things that work and don't work. And you know, many times they're kind of chomping at the bit to found their own thing and just kind of waiting to learn enough lessons and then ready and then waiting for the right problem to hit that they want to solve.

I love it.

There was also recently about, you know, companies with the most unicorn founders, I think that have spun out. I think like Palantir is obviously one chime intercom. Are you looking at like those specific companies or as you said, just really people who've been at other companies from the seed and going after legacy industries. Are they also in operating in those industries previously where they're going to start a company?

Yeah. So the dream is, you know, our archetype kind of includes two Two types of of skill sets that the founders have coming in. I like to see that they were in those key growth stages at companies who have had successful exits or at least got pretty far while they were there. But then I also like to see some sort of exposure to the legacy industry that they're serving. And sometimes you get lucky. Like, you know, we've invested in people that have spun out of Flexport, and that's like logistics plus tech. And then we've invested in people that have spun out of Uber in the early years and were involved in Uber Freight. And now we're seeing more, like you said, from Palantir. And, you know, even Anduril is becoming one of those companies where it's like, a lot of people have manufacturing experience, but they also understand technology. And so the key is like, can they. Do they have sort of both sides of their brain working, like, how am I going to build a venture scale company? And how can I talk the language that my customers have and really understand their issues? So, yeah, we look at all those companies, like, we've invested in folks that are ex Airbnb, and it has nothing to do with, you know, manufacturing or the area that they're working in. But they also, like, grew up with, you know, a parent that was an inventory warehouse manager, and they, you know, have had to learn a lot of those lessons just kind of growing up. Similarly, we've invested in ag tech founders where it's like they had a very strong, like, software venture scale background, studied machine learning, but grew up on a farm. So it can also be personal experience that allows them to understand that customer vertical that they're targeting.

Awesome.

And we can probably go on about this because Kelly and I were nerding about sector expertise and all that right before this, but I want to make sure we leave room for your question that you have for Kelly as well. So what is the question you have for the team here?

Yeah, so it's funny because I didn't know that Kelly was going to be the one on the podcast when I first picked my question, but I'm actually really happy because. Because Sandana has funded a lot of solo GPS. And for those listening, you know, there's kind of two schools of thought. Sometimes I'll talk to two different LPs in the same day, and one will be like, oh, we just absolutely will not invest in solo gps. And then later on that day, people will be like, oh, my gosh, we've been burned by so many breakups with GPS in our portfolios. We're so relieved to meet a solo gp. So I think there are pros and cons to both, and I happen to be a solo gp. But one question. When you really get into, like, what makes people nervous about solo gps, particularly for people that have been investing for a long time, like sometimes talking to a large family office, a lot of the concern comes around, like, what happens if someone happens. What happens to the fund and all the LPs and all the capital that's kind of already at play if the GP becomes incapacitated or, you know, unfortunately passes away? And some have had that situation happen. And so they're, that's why they're like, my policy is absolutely not, never again. And I can totally empathize with that because, you know, it happens to VCs too. You know, occasionally you'll have a founder that just cannot lead the company forward anymore. And you have to determine with the cap table what to do at that point. But I guess one thing that's kind of been in the back of my head, when you ask your. When I ask my legal team around this, they're like, oh, no big deal, just write a key person clause in your LPA and you're fine. But I don't think that's enough to make Those sort of LPs, you know, more comfortable given what they've experienced. So I'm curious, Kelly, having invested in so many solo gps and I assume some non solog as well, have you seen this handled well in the past and kind of what is the dream scenario if someone does, you know, become unable to lead their fund going forward and they're focused on building a generational firm, they want to have a legacy and so did all the LPs that came in. Like, what is the right transition and what can GPS do? What can solely GPS do? Even in the way that they're documenting processes to make sure that there is a really clear handoff and process if something like that happens. So not a very exciting, you know, situation, but wanted to hear your thoughts.

Yeah. And I think, I think you started out right. There's just LPs that are going to have different tastes and risk tolerances and preferences. And so I don't know that you're ever going to get somebody comfortable if they're. They've been burned or like worried about it. I think that's really. That is not our worry when we back solo gps. Right. Like our concerns. Team risk is the biggest risk in venture, to be honest. And so I didn't understand that Lesson when I joined Sandana, I came from operating, so I was like, founders break up, like, what's the big deal? And then I saw it play out in the portfolio and I realized, oh, it is a big deal. And so team risk is the biggest risk in venture. And so really when selecting teams, they've had to work together a really long time, understand the relationship, et cetera. So that's, you know, and also more capital, you deploy, the funds get bigger when you have teams get bigger. So we, we are, we were odd. And as you said, there's more LPs that actually bias towards solo GPS at this point, because I think in general, personal brands matter a lot. Right? And so if you look at any of the big firms, the same top 10 firms are not the same that they were 15 years ago, probably in Silicon Valley. Generational transfer is very hard. You know, Sebastian Malaby wrote about it in the Power Law of Sequoia. They've probably done it the best. So the personal brands really matter. And so that's why we've biased towards a solo GP in a way as well as far as documenting like what guardrails you can put around it if this existential thing happens. Again, that's our number one fear with solo gps, is really reserve decisioning, having thought partner scalability of your time. And so those are just things to set in place for you for best practices as you build your firm. Right. What are the operational systems and where is my highest leverage if I do hire somebody support? Um, I think people always think about a, you know, junior investor to help, but is that actually more of a chief of staff for you? Like what is actually best, your best leverage that you need to scale your time because whoever is supporting you at a firm will know how to kind of the processes and what's in place as well, setting up the best data systems, best processes for you to scale. Those are all in place. You know, I, I think there have been wind downs of other firms, there's other firms that buy firms to kind of manage them out. If this existential thing happens where, you know, it's a VC that's on point, but knows how to do follow on capital and kind of manage out the rest of the portfolio. So again, that part of it we're less worried about, if you will, than, you know, the solo gp just needing the supports around, being able to have other thought partners. And so, you know, we do monthly calls with our gps. We want to be an additional thought partner, much like founders need VCs as thought partners outside of just their executive team. Right. So I think it's setting up the firm as a. As you want a founder to set up. Right. Like, where do you need leverage to scale this business and to scale yourself and support yourself? So I just don't think you're going to convince somebody that thinks that the passing away of a solo GP is the. The biggest risk of a solo GP. It's just not. Again, there's just preferences of LPs and what their risk tolerance is.

Yep, totally. And then one thing you brought up was around generational handoffs and transitions. Like, how do you see. Do you see any sort of, like, hybrid situations that tend to work well with, you know, designing thought partnership around the gp? And, you know, I imagine there are like multiple flavors of that and we have our own at the council, but would love to hear some that have worked well that you've seen in your portfolio.

Yeah, I mean, so we really only had one generational transfer or two now in the portfolio, I guess Uncork and IA Ventures both. And then outside, you know, you can look to like, emergence. I think it's really giving ventures and apprenticeship business. Right. And so hiring within, building up the team within, promoting within versus trying to parachute people in from the outside. And that's where we've seen, you know, if you look at why Sequoia is great, they promote from within. You look at other. I mean, if you read the book, you look at other firms, they hired big names and came in and that did not work. So I think it's building the team within and the culture within really is how to build the generational transfer, because they are DNA. And the behind. If you can make the brand bigger than just you, then it comes from DNA support systems, things that you stand for that have had support to get there. And so once that brand is made, the other team members kind of embody that brand as well. So I think that's the way to do it. And it's really empowering other team members to own a part in that brand building and outwardly and inwardly in decision making.

Yep.

Yeah, we've kind of done something similar at the council. Not that we're. Not that I'm like thinking about generational transfer necessarily right now, but more in terms of, like, bandwidth of the firm over time and becoming a brand that extends beyond just the single gp. But we went this path of like, because we're so operator centric, we wanted it to be an operator, but somebody who had shown, like, strong track record in angel investing. So we spent several years working together as like LP angel in our community, then venture partner formally and then like a junior investment like partner on the team. And that's tended to work well for us, but it wasn't, I didn't arrive at that overnight like there were, you know, multiple things I tried that did not work before that.

So yeah, we really like the venture the other, if you are bringing somebody outside, we do like the venture partner role of like work with them for a year to a fun cycle and figure out how it works. You know, even if you've worked together in a capacity of another company, working within, it's not the same. Yeah, I just think, you know, investing, ultimately investing as a company, you're still building a company together. Right. You just happen to be investing. But I just think it's, it's very different on decision making etc when it comes to it. Because each decision, each decision investment the way you build the firm where you know, your limited resources on management piece, how those are being allocated, all of this you need to be in alignment with and it all goes to, you know, leveraging what you think is best for the firm. So it's, it's making sure the right people are around the table that are in alignment with that. Yeah. Awesome.

I want to be cognizant of time here. This is such a fascinating discussion and I wish we had hours and hours upon this, but we got to make room for our next caller here. But Amber, as before we let you go. Where's the best place for people to find you?

Yeah, so I'm on LinkedIn and Twitter. LinkedIn just Amber Illig. Twitter also. Amber Illig. You can also, if you're a founder, you can pitch us on our website. We also have a community of about 200 operators working at different companies and they tag themselves on LinkedIn. So if you want to get in a warm intro, it's fairly easy to find me.

So yeah, I love it. Also love the name of the firm, the council.

Thank you.

Well, Amber, thank you so much.

Thank you. Appreciate you for having me. Great to see both.

Great to see you fight.

Yeah, I think people balance between solo GPS and partnerships quite often and almost feel like I haven't had my career is not that long, but it feels like it's a function of the boom and bust cycle almost. Is that something you've seen over the years or is this just my anecdotal evidence?

You know, we just bias towards funds one through three and so it's hard for us, you know, if you want to build a generational firm. You know, I think Michael, I wasn't around for this, but, you know, when Josh Kushner pitched thrive to Michael, he's like, I'm going to run raise a billion dollar fund. Like, he knew that was the ambition and goal. And you kind of have to know where you want to grow to, to set up a firm in that way. And there has to be somewhat of low ego because you have to be able to bring in strong star power around you to be able to build something bigger than you. And so I think there's, you know, it. You also have to lean into your skill set, right? If you're hand, like people are choosing you because you're the star power former founder, like, can you build something bigger than you, or are you always going to be the attraction? And like, what can you do to make that different? Right? And so I just think you have to lean into who you are, what you're, where you spike, what your value add is to founders. Like, how, how can that be built and scaled? And sometimes, you know, Elon Gill, like, he's Elon Gill, like, as much as he can have people support him, that's not going to outlive him, right? And so I think you just have to understand where you can build to and what you want to build to when you're setting it up.

I hear a lot of, I used to hear a lot of GPS going like, hey, you know, we want to build the next Sequoia and we want to build this firm into perpetuity. Recently, I don't, I don't know if this corroborates with kind of the conversations you've been having, but a lot of folks are like, hey, you know what, this is going to be a four or five fund run. It's just going to be me after that fund's going to retire, I'm going to retire, and that's all there is to it. And I almost appreciate a lot of that honesty more. It's like, hey, you know what? I'm not trying to build a generational firm. I'm just trying to do my best work, provide value for the ecosystem while I'm working. That's it.

I think, to be honest, for smaller funds, LPs appreciate that. So there's a few endowments that we talk to and just to compare notes and talking to them, they were very early to see, so we're talking about early 2000s. And they're like, yeah, we've probably stayed on with some of our Fund managers, a fund or two too long. And so that means that, you know, LPs, like, think there's like five or six funds you can get out of that team. Right. And then it's a new team you would be underwriting. So, like, do they want you to be recruiting the team and building the team, or should you spend 100% of your time finding the best investments, making the best portfolio you can, or should you be building this firm to. So they can have something that you're passing off, or should they go find something else to invest in? And I think, you know, LPs are having this own. Their own questions on this as well.

Yeah, I think there's a lot of. There's a decent amount of turnover at institutions like the cio, the head of investments level, where they'll be there. I mean, there's a. They'll be there for like seven, eight years or so, but that really is. You're investing in like two or three cycles and then you're just like, you're holding it, you're holding the fort down. You're managing the portfolio for the most part. And then seven, eight years later, new cio, you leave to do something else. And then every time a new CIO comes in, they're like, I want to build my own book now and we need to figure out, like, what to cut from the previous portfolio. And it's. It seems like there's these decisions that are made that are external to what does a good portfolio look like. And sometimes people are like, I wouldn't call it ego. I think it'd be too far to call it ego. But they have their own perspective. They want to enforce their own perspective.

Agree. Yeah, I mean, they, you know, even down to managing director levels, whatever that cover venture. Right. Those people move around as well. An endowment. So you're getting the allocation changed. Right. Or the taste of a new manager coming in. And they want their own track record, they have their own perspectives on where they think something's going. It's not going to be 100% aligned with their predecessor, so. Agreed. You're. You're at that whim as well.

So much, so much to uncover. I'm going to let our next caller in. Stephen, what's up? Hey.

Hey, what's happening?

Good to see we're on opposite sides of the coast. At least Kelly and I are on the same side of the coast. Even you're on the opposite end. What's new in your world?

The weather today feels like the weather. You guys are Used to. It's actually beautiful. No humidity, 70 degree day here in the New York area, so that's amazing.

I heard it was raining yesterday though, last couple days.

So, you know, take the beauty while we can.

Well, we've kept you indoors. You're not even outside. We kept you indoors to call in for, for this episode. So I appreciate you for doing so.

For the uninitiated, you, I know we hosted a wonderful dinner back in January together and had a blast as we always do.

David, always. Every time we, we catch, we talk about everything under the face of the sun. When I'm in New York, I catch up with my boy Steven over here and when he's out here, we do try to catch up as well. But you and I know each other well. But I don't think our listener or like our audience knows you well. Or maybe they do, I don't know. But could you share a little bit more about how you found your way into venture and what oceans is all about?

Well, I bet you your audience knows me pretty well because I've been around for quite a bit. And by the way Kelly, congrats on Sandana6 before I get started. So impressive. What you know, Michael started and you and Graham have helped scale. So congrats I think really, really exciting for you guys.

Thank you. Thank you. Yeah, I think we met first. 2019 or 2020.

Feels like decades ago.

Was this fund one? This was fund one.

This is like maybe even pre fund one. You know it's actually a good segue. So I spent 25 years, really started in New York in the early.com era when there were no engineers and there was no VC ecosystem here and just made a commitment early in my career. I'm a New Yorker at heart. I grew up 10 minutes from the city. I just believed that one day New York was going to have a viable tech ecosystem. And I committed my entire career to building here and helping build this ecosystem. And so I've over my career run a number of early stage venture backed businesses. Companies like Quattro Wireless that I helped build, that we sold to Apple. So I was back and forth to Cupertino in your neck of the woods all the time. For two years I was president of Foursquare, started as chief revenue officer, then president for six years led that. I had an amazing good fortune over my career to spend countless amount of time in a boardroom and just conversations. My investors were the likes of Ben Horowitz from A16Z, Albert Wenger from Union Square from Spark, Barry Schuller from DFJ Growth Bryce Roberts Bob Davis so we always kind of talk about myself. One of my co founders Josh opened the Facebook New York office is that our relationships that we've built because of the risk we took 25 years ago have led to probably $3 trillion of market cap over the years. So it's been quite fun and maybe I think since you asked, yeah I mean Ocean's is a. We started Ocean's seven years ago really raised our first fund which was proof of concept six years ago now finishing up fund two But Ocean's is a people first early stage VC investing in companies with data driven moats. As I said we're based in New York let her co lead pre seed and seed stage deals and co invest in series A and we've really helped build the New York City tech ecosystem over our 25 years career having been part of and built many startups and opening business offices here in New York for Apple and Facebook. So it's been been great. It's funny before I did this I was like you know I haven't done this before but I'm not. What does like ChatGPT and Anthropic say about us? And the good thing is they're pretty consistent. You know both say operator led experience. Chachi PT said Operator led experience Seasoned operators first hand experience building scaling companies Anthropic said operator led approach ChatGPT said holistic support model unlike traditional VCs that may take more of a hands off approach. We're an extension of the founding team offer comprehensive support, recruiting talent, refining business models. Anthropic said focus on go to market our network access strategic guidance. So I was actually it's pretty spot on I think and consistent for what people and founders love and know about us.

I feel like that should be an exercise all GPS go through. Just put your fund into ChatGPT or Anthropic or you name whatever other like platform out there that you use for AI and see what AI says about you.

Consistency was key. I was actually kind of happy that they were consistent at least you know some of it was a little slight but most, most of it was consistent and it was the first time I did it usually you know we used to just do it in Google and just search and you know what keywords come up and. But it's a whole new world and it's a fun world. It's what we love. It's what kind of keeps us energized and every day working the way we Work.

Kelly, for you, I'm curious, do you or would you ever incorporate AI summaries about a fund or a manager into the, let's say, discovery process about a gp?

I mean, we're looking at like ingesting decks and like summarizing it, looking at the data across. I think, you know, we do research on social media, etc. To see what people are saying and what they've been interested in. Don't. We haven't implemented what is, you know, chat GPT say about it because that's publicly available information. Right. And so it's like what we've put out there brand wise versus like what we know the deck says.

I guess that's true. That's true.

You have a lot of data share that magic, you know, behind the wizard of Oz curtain kind of insight that they have. And I know you guys are very data driven, so I'm sure you've got a lot of secret stuff going on behind there.

Kelly, there's always a way to get access to that, maybe by being an LP in send data. Steven, you have a question for us? Or more specifically, you have a question for Kelly. What is that question?

This is fun. I remember when you were just like, you shot me a note and you said, hey, I'm thinking of doing this. What do you think, Stephen? What would your suggestions be? What would your thoughts? So it's fun to watch your brain work and now come to life. David. But you know, Kelly, I think one of the questions I would say is why did the majority of LPs look to follow other LPs and are afraid to make a decision to be the first or early supporter of a fund, irrespective of where a fund is in their fundraising process.

Yeah, and I think you know this about us. We're a little bit different than that. We're not social proof investors, as we call it, so we don't. But when I look at why and other LPs are worried about it, you really have to look at what their role is, who their stakeholders are, etc. So if they have an IC that's not well versed on venture, telling them that whatever endowment or whatever other name these IC members respect is in gives them the credibility when they're selling this in. When you're selling early stage emerging manager venture in, you know, if you're living in breathing venture, you understand why you're excited about it, but getting the other stakeholders to buy into it, it's a little bit easier. So I'd say that's like number one, the reason I would say probably the other thing is a lot of these people don't live in the ecosystems, right? They're not in New York or San Francisco. And so as much as they can do zooms and calls, they're not living and breathing venture 100% of the time, typically. And even if they are, it's, you know, maybe they're focused on larger funds, right. So they, they're not as ingrained in these ecosystems. And I think that's an important part because I think we can get to conviction quickly because we know the strength of your relationships and understand that your kids go to the school with this kid, this other person's kids, and there's this connectivity on a personal level. And I think it's much more difficult to have that insight and you know, deeper than surface level understanding of connections when you're not living and breathing in the ecosystems. And so they want to see it play out. Takes longer for the relationship, other people to come in. It's kind of like venture firms though, to be honest. A lot of people like if you look at companies, if there's three term sheets, it gets to be 12, right? It's FOMO, right. And so it's, there's somewhat to the momentum and psychology of humans of like, oh wait, what did I miss? Like this blue chip LP is doing it. What did I miss? And so unfortunately there is some human psychology behind it of like creating that urgency in fomo. But I do think it takes time to build the relationships. It takes time to do the work on a fund, you know, if it's not a one and done close. Seeing the first few investments into understanding the taste and having some more data points is always helpful. So I think there's other reasons other than, oh, people are social proof investors, which I do think we. There is the FOMO that I just described, but I do think there are other structural reasons and it's just understanding each specific LP that you're talking to and understanding why their process is the way it is or who the other stakeholders are, how their process works and who they're selling into, who else is in the portfolio. Sometimes it is timing, right? Like, you know, we, we've all gotten the memo that you have to raise at the beginning of the year because the capital allocation is set. And so sometimes they have an onslaught of like re ups they have to get through, right? And so then you are pushed just further out in timeline wise. But I would say it's also the number one thing that I can think of is like, who are their IC members and what would get their IC comfortable And that's what they're trying to work towards if it is something they're leaning into.

And do you see a certain type? I mean, obviously we've been talking, you know, we've built relationships over seven years with, you know, 200 plus LPs. But I'm curious and you know, I kind of see how the ecosystem, you know, now can, how they bifurcate. And again to your point, you don't need, you know, others you're in, you know, you guys, as you said, don't need social proof. But I'm curious, do you see like really experienced LPs who like, you know, is experience a variable on that or is it really more, you know, those that are more maybe incented on upside and alpha and where they have carry versus those that are maybe more salaried. Like are there any variables on the dimension of type of LP that leads someone to say, you know what, I have to be an independent thinker. I have to look for more alpha driven versus more of the safe. Like I'm just curious from your lens if you've seen any of that.

I don't think there's a commonality because I'm thinking of the few endowments that really have built great emerging manager programs as well. Because again, when we started focusing on this, nobody was focusing on it. Now there's a lot more. And I would actually say it's some of the younger generations that see how there's been generational shifts and brands fade in Silicon Valley and so they want to look for the next new thing. And so I actually say if you ask, it's not experience. It's actually probably these people have some experience in venture, right? They've come to this conviction after working in it, but they are the ones that have been around the longest in the firm. There's one endowment in particular that hires me specifically that wanted to build out emerging manager portfolio for them. And so that's kudos to the CIO for recognizing that as well. And so I don't think there's a commonality. It's really, you know, the caller before asked a question on like solo GP versus teams. And I just think this is like a bias of like how people invest. Like, you know, are you going to invest in software, hardware? Are you going to do emerging managers? And in that emerging manager like risk capacity? Like where do they stand, right, like in seed and early stage, where do they stand on, you know, Is it a more established like now that you're a fund two or three, like now that there's some data and proof points or is it a fund one? Like there's just different risk tolerances and things that people view as reducing the risk. And one of those things is, okay, you have this great syndicate. I think the other thing is, you know, we're very hands on with our GPS and so I think other LPs may want to see people who are hands on LPAC trusted like LPs in there that to know that they are like on this train with people they trust and like and know that, you know, the incentive isn't hey, There are some LPs that need to put really big checks to work, right? And so is the incentive that the next fund you need to take on, you know, 10 times what you just raised, right. Is that the goal of this LP base that you built? And so I think there's somewhat of understanding who they're getting into business with along for the right as well.

Can I ask one other quick follow up question to that, which is why don't LP spend more time actually speaking to founders and hearing directly from them versus the kind of echo chamber of their GP base?

I mean that's hard because we do a ton of founder referencing, we talk to a lot of founders. We think, I mean that's for us the best, the best intel you can get is from founders. I think. What I think is a lot of founders are not going to say a negative thing to a random LP outreach, right? Like why are they going to risk blowback or negative comments coming back to them? Unless something's been terribly egregious, I don't think founders are going to say they didn't live up to my expectation because that doesn't help them in any way, shape or form for that to get back to a gp. So I think you have to have the connectivity, right of hey, you know, goes back to living in the ecosystems, right. You know, our kids played on the same baseball team or you know, we're at the same school, like having we're friends with the same person. I actually used to work at the startup with, you know, this person you hired. Like I think having that connectivity you feel that you can get a more trusted answer from founders. I think when you're, you know, two steps removed from that calling a founder that's on list. The other thing I will say is we don't get to on list referencing until we're pretty sure we're going to make a decision because we do the number one thing, we do not want to waste founders time. And so but at that point, you know, that's where we get a lot of information of where we should be spending our time. The founders will tell us these are the firms who are most helpful. And sometimes it's an angel who doesn't have a fund and then oh, we need to go meet that person. Right. And so I think like truly the founders are the source of the best information. And so that's why we try to do as many reference and talk to as many founders as we can. As far as other LPs, I think they view they've invested in people they really trust and so they go to their opinions first. So whether it's these larger funds, downstream capital, who they view as important, how they view certain deals, so they view those people as the experts and their proxy to boots on the ground here. And so they start with those calls in lieu of living here and having those networks built out. But agreed like founders are where you get the information from.

It's also usually these institutional teams have such small teams for privates it's like two to four people, sometimes only one person. And venture especially emerging managers are such a small proportion of the bucket and even venture as a whole is probably less than 5% allocation in the overall portfolio that they just don't have the time and resources to allocate to it. In a world where we all had unlimited time, I imagine people are just like hey you know what, let's talk to everyone. And also the flip side of it is if they haven't pre established those relationships, they're not going to get truthful answers. There's no incentive for a founder to badmouth their investor.

Yeah, I mean I wouldn't say listen, they're not going to bad mouth but you can hear listen. It's like when we do, you know, we dig in and do references too. There's a difference between yeah, they're, you know, they're fine, they're good versus oh my God, I love, like I can't. Let me tell you how they really help me. Like I would have never survived this had they, you know, not helped me in this situation. And so there's I think you know.

To your point.

I mean it's funny because when we started one of the main reasons I started oceans is I would, because we built such trust with founders again preoceans just they would have the real open up conversation. You do learn. I mean when you really get close to the founder. You really do learn some of the horrifying stuff that does happen in VC that they will open up. And you'll also learn how low the bar is to actually be a successful vc because, you know, when you, if you really can get. Build that trust with a founder, they'll tell you. And repeat founders, a lot of them will tell you, oh, my God, like, they're scarred with some of their VC relationships from the past. Right? And like, it's stuff you. I think it doesn't necessarily filter back, but if you really get under the hood, sometimes you can see there's some real scars. And so that was one of the, you know, again, we didn't have to start a venture firm that was never like, you know, my. It wasn't necessarily. It was kind of our. Our way out of necessity. We felt like. I was horrified at some things I saw, but really a lot of the conversations I had. And it's like, this is crazy, you know, like, this has to change. Like, these founders are putting their lives at risk. They're going through these emotional journeys up and down. They. They're lonely, they're. To your point, they're paranoid and they don't trust a lot of people. And so there's so much emotion to the early stage, kind of found a relationship to.

That's also what makes our job really interesting because we're looking at things beyond the obvious. Anyways, Stephen, I gotta let you go. This has been so fun. Thanks for like, you know, jumping on this and thanks for humoring this, this whole idea. But we'll see you soon. And as one last thing. Like what? Where's the best place for people to find you?

A million places. Just ping me StevenOcean Ventures, Ocean. Our email address. I don't know. We. I think we had AI somewhere in there, but we've had Oceans Ventures. That's always been our email address. No.com, no anything else? Or you can find me on Twitter, DM me or X, whatever you want to call it. Or just ask David, because, David.

Oh, no, you're going to flood my inbox. No, no, no, no, no, no, I'm good there. I'll pass there. Reach out to Stephen directly.

It is great to see you both. David, I'm glad your dreams, your creative dreams have come to life. As always, you're a magician.

I love you. We'll talk soon. Bye.

Bye.

Bye.

See you, Kelly.

So I think our next caller is in the room already, so I'll let Jonathan in. But did you have Any other thoughts as to what Steven mentioned about other investors or other LPs following signals?

I think again, I just go back to. You really have to understand which investor you're talking to, who their stakeholders are, what their process is, what their taste is, etc, because everybody's going to have a different frame for that. There's many LPs who are happy to be first investors and there's others that have to sell stakeholders with an IC that's not familiar with venture and it's a harder sell for them, so.

Totally agree. We should do another episode on this, by the way, the incentives of an lp.

We have our own lp, so I know this. Right. I have to fundraise too.

Totally. All right, I'm going to let the next caller in here. Jonathan, what's up? Hey, David, how are you?

Hi, Kelly, nice to meet you.

Hi, Jonathan, nice to meet you.

Hey, that's a virtual background.

That is a virtual background provided by this platform we're using that I just downloaded. And these backgrounds are really, really good. Like better than Zoom or Teams or anything, so.

Oh, no way. I'm surprised. You might need to lift the camera or else. Okay, there we go.

Yeah, sorry, I was just pulling up my. My screen.

So perfect. Okay, that's good. I haven't used our virtual backgrounds, but I don't know about you, Kelly, I don't think either of us, at least for the two of us, I don't think we need virtual backgrounds here. Who said it up?

No, I'm traveling. I'm still in LA right now. I was hanging around Milkin, so the background is a mess.

So I'm using virtual for now, if that's okay. That's. That's okay. That's okay. You might be the first person who's been on the pod who's used a virtual background, so.

Okay, I don't know if that's a good thing.

You've gotten checks off the bingo card.

Not a bad thing.

So, Jonathan, great to see you again. Usually all three of us would be in the Bay Area, but Jonathan's calling and still from the west coast, still, same time zone. But for all our listeners and viewers who are unfamiliar with the work you've done to date, what's your story?

No, thank you, David, and thanks for having me on. I graduated school in 2013, spent some time overseas in the software industry. But when I came back to the States, I got into finance, investment banking. I did public Long, short for a little while, early stage venture investing. For the last three years, I was at a firm called Industry Ventures Funded Fund Secondaries Team. I sat on their secondaries team as a VP and as of January I left to launch my own fund and my own firm, Nuco Academy. So you know, we're a venture secondaries firm but we're focused on fund level and special situation transactions. So that's my story and happy to be here today.

I love it.

Kelly, I'm curious for you, how many of these new firms focused on secondaries are you seeing proportionally to those focused on primaries?

Well, we have a new secondary span too. I would say you're going to see more of them. There's just more of an opportunity. The way the ecosystem has evolved and the capital stack has evolved, secondaries are a big part of it. I will say in Sandana's history, since we only focus on pre seed and seed, 60% of our distributions from our managers have come from secondary transactions that they've done. And so you're going to see it increasingly important. So I, you know, the best known outside of industry, the best known secondaries firm have long focused on private equity, right? And so now we've matured into this space and as much as these private equity firms do dabble in venture, I think it's a different underwrite, different asset class. Like it needs a special specialized focus. I love it. So I think you'll see more.

I think we'll see more. And it's also, it's still, at least venture secondary still feels very new. And I've gotten my secondaries 101 education with this man sitting on this other side of the screen over here, over many a bite, many a coffee. So I really, really appreciate that. So Jonathan, you have a question for Kelly. Not on secondaries, I believe, but on something else. What is that question?

So my question to you Kelly, as an LP, is around how far and how much their GPs, your GPs ask for help, right? In terms of sourcing, in terms of diligence, fundraising, all facets of the business. I'm guessing some LPs are more than happy to extend their support, while some may take it as a negative signal. So I'm just wondering what your perspective is. You know, simple question being how should we as emerging GPS judge how far we are willing to push our LP relationships for support?

I mean we take this very much to heart, right? Like our investments succeed, if you succeed. So what do we, what do you need? And it's much like a board member, like you know, a venture firm should be to their founder and we view that role. So we take it very seriously ourselves. So we're consistently like wanting feedback from our own gps of like, what can we do to help? We did, you know, a compensation survey and service provider survey. So to help people figure out like if they're hiring what to pay people, we are connecting to fractional CFOs who we've heard the best things about after working with them specifically, we consistently want to be helpful. We've seen managers iterate on sourcing, right. We've seen this work or seen this fail. We want to be able to give that feedback. We live. You guys have a few other GP friends where you compare notes, where we are seeing things. That's all we do is sit and listen to pitches from GPs or talk to our own GPS every day. And we are seeing what works, what hasn't worked. And so we should be seeing more than you and being able to give you that feedback and share learnings. That's our goal, is to be the human router. If we can't answer it, we know somebody else who's experienced it. Again, we view that as like you're taking our capital and we want to help you do your job and succeed the most. Right. And so we are typically first investors into a lot of funds. And so we view it as our role of helping shape the LP base. Right? Like who else do we like who else has the same taste on this fund? Who would be supportive to you? And we know that our GPS are happy with, right. We hear GPs who are unhappy with certain LPs and we would not suggest that other GPs let them into their funds.

Right?

Like, so we want to be give that same feedback we would expect a VC to give to a company to our own gps. I don't think there's too much, right. Like we ask people, ask us what data systems people are and how are they tracking data we're thinking of. We even get pinged on certain deals like, hey, this deal is kind of outside the box, like how should I think about it? So we want to be that thought partner and extended team member of rgp. And so I think the bigger fears, like as an lp, if you're going and asking questions or having expectations and it doesn't seem they have their stuff together, then that's the fear, right? Like, oh, they're not institutional versus asking questions. I, I think, think honestly there's also the proverb of like gaining trust is when you ask somebody for help, right? Like you're, you're building a relationship and I think It's a good way for you to build a deeper relationship with your LPs. The more you utilize them, they know what you're, what you're working on. Right? They know what the hurdles are and they can see that you've overcome them. So then when they re underwrite, they can say, wow, look at what you've built from your questioning there. They can understand your thought process and why you did certain things if you come to them with your thought process on, you know, with questions. So I think the more you engage your LPs and ask questions, the better.

Thank you. There's also like a, a question or advice hierarchy in a sense. Like as an, as an lp, I imagine, like I can speak for myself, I can't speak for other folks where, if, if someone, one of my GPS were to come to me and be like, hey, you know what, I need help on this thing. The first reaction I'd have before I even impart any advice is one, get context to what have you looked into so far? And sometimes you can just approach it. I was like, hey, you know, I have this really big question. I think you can help me a lot just because you've seen so many GPS across the board. Here's what I'm thinking about as the solution to this problem. What are your thoughts on my potential approach to it? And I think that approach also hedges some of the I don't know what I'm doing kind of thing. Kelly's looking at me weird, so I don't know, maybe that different advice.

I definitely get where you're going. I think it's a maybe I make this assumption. It's like the person that you want to google something before coming to you. Let me google that for you. You definitely want to do your own work and have a perspective. Like here's why I'm thinking, taking this and here's the thought process. So you're not just coming with a hey, well let me google that for you and I'll get back to you question. But I, I'm, I guess I was operating under the assumption that there was some work or context done there. So the request need to be couch.

Hey, how do I do an lpa?

Like what's the first word that should be in it? Like I, I don't think that should be a thing. I'm sure you have legal counsel for that as well. But I imagine a lot of these, these advice in which you'd ask for are more specific in nature and non googleable. And so that's probably why.

Makes sense.

But like Kelly, you and Sandana are really proactive with the help in which you give your gps on a broader level across the LP industry. Is that something most LPs offer in terms of. I'm a call away. Let me know if you have any questions whatsoever.

Well, I think it goes back to what we talked about earlier, that a lot of these times these teams are small and they're not doing this like ventures, part of what they do, or they're covering a lot for one person or two people. But I think in general, a lot of people want to be one call away and to be seen as helpful and engaged with their investments. And if they can't, they always like, can reach out to another LP or another GP that they're invested in. There's ways that they will use their network for you. And so I do think, I think every LP should be happy to help. It goes back to every vc should be happy to help. So you're going to get flavors of authenticity behind that. But in general, I do think it's true.

I'm curious what happens or what are your thoughts when a. Not an existing GP in your portfolio, but a prospective GP in your portfolio asks you for help? Is it the same?

Yeah, yeah. I mean, we're always happy, you know, I think it depends on the ask. I, you know, we make introductions for gps that we aren't investing in where we think they could be a fit for other LPs, portfolios. Just because it's not a fit for our thesis doesn't mean that we don't know LPs that it would be a fit for. So we're always happy to help out with LP introductions, feedback on portfolio construction, feedback on decks, you know, feedback about building out the team, the narrative that they said, yeah, we're, you know, I think always happy to give feedback and to be helpful where we can. For anybody in the ecosystem, it's a, It's a virtuous cycle.

There's that one line where Blake Robbins has. I think he's now started Hidden Ventures, but before that he was at. This is when he was at Ludlow, prior to Benchmark as well, where he said the best compliment an investor can get is to get deal flow from someone they passed on. And part of this virtuous cycle of let me give advice and feedback. This is also true for like, you know, Jonathan, you giving advice to founders. Right. It's like, it doesn't. They don't have to be a portfolio company in order for you to give advice on a broader lens. But Jonathan, did that answer your question? Did you have a follow up question to that?

No, it did.

That was really helpful. I think from, from our perspective as we go out to the market, right. And share what we're doing, we always try to be as helpful as we can to our LPs in terms of like sharing deals or sharing ideas or if they have deals they're working on to be helpful and just to bring it to them. So I just wanted to understand what it looked like from the other side. You know, when you reach out to an LP, if LPs are like, oh, they're reaching out too much, they must not be competent. Right. But it seems like that's not the case. If it's a good lp, it seems like they should be more than willing to help.

So that's nice to hear.

It honestly makes me more nervous when you don't hear from people a little bit. It's like, you know, if, is there a trusted relationship, what's going on in the portfolio, what's going on with the firm? It almost makes you a little more nervous if you don't hear from gps. Because we should, our position in the market and what we focus on, there should be a reason to speak to us at some point or have a question for us. And so I'd say it's actually the opposite. I've never thought, oh, this person reaches out too much.

So okay, well you can bet I'm.

Calling all my LPs today and just.

Hey, can you do this for me?

Can you do this for me? These are the 10 things I need you to do for me. Kelly and David told me that you.

Need to help me for that. Now just don't ask them what you're going to cook for dinner. Like I think they're, those are decisions they don't want to get involved in.

Thank you so much, Kelly. Thank you so much, David.

That's awesome. Well Jonathan, thank you so much. As, as one last thing like how are people going to find you? How do people reach out to you and learn more about what you're building?

Yeah, you can always send me an email. Jonathan. Tingewcoacademy.com It's n e U C O Academy. You can find me on LinkedIn and you know, anything secondaries related. Feel free. Want to be an open book and help out as much as I can.

I'm glad you spelled that out. But also like Jonathan's a treasure trove for secondary advice and thoughts. And so obviously You've done good work at industry. You're doing good work at Nuco as well. So I'm excited to see what you build. We'll see you soon.

Thank you, Dave.

Thank you, Kel, of course.

Nice to meet you.

Likewise.

Kelly. We've had three callers so far, all with similar but different flavors of questions, so to speak. Are these typically. I mean, you're on calls all the time. Are these typically the kinds of questions you get from gps, or are there other kinds of questions you get?

Not these broader questions? Right. I think they're more tactical. When we talk to our GPs versus the broader market of buyer LPs, not committing in the first close. Right. I think we don't get that as much more of tactical advice. They're coming to us with a specific question, questions about the broader market, suggestions, advice. And so it's not more of these broader themes that we really hear about. We actually did, we do noon zooms with rgp, so we do monthly calls with them, one on one, and then we do noon zooms where we're bringing an expert. And our head of platform actually suggested that we do a partners ama. And so we did that. And it was kind of like, they talk to us every month, like, why are we doing this? But it actually ended up being very good because it was a lot of these broader questions that we talk about on team calls that we realize we don't talk to them specifically about. So I think this will be very. Again, that's why I said I think it's a very smart thing you're doing because a lot of these gps are asking this to each other or having these questions. But if it's not, you're going to your LPs with specific questions, not broader advice.

I. I will say I don't have as big of a portfolio as Sandana does, but I do often get, like, social calls from some of my gp sometimes. And sometimes it's just like we shoot the shit and they're asking, like, what does the market look like? How should we be thinking about things? Should we be even picking exit strategies in. In the first conversation? And oftentimes it's like, hey, you know what? Trying to find the daycare for my daughter. Like, do you have any recommendations? Different flavors.

Exactly.

And that's.

I mean, ultimately, that's what I strive to have. You know, I mean, these are people where we have, let's be honest, fun cycles or fun terms are not really 10 years, they're 15 years of relationships at least. And so I want to have that trusted personal relationship of where it's not transactional. And so I want to know, you know, where your kids enjoyed spring break or when your baby's due, what childcare are you setting up for yourself so that you have the support to continue investing? Because I know how hard it is. I want those relationships to know what's going on in their personal life as well, and where they're spending their time and how they're thinking about the fund.

Okay. This is a call to action to all the existing GPS in your portfolio to give Kelly some social calls every so often, if not already. I'm sure a lot of them are already. And I know a couple of my friends who are in your portfolio do talk about like not random things, but just things about life outside of the fund with you as well. And they really enjoy it.

Awesome.

All right, as maybe like to summarize, or maybe not summarize, but as a closing thought, do you have like one last piece of advice for the folks listening to this episode? Either first time GPS or new LPs into venture, like any piece of advice you would give broadly to the audience who's listening in?

Yeah, I mean, I think what I'm getting from these questions even is I think everybody. You know, you send newsletters, you're marketing yourself the right way, your deck is the right way, your data room, all of these like tactical things. And really it's building trusted relationships. Right. We just talked about, these are 15 year 10. Okay. We'll use the fun life, 10 year relationships at least. And so you're getting into a relationship with this person for 10 years at least. And so it's really understanding that person as a person going to them with questions, building the relationship versus just sending updates and newsletters. I think what we're hearing and what you know even from these questions is how do we establish these relationships? And it goes further to understanding who you're talking to. So me as an lp, who's my investment, who's on my investment committee? What's our process look like? Understanding the people that you are trying to start a relationship with that will last for 10 years I think is really important versus just trying to sell.

Most conversations out there. I'm willing to bet this is most. Not many, but. But are monologues that GPs have towards LPs. Whether it's in the pitch, it's like, hey Kelly, do you mind if I pitch you my fund for the next 15 minutes? Or it is, I'm going to send a quarterly Newsletter or an annual report to you. And it's very monologuing. And so the lesson here, and let me know if I'm misunderstanding this, is to increase more opportunities for dialogue instead of monologue.

Exactly. I think, think you get to know where that LP has hang ups, where they are excited. It just builds a deeper relationship of them understanding you and trusting you with their money. And so I, I, I do. You know, we fundraise ourselves. Right. And so there's no spam, there's no mass emails that I send out. I don't have any mass emails I'm going to send to LPs when I'm pitching them. It's, I want to know, you know, some of them are looking at growth stage firms. Right. So like how can I support you in that effort on growth stage, even though it's not something that we touch. Right. And so I think that's an important part is really developing that relationship and being a valuable partner to that LP in general. And so yes, any time for dialogue versus monologue. I think it's important, you know, if there's overlap in their portfolio with a certain company, you can give your version of the story. But trying to incorporate them or get their feedback versus just talking at them about that company, understanding where they've invested before, if it's a certain sector, if they have exposure, if they're in a certain GPU to work with. Again, bringing it into a dialogue is much better than just sitting back and listening to a pitch. And so again, just making it conversational. We'll go a lot deeper into the questions the LP has versus just soaking it in.

This is why I love our conversations so I love them so, so much. Kelly, thank you so much. This has been so fun to do it with you. I will say I was just, I was here for the rivals. Like this is the opportunity for me to be the fly on the wall and I think see you just answering some of these GPS questions which are all amazing and I know, I enjoy it, I enjoy it.

Well, you're very curious and it shows.

Thank you so much. Well everyone, we'll see you soon. Kelly, thank you again.

Thank you.

All right, let me know down in the comments or on socials if we should do more of these. Hope you enjoyed today's episode with Kelly. I highly recommend recommend you to check out our earlier episode together on Superclusters. In fact, here's one of my favorite moments from our episode in season four.

So you can only be data informed at the later stages at private Equity, et cetera. That's a different conversation when we're talking about earliest and trying to just apply data and have a blanket process around it. It's very nuanced and different. That being said, you have to make sure the data you're using is correct. LinkedIn and Twitter is full of the stat right now that only three funds have 3% of the overall unicorns or.

More.

Which is a great stat for Sandana because we have 15% of unicorns from the seed stage. So we are great at picking the fund managers who are great at picking and finding unicorn founders. And I love this marketing stat and it's a great identity stat. But it's a marketing stat, right? And we. We do. It is a metric in which you can say, like, this person was successful. But when I saw the list, I knew immediately that the list was incorrect. Right. So the number one on there is Y Combinator, and I think it says they have 70. Well, we have 130. We have been around for 50% less time than they have. So they have more mature companies and we have, I think, 50% less companies than they do. So our hit rate's much better with less mature companies. But I know from our calculations that they at least have 96. I also know that missing on that is 2 fund managers that have 33 unicorns and 22 unicorns. I also know that a manager that is listed on there is listed with 10 unicorns, not 20 that they have. And so just looking at the data and understanding like, okay, well, where is the data coming from and why is this incorrect? Is like my first pass. Like, I get where it's going and it's probably correct, but what conclusions you can subsequently draw out of it are going to be incorrect if you don't have the correct data to begin with. So I'm always. That's why we focus on proprietary data. Just because the private markets have such opaque data that it's only really your own data that you can trust at this point point. But with that being said, there are better data sources coming around. I think there's a lot better ways we are going to be able to get data on the horizon.

Hey, superclusters fans. David from post here. If you enjoyed today's episode, all I ask are two small things. One, there's a little red subscribe button down there if you're on YouTube and a follow button if you're on Spotify or Apple podcasts. If and only if you enjoyed today's episode. That's the button to click, you'll get many more presents, many more insights, and many more brilliant minds straight through the Internet vines just like this 1. Very, very soon. 2. It'd mean a lot to me if you could share it with one other friend who could gain a lot from listening to today's cosmos of insights. Also, let me know if there's anything I should have asked down in the comments, and if there's enough interest, we'll have today's guest back for an even spicier part. Dose I made a promise to myself to record 100 episodes of Superclusters, so every comment, question and review helps me make this experience more helpful and fun for you, and makes investing adventure a little less scary and a lot more friendly. And lastly, I wanted to share a quick disclaimer. The views expressed in this podcast are for informational purposes only and are solely the views of myself and the guest alone. They are not representative of any organization that we are a part of. None of the views expressed here in constitute legal, investment, business or tax advice. Any allusions or references to funds or companies are purely for illustrative purposes only and should not be relied upon as investment recommendations. Consult a professional investment advisor prior to making any investment decisions. And that's all from me. I'll see you on the next.

Sam.