When Rich and I were starting Equal Ventures, there was a lot we didn’t know about starting a venture fund. Scarier than that was that we didn’t know, what we didn’t know. The prospect of starting a new venture fund is both exciting and terrifying. Each of us had significant track records with our prior firms, but starting and running a great firm is a lot different than simply investing in great companies.
Ultimately, we made a lot of mistakes. To say that our initial pitch sucked, would be too kind. We struggled to find LP relationships but were fortunate to benefit from the help of many of the investors in our network who helped show us the ropes of fundraising. Amidst this process, we realized our lack of knowledge around some of the less obvious, operational sides of a firm as well.
How do you set up your back office?
How much should you pay for insurance?
How do I set my HR policies and performance management systems?
How do I manage LP communications for those who are and are not in our fund?
There are literally hundreds of questions like this that us and every single other emerging fund manager deals with. While some existing GPs are generous enough to share their lessons learned and best practices, many aren’t. Starting a firm is intentionally left as a black box. Making it easier to start a firm only makes it easier for 1) your employees to leave, 2) other firms to compete for your LPs and 3) other firms to compete against you on deals. It takes an altruistic and forward-looking GP to share those best practices and Rich/I were fortunate enough to have access to those folks, but unfortunately, most do not.
Rich and I ultimately realized that we weren’t the only ones experiencing this issue. There were a dozen or so other GPs in NYC raising their first or second funds around the same time we were. We decided we’d all gather in our office, lament over beverages and cheap pizza and share best practices, feedback and potential LP connections. More important than these, was the community and knowing that there were others out there that were going through the same trials and tribulations we were. We referred to this community-driven peer group as a “circle”, a concept I had first come across when hearing about Jerry Colonna and Reboot, an executive / performance coaching company for startup leaders. These circles have tremendous benefits in uniting a shared group of individuals to unlock each other’s potential and provided a welcome resource during the hardest months of our fundraise.
Over the coming months, the group grew one by one, eventually extending beyond the logical bounds of a circle construct. As our small group became dozens of GPs (all experiencing the same issues we were), we realized the size was better suited for monthly meetups with experts than an intimate peer circle. We recruited GPs who founded successful firms, LPs focused on emerging managers and business leaders who could serve as mentors to us and our portfolio companies. We also managed an online community where we shared news, best practices and potential opportunities via Slack. Then COVID hit.
Our last in-person event was at the beginning of March. It was one of our most successful yet. A week later, the world looked different and it seemed that all the momentum we had developed within our community was lost. But GPs in the group started pinging each other on how to respond to COVID. None of us had dealt with a crisis like that. Equal Ventures had announced our firm launch just a month before work-from-home restrictions were put in place and we found ourselves reaching out to both the community and seasoned GPs/LPs for advice. We shared a collection of that feedback with the group and ultimately open-sourced some of the best practices to the broader market. While we had only done in-person events, our peers asked us to organize a virtual session with LPs to share advice on how to weather the crisis. Others outside of the group got wind of the session and we ultimately opened it up to GPs outside of NYC as well.
11 months later, our group is a bit bigger than our initial circle of a dozen GPs. We have over 200 GPs from over 150 firms representing billions of AUM conversing in our community slack and engaging in our monthly virtual events. These events have continued to host founding GPs of successful firms and prestigious LPs looking to engage with emerging managers as well as others, including Jerry Colonna (the very inspiration for the group) himself.
We’ve kept the Emerging Manager Circle in stealth until now to preserve its intimacy. We wanted to create an environment where GPs could ask honest questions and get feedback from their peers. Group members were nominated by others in the group to ensure there was a sense of confidentiality and trust. However, we recently started an initiative for GPs within the group to create their own circles (peer groups of 4–6 GPs) to enable group members to access that level of trust in a more intimate setting. With that, we feel comfortable opening the group to a larger (but still vetted) audience. We believe strongly in democratizing access to venture capital and hope that our group can play a small role in helping other emerging GPs pursue their dreams of starting their own firms.
We’re working on a lot of great speakers and initiatives for 2021 and are excited to share these with our emerging manager peers. If you are starting a fund full-time or planning to do so in short order, please fill out the form below as we look forward to connecting and collaborating with you.
Rick & Richard