Rob Go: The Ultimate Guide to Raising a Venture Fund | E1029

Harry Stebbings 0:00 What's your biggest miss?

Rob Go 0:01 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.

Harry Stebbings 0:25 (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.

Rob Go 0:35 (laughs) It's an honor to be here. Thanks for having me back, Harry.

Harry Stebbings 0:39 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?

Rob Go 0:49 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.

Harry Stebbings 1:38 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?

Rob Go 1:44 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.

Harry Stebbings 2:36 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?

Rob Go 2:47 Mm-hmm.

Harry Stebbings 2:47 I have to ask, what do you know now that you wish you'd known when you entered?

Rob Go 2:53 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.

Harry Stebbings 4:03 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?"

Rob Go 4:12 (laughs)

Harry Stebbings 4:12 And I said, "I do, but it, it won't pass your test because I'm 20." And so, uh...

Rob Go 4:17 (laughs)

Harry Stebbings 4:17 ... and the, and the, and the endowment fund at the time was like, "Oh, my God, he's 20." (laughs)

Rob Go 4:23 (laughs) He's like, "What have we done?"

Harry Stebbings 4:25 Um, but, but they proceeded to write the check, so all is well.

Rob Go 4:28 Yeah.

Harry Stebbings 4:28 Um, I want to start though. We're gonna do, like, demystify, demystify a lot of the fundraising process today.

Rob Go 4:34 Yeah.

Harry Stebbings 4:34 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.

Rob Go 4:41 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-

Harry Stebbings 4:53 Okay. So you-

Rob Go 4:53 Yeah.

Harry Stebbings 4:54 ... wh- why those sizes?

Rob Go 4:56 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.

Harry Stebbings 5:21 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-

Rob Go 5:29 Yep.

Harry Stebbings 5:30 ... you know, investing fees. Got you totally. And then the opportunity fund. Talk to me about that being 65.

Rob Go 5:35 That was a little bit less precise. We have a sense of how many investments we think we ought to have in that fund, and that was actually with some guidance, uh, from our LPs in terms of the level of concentration that was appropriate. Um, and then we thought through, like, realistically what our allocation levels might be, um, for the things that were coming down the pike. And, you know, kind of did some fuzzy math and, and landed at a number. We didn't want something that was too big. And the, and the other, the other thing that we thought about was kind of the ratio between the C fund and the opportunity fund because we stapled the two in our last fundraise. So all of our LPs, um, were basically investing two to one from the C fund to the opportunity fund. And we thought that that was fair because...... um, you know, folks got to know us primarily as a seed fund and so most of their money is in the seed fund, but we think we have access to these great opportunities downstream and so, you know, having, you know, a, a third of their capital into, uh, uh, into those investments made sense to us.

Harry Stebbings 6:28 I have a couple of things. And we're friends, so I can just kind of go-

Rob Go 6:31 Yeah.

Harry Stebbings 6:31 ... off schedule. You know, you mentioned the reserves element. Now I, Rob, I hate reserves because I don't think I'm that good a picker on Trajectory. If I picked on Trajectory, I would've gone into a load of hyped companies, um, and bluntly, they would not have been good and sustainable investments. And so I actually prefer a no reserves model.

Rob Go 6:48 (laughs)

Harry Stebbings 6:48 How do you think about, like, bluntly, picking sustainable winners not hyped companies just because they're faster to grow with Trajectory?

Rob Go 6:56 I have a couple answers to this. Uh, one, I think we have a similar perspective because we think that our most important investment is actually the first investment. That's when we need to buy most of our ownership. And even those... And when I think about reserves, you know, uh, we- we're doing pre-seed and seed and, and in this market, right, sometimes we're make, taking a couple of bites at the apple. And so we want to make sure that we can support founders that we invest in really early with some additional capital to get them to Series A. So there's, there's a piece of it that's that. Um, but for the most part, we're trying to buy our, our ownership up front. Like, this isn't really a strategy of, like, let's, let's sprinkle some dollars in the beginning and, like, pile in at the end. We have a process internally in handling follow-on financings. Um, we basically, uh, do a, a ranking of the portfolio, um, every quarter from a perspective of where we want to deploy our follow-on capital. And we do that because we want to make the decision apart from a financing, um, opportunity. Right? Because what ends up happening is when some fancy firm comes in, wants to lead a Series B, you're, you convince yourself that this is the best opportunity in the world, but then if you look back and say, like, "Well, a quarter ago, you know, this was not necessarily a company that we were, we were as bullish on," like, you gotta make some really h- you know, convincing argument why that makes sense. So that's, that's one of the mechanisms we have to be able to do that.

Harry Stebbings 8:14 And how do you determine between reserves versus opportunity fund in terms of where the dollars come from?

Rob Go 8:21 Yeah. It's a little bit of a, a stage mismatch. So what I would say is actually, the seed fund goes pretty heavy in the seed, usually does our pro rata or a little bit less than our pro rata, than our Series A, and then kind of stops from there. And then the opportunity fund comes in at the B or C stage. So there's almost this, like, period where NextView is actually investing a little bit less than our capacity, um, just to create a little bit of separation between the two funds. So, you know, it's a little bit... It's not truly a barbell, but it's a little bit more like a barbell, um, than, than if we raised one fund and just, like, followed on at every stage.

Harry Stebbings 8:54 I'm gonna be a bit of a dick. I speak to a lot of LPs-

Rob Go 8:57 Yeah.

Harry Stebbings 8:57 ... and they're always like, "Oh, we hate opportunity funds." Did they hate opportunity funds with you two?

Rob Go 9:05 You know, when we raised, opportunity funds looked pretty darn good. Um, uh, there was this, like, brief moment in time where the numbers were quite strong. I mean, this was really t- uh, 2002, 2000, 2001 really, when we raised it, um, so there was a lot less pushback. Um, I think the LPs also liked the idea that, you know, most of their dollars were going into the seed fund, not the opportunity fund.

Harry Stebbings 9:26 Sure.

Rob Go 9:26 I think there are other firms where the balance was different, right? It was like two to one the other way. Um, LPs didn't love that. Um, I think the, the third is, like, there's an alternative which is we could just raise a bigger fund overall. Um, but I think everybody kind of loses in that case, right? Because, you know, it's harder to deploy that much money, the fees effectively are higher if you don't do... Because our, our opportunity fund has somewhat discounted fees. Um, and so I see this as kind of a win-win, uh, for everybody in, uh, uh, who's doing this.

Harry Stebbings 9:55 I totally agree with you in terms of the separation of funds and the benefits that accrue there as a result. If we lean back to Fund 1, what was that size?

Rob Go 10:04 Fund 1 was a $21 million fund.

Harry Stebbings 10:07 (laughs)

Rob Go 10:08 Yes.

Harry Stebbings 10:10 And that was a very different portfo-

Rob Go 10:11 With three partners.

Harry Stebbings 10:12 Was that a different portfolio construction, uh, or has times changed that much?

Rob Go 10:16 You know, weirdly it was not that different. Right?

Harry Stebbings 10:19 Hm.

Rob Go 10:19 So still roughly 30 companies in the portfolio. Um, initial check sizes were lower, but, you know, seed rounds at that time, like $1 million was a pretty big seed round, right?

Harry Stebbings 10:28 Mm-hmm.

Rob Go 10:28 And so we were writing 3 to 400K checks and doing roughly 30 investments per fund and reserving some capital for follow-ons.

Harry Stebbings 10:36 Oh.

Rob Go 10:36 So it kind of was the same.

Harry Stebbings 10:38 I miss those days, Rob. Uh-

Rob Go 10:40 Weren't those good?

Harry Stebbings 10:41 And you c- and, and you could buy, like, 10% of a company in some cases for like 500K.

Rob Go 10:45 I mean, ownership relative to fund size was quite nice.

Harry Stebbings 10:47 Oh my gosh.

Rob Go 10:48 I don't know if you would own 10% of the company, but you could have, like, pretty meaningful ownership, and out of a $21 billion fund, you didn't need that much to, uh, to move the needle.

Harry Stebbings 10:55 Oh my gosh. So we're gonna go into the fundraising process today-

Rob Go 10:58 Okay.

Harry Stebbings 10:58 ... because there's, like, a lot of unknowns that I think need to be addressed. If we think about, like, chronologically speaking, we decide on this fund size that we just touched on. Now we need to do some docs. What docs did you prep for the raise and how would you advise on preparation f- in terms of documents?

Rob Go 11:16 So when you say docs, I think... Uh, there's both, like, the actual legal documentation around the fund, the LPA and so forth. I, I think I, you put that aside. You kind of wait until you're at the end of the process. But I think step one is pick a really good law firm. Like, we've worked with Gunderson since the beginning of, of the life of NextView and we actually chose them because they had had experience working with others' funds that were similar to us, um, and gotten a couple recommendations. So get a good lawyer and they will help you set up the, uh, basically the agreements with your partners, which I think is really, really important. Like, this is sort of nothing to do with the LPs, this has everything to do with, like, how you run the fund and, and how you, how the management company operates. But then going to the actual fundraising documents, um, we basically had a deck and a few spreadsheets that had our track record and, um, I think we had a, a bunch of slides around, like, case studies and that sort of thing. But for the most part, we weren't, like... We didn't have that much documentation. It was mostly focused around our deck.

Harry Stebbings 12:14 What do you advise founders getting out today in terms of those materials that they have going up to raise from those first LPs?

Rob Go 12:21 What I have found is most LPs care about deck, track record, and then it's- it's really deck and track record are the- are the main two things they care about. Everything else is just fodder for them to use as ammunition to sell into their, uh, investment committees. And so, you know, you- you think about, like, what's- what are the assets that you have at your disposal, right? Like, if you have a great media company that is powering the fund, you'd put tons of stuff about the media company, right, and tons of stats about that. Um, if you have other assets at your disposal, put other things there that- that matter, uh, uh, for that purpose. But, like, really, I think most LPs, they spend, like, 90% of the time on the deck and the track record, and that's all there is.

Harry Stebbings 13:03 I totally agree with you there. I- I have to ask, you mentioned about kind of the agreement between your partners. It's a big sticking point for a lot of LPs. Do you have an equal partnership at Netisview?

Rob Go 13:14 Uh, we do have an equal partnership.

Harry Stebbings 13:16 And- and tell me, is that across carry and salary? 'Cause sometimes you see differences there.

Rob Go 13:21 Yeah, uh, that is carries and salary and ownership and governance.

Harry Stebbings 13:25 How important is that, having that equal split?

Rob Go 13:28 For us, it has been really, really valuable and important. I don't think it's the right path for everybody. Um, but, you know, we- the- the- especially the three founders but all the partners now, we're very aligned in our, like, life goals and our career. And so, it was kind of easy to be able to say, like, "Hey, we're in this together long term." W- we felt like if it wasn't equal, there would be too much- too much of an incentive to renegotiate depending on, like, how things are going in the fund. And- and thankfully, my partners kind of have this long-term view around the- the downfalls of not having an equal partnership and- and were willing to- to structure it this way. And, you know, I was very happy to do that.

Harry Stebbings 14:05 No, I think it's really important. So, now we've got this kind of doc preparation stage. We've got the deck. We've got the tr- record. They look fantastic. Now it's time to go out and raise. Rob, do we want to get an anchor first and then get more friendlies around them? Or do we want friendlies and then anchor? What's that strategy?

Rob Go 14:23 I think both are viable strategies. We tried the first and ended up doing the second. Um, so, typically, an anchor is, you know, usually an institution, usually somebody who has some strong relationship with you, um, who is willing to be the first yes, write a meaningful check, um, and you can build y- the rest of the- the fund around them. Um, that usually requires a pretty long process, usually, to get the anchor over the finish line. Um, but then because that process was so robust, other- other institutions and folks who want to be a part of this, it makes it very easy for them to say yes. The other approach, which is what we ended up doing, was sort of a bottom sub strategy, right? It's a little 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.

Harry Stebbings 15:26 Why did the first not work for you?

Rob Go 15:28 Because LP said no. (laughs)

Harry Stebbings 15:31 (laughs) Why did they say no?

Rob Go 15:32 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.

Harry Stebbings 16:16 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.

Rob Go 16:48 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.

Harry Stebbings 17:21 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?

Rob Go 17:36 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."

Harry Stebbings 17:46 What's the concentration? Is that 25%? Is that 50%? That 10?

Rob Go 17:51 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.

Harry Stebbings 18:21 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?

Rob Go 18:36 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.

Harry Stebbings 19:51 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.

Rob Go 19:59 Mm-hmm.

Harry Stebbings 19:59 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-

Rob Go 20:12 Mm-hmm.

Harry Stebbings 20:12 ... Notre Dame, Yale, Harvard, MIT, Stanford, instantly it just gives so much credibility to other LPs. For subsequent LP acquisition-

Rob Go 20:22 Yeah.

Harry Stebbings 20:22 ... it makes such a difference.

Rob Go 20:24 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.

Harry Stebbings 20:32 That's totally true. But, you know, at least you have three funds. (laughs)

Rob Go 20:37 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.

Harry Stebbings 21:32 Yeah. That's pretty bad. How did you respond?

Rob Go 21:36 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.

Harry Stebbings 22:27 Yeah, Michael was the first ever LP meeting I ever had. I think he thought we were complete-

Rob Go 22:31 Is that right?

Harry Stebbings 22:31 Yeah. I think he thought we were complete reprobates and proceeded not to give us money. Um, but, you know-

Rob Go 22:36 (laughs)

Harry Stebbings 22:36 ... still love Michael. What a great guy. Um, I- I- I-

Rob Go 22:39 Yeah.

Harry Stebbings 22:40 ... I- I do want to ask, in terms of like getting them over the line, that anchor, a lot of times the anchor says... Well, I've- I've seen them when I was very young, they're like, "Hey, we'll do it, but we'd like to buy part of the GP or we'd like part of the carry, discount on fees." How do you think about concessions to get the anchor over the line?

Rob Go 23:00 Um, I wouldn't do it. I think it's a sign of strength not to take that deal. It's not very typical in venture, I would say. Um, I- I've heard it's more common in private equity or hedge funds. Um, and so if you're talking to an LP that's very used to anchoring hedge funds, like they're more likely to ask for this. But I think for the most part, it is to your benefit to show some strength and say no to that. Um, and, you know, especially with our first fund, I remember every other LP asked, "Well, do any of the early folks in the first close have special economic special governance?" And everyone is relieved when you say no. And so you think about like the long game here, like you really don't want to get stuck with, uh, with somebody who has, you know, extra power within your organization unless you really believe they're a long-term partner. But I think that's very rarely the case.

Harry Stebbings 23:47 I think you're absolutely right. It sets-

Rob Go 23:48 We actually have an interesting... Go ahead.

Harry Stebbings 23:50 It- it- it sets a dangerous precedent where, like you, I had it where they were like, "Does anyone..." and the minute you say yes, it's just uncomfortable every time.

Rob Go 23:59 Yeah. And I think there's a question of like, what did you do this for, right? Most people who start funds, uh, many people came from funds, uh, or, you know, could be doing other things. Like the reason you did this probably is to have independence and control and do what you want to do. And so once you have somebody who has, you know, additional governance, you kind of start to- to cede some of that. Um, so in our... We actually had a situation, uh, where shortly after our busted, um, anchor, you know, situation, uh, we had a couple billionaires whose name I won't share, um, who basically said, "You know, we kind of like what you're doing. We were thinking about starting a fund too. Why don't we just like merge and we'll create our own firm, we'll raise like a couple hundred million bucks for you guys, you know, and we'll just do it together?"... and we had a couple of conversations about this, and it was very enticing, right? It was like get into business, um, these were very high-profile, you know, entrepreneurs and, and investors. Um, you know, this was a time when like a couple of hundred million dollar early stage seed fund was like unheard of. We were like, "Man, we can like get into the game in a big way." Um, and I remember my partner, David, was very decisive about this. He was like, "You know, if you guys wanna do this, you should do it. I'm not gonna be part of it." Uh, "Because the reason I left my job to start a firm was because I wanted to do things my way, uh, uh, with you guys, and, uh, that matters a lot to me. And if we take this offer, we're just gonna be employees. Like d- don't listen to anything they say or what they promise. We are gonna be employees. I do not want that." And that was a very decisive, uh, conversation and, and he really convinced us that we need to go o- on our, our own path.

Harry Stebbings 25:47 It is hard. When you get, "Hey, you never have to fundraise. Super influential people coming in for you," you're like, "Ah, that sounds nice." Yeah. I-

Rob Go 25:55 Yeah.

Harry Stebbings 25:56 ... I, I do feel you. Okay, fair enough. Well, listen, totally the right decision. Uh, when we reflect though on like the, the meeting processes itself, for Fund 1, how many meetings did you have?

Rob Go 26:08 We had... Must have been hundreds. We didn't... We, we like stopped counting at some point.

Harry Stebbings 26:13 Okay. So you had hundreds. How did you get in touch with them? What was that entry point for that relationship?

Rob Go 26:20 Thankfully we had been in venture for a few years, um, and so we had relationships with GPs at our firms and other firms who were willing to, to make introductions to us. Um, what I found actually very useful though was not necessarily our closest relationships as much as other funds that were sort of like us that had raised recently, and it was just amazing, Harry, how generous people were in sharing, you know, their insights in the process, their lead list, you know, giving us background intel on everybody who's, you know, who they spoke to. Um, I remember, you know, one, one person always sticks in my mind. There were, there were a few, but Bryce Roberts who was doing OATV at the time, um, he... Like I barely really knew him, um, but, I don't know, I guess we just had good chemistry. And I remember him sharing me his entire spreadsheet and talking me through every single LP and saying like, "Here's how they think." A- and I didn't understand like half the words he was saying and he just like was so gracious and was able to explain to me like, you know, what the situation was, how we should be thinking about it in our process. And, you know, I, I just like can't thank him enough for that generosity early on.

Harry Stebbings 27:28 So I've made many LP intros for Bryce. It's funny you said that.

Rob Go 27:32 Mm-hmm.

Harry Stebbings 27:32 And the reason I do, and I do actively for other early stage managers, is 'cause when you find a great manager, they're gonna raise with or without your help.

Rob Go 27:41 Yeah.

Harry Stebbings 27:41 You get brownie points for helping them, and then you get brownie points from the LP for providing great leads. It's like a net, net win-win to do it.

Rob Go 27:50 Mm-hmm.

Harry Stebbings 27:50 Don't you think?

Rob Go 27:52 Yeah. And I didn't realize that at the time, right? I would... At, at the time, I thought that folks would be very protective about LP relationships. You don't realize that, you know, a lot of the market has this win-win perception. I gotta tell you though some firms don't. I think it's a little bit of a scarcity mindset. And I would argue that, um, this is a little bit of the function of the time. Like part of why the Boston venture market at the time was l- was not thriving the way the West Coast market was, um, is there's a little bit of a scarcity mindset here, a little bit more of a protective attitude towards everything. Um, which frankly was part of why we started... Wanted to start a fund, right? We wanted to buck that trend, and I actually think that many of the funds that exist today, um, don't behave that way. Um, but, you know, there are certain ecosystems where I think that that is definitely the case.

Harry Stebbings 28:40 No. I, I totally agree with you. Uh, I think we're getting there more and more. When we think about those LP intros there that we have, did you send them the deck, the track record beforehand? There's often a question of whether to send before or after.

Rob Go 28:53 Yeah. So you could go either way. I actually don't think it's a bad thing to send the deck. It's like, you know, people want the information, just give it to them. Um, uh, sometimes we'll send like a pretty detailed blurb so that there is some enticing information but we don't have everything. I actually don't mind that, because I think a, a part of your job is to qualify and to try to manage your time well, um, and so having an, an obvious next step that is out there is kinda helpful for that qualification process. But, I don't know. For the most part, I think sending a deck is not the worst thing.

Harry Stebbings 29:25 I, I agree with you. I, I, I prefer the more detailed blurb. I find that people find a reason to say no in the deck quite often ahead of time. But you mentioned qualification there.

Rob Go 29:36 Mm-hmm.

Harry Stebbings 29:36 I do wanna touch on that, 'cause I think there's questions that managers can ask to qualify LPs early in the call or the meeting. What questions-

Rob Go 29:43 Mm-hmm.

Harry Stebbings 29:43 ... do you think managers can and should ask to better do LP qualification?

Rob Go 29:48 This is something that I didn't realize when we started the first fund. I think that the number one factor in, in whether an LP says yes or no is just timing, right? Are they expanding 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.

Harry Stebbings 31:31 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-

Rob Go 32:06 Mm-hmm. Yeah.

Harry Stebbings 32:06 ... "Actually, we take a very case-by-case basis," you're like, "Uh, okay."

Rob Go 32:11 (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.

Harry Stebbings 32:31 What was the best-ever LP meeting you had?

Rob Go 32:35 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.

Harry Stebbings 34:00 What was the worst LP meeting you've had?

Rob Go 34:03 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.

Harry Stebbings 34:55 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?

Rob Go 35:07 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.

Harry Stebbings 36:27 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?

Rob Go 36:37 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.

Harry Stebbings 37:16 I remember, there was one with my first fund, and it was... I, I... Fuck it. Uh, an old LP is in mind. Allianz-

Rob Go 37:22 (laughs)

Harry Stebbings 37:22 ... um-

Rob Go 37:23 Okay.

Harry Stebbings 37:23 ... the insurance provider, and they didn't respond after a great first meeting. Every single Monday for 50 weeks, I re-emailed them.

Rob Go 37:32 (laughs)

Harry Stebbings 37:33 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."

Rob Go 37:44 (laughs)

Harry Stebbings 37:44 And you're like, "Really?" Um-

Rob Go 37:47 And what'd you do with that?

Harry Stebbings 37:49 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.

Rob Go 37:55 Mm-hmm.

Harry Stebbings 37:56 Um, but so I totally agree with you. But I think, yeah, there is a certain time when you probably should stop. (laughs) Um-

Rob Go 38:01 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?

Harry Stebbings 38:13 Oh, yeah. 100%. I, I know I've said it.

Rob Go 38:16 Okay.

Harry Stebbings 38:16 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.

Rob Go 38:28 Mm-hmm.

Harry Stebbings 38:29 It's very low. Like-

Rob Go 38:31 Yeah, yeah.

Harry Stebbings 38:31 ... actually the cost is low and the benefit is high, so fuck it, keep going. And I'm always more and more humorous with everyone.

Rob Go 38:37 Mm-hmm.

Harry Stebbings 38:38 So I'm like, "Rob, you probably think I'm as persistent as your, you know, wife or husband, and I am. I'm worse."

Rob Go 38:45 (laughs)

Harry Stebbings 38:45 "So if you want to get rid of me, it's much easier than divorce. Just let me know." Um, do you know what I mean? And then they're like-

Rob Go 38:52 Yeah.

Harry Stebbings 38:52 ... "Ha ha ha." Great. Um, so I totally do that, but yeah, it's-

Rob Go 38:57 Well, so I actually... I really like that approach, right? It's... The thing not to do is the, "Do you want to take a next step? Do you want to take a meeting?" Like, with... Like, asking for something without offering something, I think that is really hopeless. Um, I think that giving, like-

Harry Stebbings 39:12 Or, or-

Rob Go 39:12 Yeah.

Harry Stebbings 39:12 ... or the enti- or the entitlement element. Like-

Rob Go 39:15 Right.

Harry Stebbings 39:15 ... I think it's really bad that you haven't responded, blah, blah, blah. It's not bad they haven't responded. They just don't like you in a lot of cases. Like, get over it.

Rob Go 39:23 (laughs)

Harry Stebbings 39:23 Um-

Rob Go 39:23 (laughs)

Harry Stebbings 39:23 ... so I, I think that. And then the other thing I think is like invest in lines, not dots. So I meet-

Rob Go 39:28 Mm-hmm.

Harry Stebbings 39:28 ... two new LPs every single week when I'm not fundraising.

Rob Go 39:31 Mm-hmm.

Harry Stebbings 39:31 At the end of each meeting, I ask for two new LP intros. They make them, so I have a flywheel of four new LPs per week. I'm not fundraising. And then every, like, quarter, when I send out my quarterly update, I send it to them, "Rob, I hope you and the family are well. I hope Boston's great this time of year." Personal copy, like personal bit at the beginning-

Rob Go 39:51 Mm-hmm.

Harry Stebbings 39:51 ... and then copy and paste with the... They love it. The lines not dots go into your Suster comment, and building that relationship-

Rob Go 39:57 Mm-hmm.

Harry Stebbings 39:57 ... over time works so well.

Rob Go 40:00 Yeah. I, I agree with that. So, you know, I would say, uh, when I say don't, don't ask twice, um, I that. Like, I would not, I would not be shy about sharing good news, um, but I certainly wouldn't ask without offering something over and over again. That's, that's generally-

Harry Stebbings 40:19 But you're not gonna share a bad... You're not gonna share bad news, are you?

Rob Go 40:21 Yeah.

Harry Stebbings 40:21 "Oh, my partner left, and I hate him." (laughs)

Rob Go 40:25 Yeah, no. No, of course.

Harry Stebbings 40:26 That would be too funny. Uh, tell me, though, the hard thing is, like, just creating a sense of urgency, even in ones that do respond. So how do you advise managers on getting people over the line, and what works and what doesn't?

Rob Go 40:39 You know, that's a tricky thing about this business, as you know, where, uh, most LPs have the incentive to be the second-to-last yes.

Harry Stebbings 40:46 Yeah.

Rob Go 40:46 Um, because, you know, it's not like you have that much benefit in being or, or any benefit in being the first yes to, to a fund. Um, so I have a couple thoughts here. I think for a first fund, there is no shame in closing a very small amount, as long as your strategy can support it. I always remind people, like, Lira's first fund was a $7 million fund. Um, and you know, they're, they're pretty well-known folks in the industry. So I think there's something about, like, just do a close, and then that allows you to, like, have a very concrete timeline of like what a final close looks like. And once you're done, and you're in business, like, you know, just do what you need to do, and then you can, you can create more urgency in your next fund when you, you have more, more demand and more, um, more points on the board. I also think that there's some LPs that pride themselves in being in a first close, right? Like, some fund of funds, some endowments. Like, it's really... It's meaningful to them that they, that they're, they're known for, for being the first yes. And so, you know, you can kind of use... You can basically use a close date as a forcing function, um, to s- to, to, uh, to get folks, like, oriented. And if clearly that's not gonna work, then, then at least you know they're not really serious. Um, or at least they're not serious within that timeframe. Um, but I don't know. Like, what's... What have you done, Harry?

Harry Stebbings 42:03 Well, I think it's really important on the timeline basis to set a timeline that's not too short where it forces them to a no, but where it's short enough, where actually they need to do the work fast, but they actually have time. So I always say 14 to 21 days.

Rob Go 42:15 Mm-hmm.

Harry Stebbings 42:16 Actually, if someone's gonna do it, 14 to 21 days gives you time to shit or get off the can, as we say in the UK. And I don't think that's arrogant. It's not unreasonable. A couple of weeks to internalize. They can say subsequently, "Hey, that's our decision, and then we need to approve with IC." Fine, but actually, we need to have some form of d- declarative decision within 14 days, because, you know, bluntly, we do have allocations that are filling up. I think it also shows confidence-

Rob Go 42:42 Mm-hmm.

Harry Stebbings 42:42 ... and progression by doing that.

Rob Go 42:45 Mm-hmm. Yep. I think that's right. Um, I think that as you get further along in the fund, it's easier to be able to say, "Hey, you know, here... We're, we're, um... Our last fund was X size. New fund is this size."... um, most of our LPs wanna do, you know, wanna increase their allocation. We probably have room for one or two more LPs and we're trying to be very selective about who that looks like. Um, and, you know, we think that we'd love to work with you but, you know, here's our timeline and try to, try to figure out if, uh, if they can meet that.

Harry Stebbings 43:15 I, I, I also think-

Rob Go 43:15 I, I think actually in our first-

Harry Stebbings 43:16 ... sorry, they, they should never, they should never be surprised by your timeline on subsequent funds. Like, I've built the relationship with many LPs that I want in subsequent funds ahead of time. They know exactly when they're coming, so they're pre-sold to plan for that internally. I think that's really important. You gotta think about their planning cycles and their deployment cycles 'cause otherwise if you're like, "Hey Rob, I'm raising." "Oh shit, I, I kind of did like you, but, ugh, now we're a little bit up shit creek."

Rob Go 43:43 Yeah. Yeah, that's actually totally, uh, that's a great point. Um, so typically a year, you know, if I think about, like, our timing, if we're looking to do a, a first close in say Q1 of, of a given year, we are probably giving pretty clear indication of what our timeframe is at least, like, 18, if not 24 months before that. Um, and then we remind people, "Hey," like, "this is what we said. You probably don't remember, but here it is again." Right? Um, I think a lot of LPs, some LPs are very, very good at keeping track of this kind of thing, some folks tend to forget, and so we just remind folks. And so it, like you said, it's not a surprise when the time comes that, you know, you're looking to close between, you know, at a certain time, and I think LPs actually kind of, even those who pay attention, they, they appreciate the consistency of how you operate it, right? So knowing that you're a, a fund that is delivering on exactly what they said, they're hitting the timeline that, that they, they projected to earlier is, like, very reassuring because frankly, a lot of the existing managers don't do that, right? So, you know, when the markets were hot, what LPs always said was like, "Oh my gosh, so-and-so fund has come back, like, a year or two years ahead of expected and it's throwing off our entire, you know, planning strategy." 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.

Harry Stebbings 45:11 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-

Rob Go 45:25 Right.

Harry Stebbings 45:25 ... 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.

Rob Go 45:42 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-

Harry Stebbings 46:12 But I-

Rob Go 46:12 ... yeah, that's something that I've been thinking about actually.

Harry Stebbings 46:13 ... I just have a problem with that though too, because it just shows this, like, strategic manipulation of relationships aligned to fundraisers.

Rob Go 46:21 Mm-hmm.

Harry Stebbings 46:21 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.

Rob Go 46:31 Mm-hmm.

Harry Stebbings 46:31 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?

Rob Go 46:50 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.

Harry Stebbings 47:28 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?

Rob Go 47:47 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-

Harry Stebbings 48:38 I, I-

Rob Go 48:38 ... 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.

Harry Stebbings 48:44 My lesson for you is l- like, not lesson for you, that sounds terrible, you're, you're-

Rob Go 48:48 No, please.

Harry Stebbings 48:48 ... respectfully the, the, the more wise one. Uh, I find the smaller checks more painful to manage. They're less educated-

Rob Go 48:55 Mm-hmm.

Harry Stebbings 48:55 ... 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.

Rob Go 49:11 Mm-hmm.

Harry Stebbings 49:11 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?

Rob Go 49:25 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.

Harry Stebbings 50:56 Where would you say you are? You're fund five.

Rob Go 50:59 Mm-hmm.

Harry Stebbings 50:59 But respect it's not Sequoia of 40 years or KPU.

Rob Go 51:02 Yeah. No.

Harry Stebbings 51:03 Where, where are you in terms of that fund life cycle, would you say?

Rob Go 51:07 Yeah, I would say that we are, we are not the new product, but we have a lot of stability. And we have a, you know ... We don't have the biggest brand but our track record is pretty strong. And so I think LPs that don't care so much about the brand, that wa- that like smaller managers and believe in early stage and, you know, kind of like a no frills, you know, less flash but great performance kinda partner that they can trust for a long period of time tend to, tend to like, uh, NextWheel.

Harry Stebbings 51:41 Who is the new thing?

Rob Go 51:43 Well, it was crypto. Um, uh, that's not the case anymore. Probably if you're an AI specific fund that can very credibly tell a differentiated story, that could be a new-new thing. Although, it's so crowded, perhaps not. I'm not sure what else is the, what else is a new-new thing. I haven't talked to LPs about this in, in a little bit.

Harry Stebbings 52:04 I would say solo GPs were. (laughs)

Rob Go 52:07 (laughs) They were, they were.

Harry Stebbings 52:09 Uh-

Rob Go 52:10 I don't think that that's actually ... I don't think that that's, um-

Harry Stebbings 52:12 I think that's changed, by the way, bluntly. Uh, there's still a lot of investment in series A.

Rob Go 52:15 I think that's changed, but that's one of the things where, like, even if that's not the new-new thing, I, I think there was something, like, quite attractive about being a solo GP, that, the, there's no reason to me why that shouldn't persist as an interesting category going forward.

Harry Stebbings 52:29 Oh, no, no. I, no, I'm one hund- I mean, I am a solo GP, so ...

Rob Go 52:32 Yeah, right. (laughs)

Harry Stebbings 52:33 But, but I 100% believe in and back it 'cause ... But I don't think it's thematic. Like, it's not cyclical.

Rob Go 52:39 Yeah. Right.

Harry Stebbings 52:40 We can have a different discussion on scalability of solo GP models, which I think is a different discussion.

Rob Go 52:46 Right, right.

Harry Stebbings 52:47 Uh, but, uh, no, I totally agree. Can I ask you, in terms of, like, management of the process, how tightly should it be managed? I don't find emerging managers manage them well at all, bluntly. How tightly should it be managed?

Rob Go 52:57 I think you want to be organized, especially the first couple of times you do this. I think you want to be very organized, but don't try to manage it too tightly because you actually don't know enough to be able to manage it like a fine oiled machine. Um, and you have to allow for some serendipity, right? So, I don't know. I, I'm like a little zen about this, this kind of thing. Like, you know, I try to stick to my timelines, I try to be very transparent with our LPs, but, you know, I always say that if, if you're not for us this time, maybe next time. And, and who knows? Right? Like, I ... When I started, I had so much urgency around, like, "We need to hit this date. We need to close this amount by this amount of time," like, trying to jam people into a framework. And now, I'm just, like, much more, like, laissez-faire about it. Um, we had one experience with one of our funds where we closed most of it, frankly right before the, the lockdown happened with COVID, and we were like, "Well, you know, we've, we've, we've hit our target. Like, should we just, like, stop fundraising and, and just like focus on, on investing?" And I was like, "Yes, but you never know what might happen." And like, nine months later, one LP, that frankly is a relationship I'd cultivated since, like, since fund one, decided to come in at the very, very end. And it was 100% about their own timing, right? It's like, were they, were they ready to say yes to us early on? No. Like literally, it was like, I sent an email and I think they either ignored me or they said no, like, just, just by the email. And then nine months later, they were ready. And, you know, because I chatted with them in fund one, like, they had the sense that they tracked us for a long, long time and they were, they were ready to, to say yes to us. And so I was like, "Okay, great. This is, this is gonna work."

Harry Stebbings 54:40 Right. Well, what-

Rob Go 54:41 So I don't know. I'm much more relaxed.

Harry Stebbings 54:42 What was the easiest fund to raise and what was the hardest fund to raise?

Rob Go 54:47 Uh, the last fund was the easiest to raise, so that was the fifth fund. Um-

Harry Stebbings 54:50 And that was just because of DPI and cashback?

Rob Go 54:53 What was that? Yeah.

Harry Stebbings 54:54 Yeah.

Rob Go 54:54 It was a DPI story.

Harry Stebbings 54:55 Yeah, DPI story. And then the hardest?

Rob Go 54:59 The hardest, uh, was the first fund, 'cause we didn't know what we were doing.

Harry Stebbings 55:03 Other than the first, which was the hardest?

Rob Go 55:06 Uh, probably the third fund.

Harry Stebbings 55:08 And why do you think that is?

Rob Go 55:11 Uh, because we lost an LP.

Harry Stebbings 55:15 This fucking LP. God.

Rob Go 55:17 (laughs)

Harry Stebbings 55:17 And there's noth- ... The, the story is a fucking LP title. Uh, can I ask, a final one before we just touch on the market.

Rob Go 55:24 Yeah.

Harry Stebbings 55:24 Is there anything you know about fundraising now that you wish you'd known at the start? Or, I'm sure there's many things. (laughs) But like, what do you wish most?

Rob Go 55:32 I, so I'm, I've become, like I said, I've become so much more zen about this. Um, in the first fund, every time someone said no, I took it personally and I felt like it was a waste of time. Now looking back, it is amazing, like this one LP that I mentioned is one of our, it's actually our biggest LP now. This is the one that I talked to them in fund one. They never... I, I actually, it was very kind of them. They didn't actually engage very much but they always took a meeting or two, and then passed. And then I think fund three or fund four they didn't even take a meeting, and then fund five they came in. And I was like, "You know what?" Like, how much of a waste of time was that? Not much, right? It was like a handful of meetings over the course of however many years, some email updates, and they're, they're great partners with us, and they're, they're a pretty large LP for us. And it, it... That has kind of changed my thinking, where like, you just don't know. Like, people are in the business of like meeting managers, you're in the business of meeting LPs, and you just don't know how relationships are gonna evolve, people are gonna go to different platforms, and you know, at a new platform maybe you become a really great fit for them when they weren't before, so just like allow serendipity to happen and do your job and I feel like things will work out.

Harry Stebbings 56:41 I, I think mine is, just be human.

Rob Go 56:43 Mm-hmm.

Harry Stebbings 56:43 You know, we started this call with me asking you advice on, you know, children and relationships and managing life. When you get on an LP call, you put on a shirt and tie and get the deck up ready and you, you, you talk B2B and it's like, they're just the same as you. Why don't you ask them those questions-

Rob Go 57:01 Mm-hmm.

Harry Stebbings 57:01 ... and actually build a real relationship?

Rob Go 57:03 Yeah. Totally.

Harry Stebbings 57:05 That's what I-

Rob Go 57:05 That's why you bring backpacks. (laughs)

Harry Stebbings 57:06 That, that's why you bring backpacks, baby. Um, now I, I do have a couple of final ones before we do a quick fire. Now I have this, uh, theory. Well, not theory, but many people have said on this show before that multi-stage funds have destroyed seed. They've termed the bloodbath with five million on 25 million seed rounds. Do you agree, and is seed harder than ever now?

Rob Go 57:27 I think the degree of difficulty is relatively high. I don't think that it will persist, um, because at some point the multi-stage funds will say, "Hey, it's not really worth, worth our time and effort to invest at this stage," and you know, they'll, they'll turn their attention to later stage rounds where they can write bigger checks again. Um, but for now it's pretty difficult. Um, but there have been other times where it has been difficult as well, and you know, when we started, seed was a cottage industry, it wasn't that... It, it was a lot easier. Today it's harder, but you know, we didn't get into this to do something easy.

Harry Stebbings 58:01 Do you not think seed pricing is immune to macro cycles? Like when you look at it, I think it will just continuously stay actually at very high levels because of all the multi-stage funds moving earlier.

Rob Go 58:11 I think it's a bifurcated market. It's very high p- Prices are very high for certain types of companies, but there, i- if you're c- if you're a contrarian, there are a lot of companies that don't get any love as well. Um, I also think that part of the complaint is that seed funds are looking for what effectively used to be a series A investment, um, like back when we started, and I say like, "Why don't you do a pre-seed?" Because pre-seeds are still pretty cheap, um, especially if it's not a super proven founder. Uh, by the way, like when we started, um, we were doing seed, seed rounds and, and there were cases where it was a very, very proven founder, they would skip the seed stage all together and raise series A. I feel like that's kind of the same thing that's happening today, it's just, you know, the labels are different.

Harry Stebbings 58:50 I totally... I don't see pre- If you come out of a Figma, a Stripe, a Notion, you don't raise a 500K to a million pre-seed round.

Rob Go 58:59 Yeah, you never know. I, I, I don't know if that's necessarily true.

Harry Stebbings 59:04 Do you see them?

Rob Go 59:06 Yeah. We see them. I spoke to a founder yesterday who was at a, you know, had, had been part of a company that had a very successful exit, um, then joined a unicorn company, uh, before it was a unicorn, led growth, and he did a, he did a pre-seed, um, and it was pretty reasonably priced. Like the seed will probably be pretty expensive but like, the pre-seed wasn't bad.

Harry Stebbings 59:28 Interesting. Well, thanks for sharing it with me, Rob. (laughs) No, I'm joking.

Rob Go 59:32 (laughs)

Harry Stebbings 59:32 Uh, f-

Rob Go 59:32 Well, we're not in it, so-

Harry Stebbings 59:34 Finally-

Rob Go 59:34 ... we weren't in the pre-seed.

Harry Stebbings 59:35 Finally-

Rob Go 59:35 (laughs)

Harry Stebbings 59:36 ... what, what do you see today in the seed market that you think not enough people are talking about or spending enough time on?

Rob Go 59:43 Related to your last question, I think there's actually a lot of opportunity out there for non-con- non-consensus thinking. I think there are a lot of companies that aren't getting very much love, um, because they're not AI, the teams aren't fancy founders that came 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.

Harry Stebbings 1:00:27 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-

Rob Go 1:00:35 Mm-hmm.

Harry Stebbings 1:00:35 ... 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.

Rob Go 1:00:41 Right. No, I saw that tweet, right? It's like a, a, a good old-fashioned enterprise software series A-

Harry Stebbings 1:00:46 Mm.

Rob Go 1:00:46 ... with good metrics that isn't doing AI or not pretending to do AI, like that's great.

Harry Stebbings 1:00:50 And everyone's like, "AI's gonna kill it," you're like, "Really, it's not. This, this is so ugly-

Rob Go 1:00:55 (laughs)

Harry Stebbings 1:00:55 ... 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-

Rob Go 1:01:01 Yeah.

Harry Stebbings 1:01:01 ... okay, so if you were to invest in one seed firm other than NextView, what would it be and why?

Rob Go 1:01:09 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.

Harry Stebbings 1:01:29 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?

Rob Go 1:01:35 ... uh, it would be Benchmark. Persistent success over time, successful generational transition, um, quite disciplined, amazing brand, great people, like hard to beat.

Harry Stebbings 1:01:46 If you were to invest in a growth firm, which would it be?

Rob Go 1:01:49 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.

Harry Stebbings 1:02:14 What have you changed your mind on in the last 12 months?

Rob Go 1:02:17 I was skeptical of AI. I am like all-in on it.

Harry Stebbings 1:02:22 What cha- what, like what caused the change?

Rob Go 1:02:24 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.

Harry Stebbings 1:02:39 Mm-hmm.

Rob Go 1:02:39 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.

Harry Stebbings 1:03:33 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?

Rob Go 1:03:40 I would choose my partner, David Beisel.

Harry Stebbings 1:03:42 Why?

Rob Go 1:03:43 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.

Harry Stebbings 1:04:11 Yeah.

Rob Go 1:04:11 Like he's the most trustworthy guy I know.

Harry Stebbings 1:04:12 What's your biggest miss and how did it change your mindset?

Rob Go 1:04:16 My biggest miss was DraftKings. I was actually Jason Robins' LP ... uh, not LP, (laughs) um, uh, teaching assistant in college. Um, I knew he was special, um, and he walked into our offices to pitch DraftKings, um, along with two other extraordinary co-founders, and we passed b- not because of like regulation, but because we misunderstood the market size. And ever since then, I've been very careful to not say no to an investment just because of market size without thinking very deeply about whether or not we are misunderstanding the market, misdefining it, or, uh, or just underestimating the, the growth that's on the other end.

Harry Stebbings 1:05:00 What's the biggest hit and that ... (clears throat) sorry. What's the biggest hit and how did that change your mindset?

Rob Go 1:05:07 One of our biggest hits is Attentive. Um, and we invested in an uncapped note, and that changed my mind because we never would have done it before. It's not like we're looking to do uncapped notes left and right, but it made me realize you just wanna get into the best companies. There's an emp- in a power law business, you just wanna get into the best companies.

Harry Stebbings 1:05:34 What would you most like to change about the world of venture?

Rob Go 1:05:37 I think venture is very one-size-fits-all. Right? Like even though there are a lot of different managers, a lot of different funds, there's just like so much similarity in the ways that they approach it. That's why I love what Bryce is doing with Indie. Like it's completely different in so many vectors. You know, when, when I got into venture, I remember there was this s- very hard and fast rule about like you have to own 20% as a venture fund.

Harry Stebbings 1:06:00 (laughs)

Rob Go 1:06:00 Like one of Union Square's like big innovations was they were willing to own 15%, and I remember people were poo-pooing them for owning 15%. I'm like wha- why, w- why is that wrong? Right? Um, there's just so much one-size-fits-all in the venture, and I would love that to change around like the types of people who get into it, the types of companies that can, can raise venture, the type of economics maybe that, that could, could allow different types of companies to work. Um, I don't know. I think in a lot of different ways, we're not thinking creatively enough.

Harry Stebbings 1:06:29 Rob, tell me, next five years for you and for NextView, what does that look like when we chat in 2028?

Rob Go 1:06:36 My vision and our team's vision is for NextView to be ... and we don't have a great, uh, marketing pitch for this, but I think if Benchmark and YPO had a baby and focused on seed, that's what I'd love NextView to be.

Harry Stebbings 1:06:52 (laughs)

Rob Go 1:06:52 Right? So from ... on the Benchmark side, it's a, it's a very partner-driven model, equal partnership, a lot of stability, best in class, um, best in class investor, very concentrated model. YPO, um, the, the ... an ethos of founder vulnerability, support, and, um, and kind of communal excellence, uh, that folks are able to have like lifelong relationships that they think is one of the most important things in their lives. Like I would love that to be what founders say about being part of the NextView portfolio.

Harry Stebbings 1:07:29 Rob-

Rob Go 1:07:29 So if we can marry those two things, I would love that.

Harry Stebbings 1:07:31 Rob, I've so enjoyed this. This has been such a great discussion. Thank you for putting up with my very vocal, uh, interview style this time around.

Rob Go 1:07:39 (laughs) .

Harry Stebbings 1:07:39 But I've loved it, man.