The Twenty Minute VCRob Go: The Ultimate Guide to Raising a Venture Fund | E1029
EVERY SPOKEN WORD
140 min read · 28,099 words- 0:00 – 15:00
What's your biggest miss?…
- HSHarry Stebbings
What's your biggest miss?
- RGRob Go
My biggest miss was DraftKings. I was actually Jason Robins's L- uh, not LP. (laughs) Um, uh, teaching assistant in college. Um, I knew he was special. And he walked into our offices to pitch DraftKings, um, along with two other extraordinary co-founders. And we passed, not because of, like, regulation, but because we misunderstood the market size.
- HSHarry Stebbings
(instrumental music) Rob, it has been seven years since our last show, which shows that we've got incredible facial routines 'cause we don't look a day older. But thank you so much for joining me today.
- RGRob Go
(laughs) It's an honor to be here. Thanks for having me back, Harry.
- HSHarry Stebbings
Not at all. But before we do dive into the show, I love to start with some context. And so, tell me, how did you make that first foray into the world of venture and come to found NextView?
- RGRob Go
Uh, so, uh, this is gonna sound ridiculous. Uh, I got into venture because I got a cold call from a VC firm when I was in business school. Um, I was, uh, I, I distinctly remember, I was looking for... I was either gonna start a company or, um, or join an early stage startup. I was at a pre-seed stage startup interview, and I got an email from a partner at, uh, at Spark Capital because they were leading a team with a digital media background and, you know, at the time, everyone had a very narrow, um, definition of what they were, they were looking for. It was like, top business school, worked at eBay, Google, or Yahoo, and lived in the local market. And so I was in Boston. This fund was in Boston. So, went in for an interview. I was like, "Oh, this is kind of interesting. Let me pursue this." And then proceeded to get tortured for six months before I finally got my offer. But that's how I got into the business.
- HSHarry Stebbings
I love that. And then what was the founding of NextView? What was that, uh-huh, I can actually do this on my own with my own firm?
- RGRob Go
It was a lot of naivete. Um, I had, you know, started to learn the business at, at Spark over two years. Um, I saw the, um, the, the, the rise of C funds that were starting to happen, right? So Baseline, Harrison Metal, First Run Capital were starting to have these models where they're investing specifically in seed stage companies. That seemed like a n- that, that doesn't seem like a novel thing today, but it was a novel thing at the time. Um, most of the successful early stage funds were getting bigger and bigger, and you saw the writing on the wall for some of those firms. And I figured, you know, there's gonna be a seed stage specialized fund that's not based in the Bay Area, um, maybe here in the Boston area. So, you know, why not give it a shot? And so, at the same time, my partners David and Lee were, had pretty similar backgrounds to me. They were all thinking about the same thing, and we decided, you know, somebody's gonna make, take advantage of this opportunity. May as well be us.
- HSHarry Stebbings
I, I love that, and, uh, yeah, I totally agree with you in terms of seeing the writing on the wall for the large funds. Uh, I wanted... Before we dive in, you've now been in the industry for close to a decade, over a decade?
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
I have to ask, what do you know now that you wish you'd known when you entered?
- RGRob Go
Venture is a young person's sport, and going in, we were very sensitive to the fact that we were inexperienced and we were young. Um, we have this funny joke actually at NextView where every time we raise a new fund, we get backpacks for each other, uh, like team backpacks. And the reason was, the first time we went into an LP pitch meeting, uh, which was out of town, Lee and I showed up with backpacks because that's what we used to travel. And our partner, David, was like, "Dude, you can't show up with backpacks. Like, people already think we're young, and now we're gonna, like, show up like school kids? Are you kidding me?" Uh, and so we always remembered that. And so after we closed our first fund, Lee, uh, you know, on his own, got a gift for the two of us, which were NextView logoed backpacks. And since then, that's been the tradition. Um, but I really believe venture is a young person's game. Like, the amount... We were talking about this before you started recording, right? Like, the amount of, like, energy and hustle that you're able to deploy as a young person is truly a competitive advantage. Like, there's a lot to learn from people who've been in this, the industry for a long time. But you can actually get that, uh, that, that kind of knowledge, uh, if you're resourceful. And what you can't really replicate is the, uh, the energy of youth.
- HSHarry Stebbings
A funny story. When I was raising my first fund, I was in a restaurant in the US and they started serving wine, and then they looked at me and said, "Do you have an ID?"
- RGRob Go
(laughs)
- HSHarry Stebbings
And I said, "I do, but it, it won't pass your test because I'm 20." And so, uh...
- RGRob Go
(laughs)
- HSHarry Stebbings
... and the, and the, and the endowment fund at the time was like, "Oh, my God, he's 20." (laughs)
- RGRob Go
(laughs) He's like, "What have we done?"
- HSHarry Stebbings
Um, but, but they proceeded to write the check, so all is well.
- RGRob Go
Yeah.
- HSHarry Stebbings
Um, I want to start though. We're gonna do, like, demystify, demystify a lot of the fundraising process today.
- RGRob Go
Yeah.
- HSHarry Stebbings
I want to start on you. What's the fund size today and why did you decide that was the optimal size? Let's start there.
- RGRob Go
Yeah. So we're currently investing out of our fifth fund. Um, in fact, we have two. We have a C fund and we have a, uh, opportunity fund. The C fund is 135 million. The opportunity fund is 65 million. Um-
- HSHarry Stebbings
Okay. So you-
- RGRob Go
Yeah.
- HSHarry Stebbings
... wh- why those sizes?
- RGRob Go
Our portfolio construction has been pretty consistent since we started the firm. We make roughly 30 core investments per year. Um, we reserve roughly half the fund for follow-ons, and we have a sense for what the ideal average check size is for the stage that we invest in. And so today, we try to write checks between a million to $3 million into pre-seed and seed rounds. Uh, you kind of do that math and mul- multiply that out. That, that leads you to, uh, about 130, 100 to $40 million fund.
- HSHarry Stebbings
Okay, so you essentially have, like, $32 million checks, which takes you to 60 million initial, 60 million for, like, subsequent and follow-on financing, and then-
- RGRob Go
Yep.
- 15:00 – 30:00
Why did the first…
- RGRob Go
bit more of a, like, you know, uh, lean startup of venture funds. You basically find the people who are willing to say yes and just trust you. Um, you try to tally up as much as possible, preferably enough to do a minimum viable first close, close that capital, get into business, and allow yourself time to be able to cultivate the- the slower-moving institutional LPs to come alongside you, hopefully by the end of the first round. So, we ended up taking the second strategy.
- HSHarry Stebbings
Why did the first not work for you?
- RGRob Go
Because LP said no. (laughs)
- HSHarry Stebbings
(laughs) Why did they say no?
- RGRob Go
We- we had a... So, we had a couple of LPs that showed very positive signs early on. And, um, and- and, you know, these LPs then started collaborating with each other and said, "Oh, maybe we're gonna anchor this fund." And we went down the process with them. Um, and I don't exactly remember what happened. At some point, they just got some pushback and started to get cold feet, and we saw the, you know, the- the Jenga tower start to crumble. Um, it was really... I mean, it was easy to say no to us, right? We were new. We didn't have that much of a track record. It was a time when folks said, "Well, if you weren't in Silicon Valley, like, why bother doing venture?" Venture returns generally were really, really bad. So, like, it was easy to say no, right? So, you know, they- they just, like, got cold feet, and we were back to the drawing board.
- HSHarry Stebbings
I'm super opinionated on this one. I think unless you have, like, an anchor who's, like, you know, giving you money forcefully, go to your friends, use them for social validity, go for the big names, and with every friend, ask for three subsequent LP intros that they can make and put as a reference for themselves. Like, "Hey, I'm investing in Rob's fund. I love Rob. Meet X, Y, and Zed." Then you build the flywheel. And actually, as you said, when you get to minimum viable, like, first close, I find all LPs want is to know that you're actually in business. There's no risk of it not happening.
- RGRob Go
Yeah, I think that... I mean, that's the strategy I would recommend for most folks that are raising seed or early-stage funds. I think there's certain funds where it's just not practical, right? If you're... And I have a friend who is raising a growth fund, and, like, it's just tough to do a minimum viable close. Or, you know, you- you kind of do your first close, but you say, "Hey, you know, we might end up doing, you know, a slightly different strategy, because what if we only close at, like, half or a third of our ultimate target," right? Um, I think in those type of strategies, you kind of need to have a meaningful anchor or some really big dollars behind you to be able to feel good about closing the capital.
- HSHarry Stebbings
So, when you think about that anchor, do you... One, do you have to have an anchor? Two, d- do... Like, can they be 50% of your fund? What do you think about concentration of capital to the anchor? And are there different qualities of anchor?
- RGRob Go
Ideally, I actually don't mind concentration that much. Um, especially for a small fund, you're gonna have concentration one way or the other, right? And so, I'm like, "Don't overthink it."
- HSHarry Stebbings
What's the concentration? Is that 25%? Is that 50%? That 10?
- RGRob Go
Uh, you know, some- some funds don't want an, uh, LP to be more than 10% or 15%. Like, we've had situations where we've had more than 20% of the fund in- with- with one LP. Um, I think 50% is kind of extreme. I think it's probably unusual that an LP would be willing to do that without some special controls or economics. That I would recommend probably steering away from, for the most part. But, you know, if you have an LP that's 20% of your fund, 25% of the fund, like, that's not ideal. But hopefully, by the time you get to your next fund, you can start to dilute their influence.
- HSHarry Stebbings
Okay, so we- we're okay with concentration, probably do need one. Are there different qualities in terms of the types? We've got corporates, family offices, endowments, foundations. Is there a snootiness and exclusivity of anchor of LP?
- RGRob Go
I think there are some LPs that are more influential than others. Um, so if you have a really fancy endowment or foundation, that tends to be a stronger signal for other LPs that, uh, that- that want to come alongside them and essentially outsource the- the due diligence, or help them feel better that- that, you know, they're not making a stupid mistake. But frankly, I actually don't care that much. Um, I think that you get- you get the partners that you like. Um, you know, the different profiles, you know, there- there was a time when folks used to say that like endowments and foundations are the most robust long-term partners that exist on the planet. I- it is just not true. I've heard so many cases where markets turn, things change, and the first ones to leave are the endowments. So, it's hard to overthink it. I- I actually think it's, what's more important is the individual who's there. You want somebody who is empowered, not at the very end of their career, because there's- there's a risk that they're gonna leave and then you're gonna be adopted by somebody else. Um, and somebody who's really committed to whatever it is you're doing, like whatever your strategy is, whatever segment of the market you're- that you're in. And as long as that person is still around when you raise your next fund, I think you have a pretty good chance to- to get that firm back over the finish line. And it doesn't really matter what kind of institution they're in, as long as you have that kind of champion wi- internally.
- HSHarry Stebbings
So, one, I totally agree with you, like multi-thread super early. It is a nightmare when you have a champion leave and then you're kind of the orphan child.
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
Two, totally agree with you in terms of like not being as stable as you think with some of the biggest institutions. I would say it's worth really being snooty though for subsequent LP acquisition. I find when you get the-
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
... Notre Dame, Yale, Harvard, MIT, Stanford, instantly it just gives so much credibility to other LPs. For subsequent LP acquisition-
- RGRob Go
Yeah.
- HSHarry Stebbings
... it makes such a difference.
- RGRob Go
I think so. But, you know, there's also extra risk if they drop you, things that really, really hurt. So you better not lose them.
- HSHarry Stebbings
That's totally true. But, you know, at least you have three funds. (laughs)
- RGRob Go
Yeah. We- we had a- we... I'm not gonna name names. We had a pretty, um, influential institution drop us, uh, uh, in our third fund. And they did it the ninth hour and there was... And basically the reason was that there was, you know, they had a new CIO, um, most of the private equity team turned over, and they just didn't give us the attention needed to make that concrete decision early on. And like, that was like a pretty devastating event for us. So, it goes both ways. Luckily, all of our existing LPs, um, had the wherewithal to stick with us, e- everybody else, um, some of which actually increased their- their allocation of the fund and we were able to get through it. But like, I don't know, that- that experience sticks pretty... I- it is an important one in my mind because it made me realize that like influence kind of goes both ways potentially.
- HSHarry Stebbings
Yeah. That's pretty bad. How did you respond?
- RGRob Go
Mm-hmm. Well, this was before our first close for that fund. And, you know, we- we basically went back to all of our existing LPs who had committed and said, "Hey, here's what happened." And, you know, the- the rationale I actually think made sense because that institution was so large and our fund was so small that it really didn't make that much sense for them to be in funds like us unless they had a dedicated strategy. And because they had turned over their leadership within the private equity and- and the CIO as well, like they had just shifted the strategies. Thankfully, one of our other LPs that was gonna be sort of a co-anchor in this fund, um, was super rock steady and, uh, and I think that gave o- other LPs a lot of confidence that they could move forward. Um, so shout out to- to Michael Kim at Sundana for, uh, for helping us navigate that and being a really great partner.
- HSHarry Stebbings
Yeah, Michael was the first ever LP meeting I ever had. I think he thought we were complete-
- RGRob Go
Is that right?
- HSHarry Stebbings
Yeah. I think he thought we were complete reprobates and proceeded not to give us money. Um, but, you know-
- RGRob Go
(laughs)
- HSHarry Stebbings
... still love Michael. What a great guy. Um, I- I- I-
- 30:00 – 45:00
I always ask about…
- RGRob Go
their program? Are they looking for whatever box or category they put you in? Um, and do they have the bandwidth to be able to do it within the timeframe they're trying to raise the fund? Like those are the main factors, and so you wanna try to figure out like what the answer is to those, to those, uh, those questions. Not... The alternative is, if you have just like extraordinary performance and extraordinary track record, like LPs always want that. So, but, but if you have that, it... You don't need to listen to me about fundraising advice if, if that's kinda the, the, the place you're at. Um, so, you know, in terms of qualifying, I think you try to get a sense for, you know... What... LPs usually will share like what percentage of their portfolio is private equity or venture. You wanna get a sense for like is that growing or shrinking, right, and what's driving that growth. Um, you wanna get a sense of like...... has this LP invested in something that looks like you and what is their general strategy around that category of, of, of product, right? Because, you know, within Venture, presumably if you're raising a first fund, you, you fit into some small bucket, right? So when we started, it was, like, institutional seed funds not in the Bay Area, right? A few years ago, it'd be crypto, right? Most LPs hopefully have some strategy of, like, "We want to have, like, X number of managers that look like you. We've invested in two or three of them and so we have another, like, you know, four or five to go," right? Like, whatever the numbers are. Um, so trying to get that, that feel, I think, is really, really valuable. Um, and whatever questions it takes to, to answer that, I think, is, is what you're looking for.
- HSHarry Stebbings
I always ask about geography. I find if you're the first in a new geography, it's probably very unlikely. I always ask, like, on check size. Like you said there, about the ones that are massive checks. Like, if they write 25 million dollar checks and you're raising a 30, 40 million fund, you're pretty much qualified out straight away. I do check size, geography, existing portfolio for them, and then I always like to say, "I think you can be quite bold in your fundraise." And so I would say, like, "Listen, I'm really optimizing for long-term partnerships and I think trust is built over time. Can you talk to me about how you think about how you support your portfolio in the long term?" And then if they're like-
- RGRob Go
Mm-hmm. Yeah.
- HSHarry Stebbings
... "Actually, we take a very case-by-case basis," you're like, "Uh, okay."
- RGRob Go
(laughs) The, the challenge though is a lot of the, the answers, right? Like, LPs want to maximize and maintain optionality as much as possible, right? And so, you know, uh, some, some, uh, LPs will be very, very straightforward and direct and, and specific, and most will be, you know, kind of vague. And, you know, I think that's okay. It's hard to know.
- HSHarry Stebbings
What was the best-ever LP meeting you had?
- RGRob Go
I'll tell you the LP meetings I most enjoy are ones that focus a lot on the human beings and the kind of nature of the team dynamic, the why behind what we do, um, uh, you know, the touchy-feely meetings. There is a class of LPs, and I'm trying to figure out where... I think that there's a lot of roots in the way that, like, the Yale Management, uh, Company has trained, um, investors. Like, I, I think a lot of folks who, who have this approach c- um, have a heritage at Yale. So I really enjoy those meetings. Another meeting I remember was, uh, with Horsley Bridge. Um, they're not LPs in our fund, but I remember actually a follow-up where we were talking about portfolio construction and one of the, uh, one of the folks there said, "You know, the best portfolio construction in the world is to invest in one company and put all your money into the first round and be right." And every derivative from that basically is allowing for uncertainty and risk. Uh, and I always kind of remembered that. I really en- I, I kind of enjoyed their, like, probing, taking ideas to an extreme just to stretch your thinking, because I felt like I learned something from that. And, you know, obviously that's not what anybody does, but I kind of appreciated that point of view and it, it changed the way that, um, I sometimes think about portfolio construction myself.
- HSHarry Stebbings
What was the worst LP meeting you've had?
- RGRob Go
The worst LP meetings are just when it's clear the person doesn't want to be there. Um, we actually very rarely have those meetings now. And for the most part it's because we don't, like, fight that hard to get a meeting. Like, in the beginning, we were... I was like, "Oh, you know, I just need to get in the room and if we can get in the room, we can convince somebody that they want us." I now have the opinion that, like, if they... if somebody doesn't want you, like, they don't want you. Like, and I'm not that charming, I'm not that great, you know, e- I'm not that great of a salesperson. So, like, it does me no good to walk in to somebody who's already, like, leaning way back. Like, life's too short, there's other opportunities out there, and so, um, I just don't worry too much about that. So, I would almost say, like, you want to scrape and fight really hard to get great introductions, but if somebody doesn't want to take a meeting, like, there's no, there's not that much value in, like, forcing it. That's my point of view, at least.
- HSHarry Stebbings
If we think about that post-meeting process though, we have that meeting, we have that call. What's the right subsequent follow-up? What do we send them? When do we send it? What do you advise there?
- RGRob Go
Yeah. So, um, Mark Suster had a post years ago, and one of the takeaways was, uh, to paraphrase, like, "Always leave something more." Right? Like, always leave something out so that there's some reason to have a follow-up, right? So, that, that's sort of why a blurb is kind of nice, because then it a- it gives you the opportunity to follow up with a deck, right? Um, sometimes... So i- i- with one of our fundraises, we had a data room. For the first time, we actually had a data room. And we were so liberal about saying, like, "Well, here's the data room. Have a look." Um, we have since changed that, where we do have a data room, but the data room is a, is a preliminary data room and it is intentionally incomplete. And the reason it's intentionally incomplete is I want to see an LP... I- if we offer the data room, I want to know they looked at it. Which, which you can. Like, a lot of times there's tracking for these things. But then, if they actually, like, prosecuted it, it'll be obvious that there's some other stuff that they would want to see. And so we have, like, a subsequent data room that we offer for folks who actually dig in and, and care to, care to look at it. So I like having these kind of gates, uh, that are out there to try to get, um... just, just to assess whether or not LPs are serious and, you know, to, to... It's sort of like a video game, right? Like, let them go on quests and, uh, you know, pass a level and move on to the next one.
- HSHarry Stebbings
I totally agree with you. So let's talk about the next level. You send them the deck, you send them the follow-up, something, the data room. They don't respond. What do you do then?
- RGRob Go
I have a basic belief that it never hurts to ask twice, but I never ask three times. Right? So if there's an email that doesn't get responded to, I don't feel bad about asking again. After two... after I'm, I'm ignored twice, that's okay. I just move on. That doesn't necessarily mean they're dead, by the way. It's just that I'm not going out of my way to proactively seek them out.... but, you know, fundraising processes are long. You never know, right? You might see them at a conference in, you know, three, three months from now, and they'll be like, "Oh, yeah, you know, uh, the times have changed. Like, let's, let's have a follow-up." And, like, that's fine. I, I, I... They're not dead to me. They're just... I'm just not gonna, to proactively reach out anymore. So that's my general rule.
- HSHarry Stebbings
I remember, there was one with my first fund, and it was... I, I... Fuck it. Uh, an old LP is in mind. Allianz-
- RGRob Go
(laughs)
- HSHarry Stebbings
... um-
- RGRob Go
Okay.
- HSHarry Stebbings
... the insurance provider, and they didn't respond after a great first meeting. Every single Monday for 50 weeks, I re-emailed them.
- RGRob Go
(laughs)
- HSHarry Stebbings
50 weeks. Which shows that they, they took a year to raise the fucking fund. Um, and then on the 51st week, they responded, "Sorry, been slammed. Love to engage."
- RGRob Go
(laughs)
- HSHarry Stebbings
And you're like, "Really?" Um-
- RGRob Go
And what'd you do with that?
- HSHarry Stebbings
And so we followed up, and we're like, "We would love to engage too. Yes, please." You know, we only sent 50 fucking emails to get this one.
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
Um, but so I totally agree with you. But I think, yeah, there is a certain time when you probably should stop. (laughs) Um-
- RGRob Go
Well, well, well, so it, it seems like you've had maybe a different experience where... Because if you've sent 50 emails, that means for somebody else who sent 10 emails, and it did work. So do, do you actually think that the two email rule is not correct?
- HSHarry Stebbings
Oh, yeah. 100%. I, I know I've said it.
- RGRob Go
Okay.
- HSHarry Stebbings
Like, I just think, like, the cost of it, that... You know, you're technically right, but the cost of it is so little. Like, just checking in, one of our portfolio companies just raised a huge up round by Sequoia.
- 45:00 – 1:00:00
I, I think also…
- RGRob Go
Like, there's actually something comforting in knowing that you're o- you're operating as predictably, if not more predictably than their existing portfolio and, and, uh, and you're great to work with from that standpoint.
- HSHarry Stebbings
I, I think also going to your point now of kind of calendars, it's really important to know that there are strategically better times of year to raise for certain institutions. Like, a lot of endowment funds get fresh buckets of allocation in the start of any year. And so Q1-
- RGRob Go
Right.
- HSHarry Stebbings
... is actually optimal. Q3 is probably the worst, and actually end of Q4 when they might have, like, a spare little stipend left can actually be the best as well. But I think knowing that there's, like, strategic moments of best capital availability is important.
- RGRob Go
Yeah. I wonder if that's gonna change though, because I feel like everybody's... Like what you've described, I feel like maybe everybody's figured out, and so I notice that everybody basically starts to fundraise, uh, at the latter half of the year so that they can target a beginning of the year close unless they catch somebody who has end of year obligation. Like, that, that is sort of, like, the most logical timing to, to capture the largest part of the market. But then, I hear everybody's doing that, so I don't know if there's a way to zig when others are zagging. Probably not, but, um-
- HSHarry Stebbings
But I-
- RGRob Go
... yeah, that's something that I've been thinking about actually.
- HSHarry Stebbings
... I just have a problem with that though too, because it just shows this, like, strategic manipulation of relationships aligned to fundraisers.
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
And it's like, I've been speaking to 30 LPs who are not in my fund. Honestly Rob, because they're also really fricking smart and I learn from them on deployment site.
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
And so there's no, like, "Oh, I'm gonna engage with them again with Q1 in mind." I'm kind of chatting to them on a weekly, quarterly basis on WhatsApp anyway, and I think that's what managers need more of which is just the natural relationships whereas, "Oh, meet my friend Rob. He's raising now and he's great. I'm not raising." Do you see what I mean?
- RGRob Go
Mm-hmm. Yeah. I think there, I think there's some GPs though that are just not, um, they don't have the constitution of, like, always fundraising. It's, I feel like this is true for founders too. Like, there's some founders who are just so great at always having investor conversations, and other founders that are just not good at that, right? And they're better off, like, running a concentrated process, um, a simultaneous process in, in, in big bursts. And so I think to some degree, like, that's sort of the same for GPs too. Some folks are very, very good at, uh, at keeping a lot of LP relationships and LP cultivation going, and I think some are just not as good at that.
- HSHarry Stebbings
How much, uh, in terms of, like, LP check size, a lot of people I meet have minimums and it really pisses me off 'cause I think that they're very dangerous. Some of my best LP instructions, founder instructions have come from 25K checks from heads of products, say. Um, how do you advise on minimum LP check sizes?
- RGRob Go
I would say for individuals I'm usually pretty loose. For institutions, um, we try to enforce some sort of a minimum, but the minimum's typically pretty low, um, because like you said, sometimes you get great introductions from LPs, sometimes they start, you know, it's their model to start really small but they can actually upsize quite considerably. Like, we've certainly seen that in our portfolio. So, you know, I try not to be too, too kind of snooty about that, if I can. Um, I, I generally am a believer in, like, building an antifragile LP, uh, LP base. And so in a weird way... Like, even though I said earlier I really, you know, I don't mind concentration, I also don't mind a lot of small checks if you can handle it from a timing standpoint, because a bunch of small checks is very, very antifragile. And so, you know, I'm not, I'm not too, uh, too snooty about that sort of thing. Like-
- HSHarry Stebbings
I, I-
- RGRob Go
... a- as long as folks are good to deal with and they're not, like, a huge time sink, um, I'm, I'm happy to engage.
- HSHarry Stebbings
My lesson for you is l- like, not lesson for you, that sounds terrible, you're, you're-
- RGRob Go
No, please.
- HSHarry Stebbings
... respectfully the, the, the more wise one. Uh, I find the smaller checks more painful to manage. They're less educated-
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
... but often, this is not unison, but often they can be less educated, less informed on venture, and actually they take a lot more time and care than almost the bigger LPs who are much more informed and educated, is personally what I see and I've seen in other managers.
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
Um, so that's the only thing I'd say there. Can I ask you on, like, different types of LP knowledge there, did you find that one type of LP converted better for you than, than the others in terms of corporate fund of funds, you name it?
- RGRob Go
I think there's ... Different types of LPs convert better at different times in your life cycle. So fund of funds are in the business of one of two things. They're either in the business of access, so you know, get whatever institution into these fancy names and so they're very focused on brand. And so, you know, thing where you have a brand, then they'd convert great. The other time, uh, uh, s- the other job of fund of funds sometimes is to execute a particular strategy and get folks into something new. And so if you fit the category of, like, the new thing in a new category, some fund of funds are really, really great at converting. Weirdly, when you're in the middle, you're neither new nor are you so well-known that you have, like, a great brand, fund of funds are not as good. So that, what I found is that, like, funds, you know, three-ish, two to three, it's actually harder to get a new fund of funds, uh, engaged because you're neither of the two. There are some groups that are, that are very, very large LPs and they just want stability, right? They will never invest in a fund one or a fund two, but they love the idea of investing in fund three, four, five or plu- or, or more with a team that's been together for a long time, that has executed the same strategy for a long time, that, you know, just has shown that great level of stability and, like, that's what they want, right? Um, and so I think pension funds tend to like that. Um, certain types of, um ... I think some endowments like that, and I think they tend to convert great, uh, towards the, the middle and later s- stages of a, of the fund cycle.
- HSHarry Stebbings
Where would you say you are? You're fund five.
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
But respect it's not Sequoia of 40 years or KPU.
- RGRob Go
Yeah. No.
- HSHarry Stebbings
Where, where are you in terms of that fund life cycle, would you say?
- 1:00:00 – 1:07:40
Listen, I, I agree,…
- RGRob Go
from well-known companies that are just having a really tough time raising, and I think that there's gonna be like, like many diamonds in the rough that come out of that. Uh, and so you know, I think there's a lot of like doom and gloom and like disgruntled like chatter among seed investors right now, and I'm like, "I don't know, like there are a lot of companies out there, go ahead and do it." And by the way, if the company, if the founders are really that great, like just go ahead and pay a higher price. Like, that's okay too.
- HSHarry Stebbings
Listen, I, I agree, and I totally agree with you in terms of option. I think anything else, I've just put down a term sheet for series A to lead it, and I think the price-
- RGRob Go
Mm-hmm.
- HSHarry Stebbings
... was half what it would be last year, but I just think the capital of supply is not there for an enterprise software company in London.
- RGRob Go
Right. No, I saw that tweet, right? It's like a, a, a good old-fashioned enterprise software series A-
- HSHarry Stebbings
Mm.
- RGRob Go
... with good metrics that isn't doing AI or not pretending to do AI, like that's great.
- HSHarry Stebbings
And everyone's like, "AI's gonna kill it," you're like, "Really, it's not. This, this is so ugly-
- RGRob Go
(laughs)
- HSHarry Stebbings
... and awful. Trust me, it's not that easy, guys. (laughs) Um, listen, I wanna do a quick fire round, Rob. So I say a short statement-
- RGRob Go
Yeah.
- HSHarry Stebbings
... okay, so if you were to invest in one seed firm other than NextView, what would it be and why?
- RGRob Go
Uh, it would be Indie VC. Um, so this is Bryce's fund, uh, they have a completely different model focused on a completely underserved different segment of the early stage market, um, with a unique investment product. And so, I love... That's like different on four out of five dimensions, with a great guy, and like I can't wait to invest in this fund.
- HSHarry Stebbings
He just is such a good person. I'm totally with you. Um, if you were to invest in a series A firm, who would it be and why?
- RGRob Go
... uh, it would be Benchmark. Persistent success over time, successful generational transition, um, quite disciplined, amazing brand, great people, like hard to beat.
- HSHarry Stebbings
If you were to invest in a growth firm, which would it be?
- RGRob Go
I would ... I don't actually know the growth world that well. I would probably say Summit Partners. They're the OG of the classic growth cold calling machine. Like they invented that model. They execute it like nobody else. Um, I would probab- if I could, I would specifically invest in their smaller fund. They have a bunch of different funds. I think they have a small $400 or $500 million, um, like classic growth fund. Um, that's probably what I would do.
- HSHarry Stebbings
What have you changed your mind on in the last 12 months?
- RGRob Go
I was skeptical of AI. I am like all-in on it.
- HSHarry Stebbings
What cha- what, like what caused the change?
- RGRob Go
I th- I saw ... I see something happening in AI that's very similar to, to the early days of the internet where there are team ... So there are teams that I see that are clearly trying to become AI native.
- HSHarry Stebbings
Mm-hmm.
- RGRob Go
And that doesn't necessarily mean that you're like an ML, you know, ML researcher or have a PhD in, in, you know, in the space. It's just that you are like approaching building every software product with a expectation that AI and AI driven tools can massively create efficiencies, um, or to enable new, new capabilities. And there are other teams that are just like, "Ah, this is probably the next new fad. I don't know, I'm gonna put it aside." This is very similar to the internet, right, or, or cloud. Like there was a time when like you would talk to a founder and you just knew, like is this person like a, a, a internet native? Is this person just like native to the types of products and tools that are out there and available to them or not? Um, I kinda see the same dynamic happening and, you know, it's not that every AI that we invest in, every company we invest in will be an AI company, but I think every team we invest in, I'd like them to be very, very AI native, whatever that comes to mean.
- HSHarry Stebbings
No, I d- I do understand that and I totally get it. What f- tell me, n- if you could choose one board member, who would you choose?
- RGRob Go
I would choose my partner, David Beisel.
- HSHarry Stebbings
Why?
- RGRob Go
Um, I trust him a ton. I, you know, I've been able to watch him up close now for, for 12, 12 plus years, and like I am just like so impressed with the wisdom that he has, he has, uh, been able to, to gather over this, you know, his, his long career in venture, and he's like a s- a, a wise sage. He just, like he doesn't say that much, but what he says, he says with conviction, and you can really trust him.
- HSHarry Stebbings
Yeah.
- RGRob Go
Like he's the most trustworthy guy I know.
- HSHarry Stebbings
What's your biggest miss and how did it change your mindset?
Episode duration: 1:07:40
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