The entire Screendoor team joins me on El Pack to answer your questions on how to build a venture capital fund. We bring on three GPs at VC funds to ask three different questions.
Kyber Knight Capital’s Linus Liang asked about why LPs choose to bet on new managers as opposed to investing in more established funds.
NOMO Ventures’ Kate Rohacz asked about what parts of venture do LPs think is most opaque.
Articulate’s Helen Min asked if every emerging manager should scale into a larger firm.
The Screendoor team is a powerhouse of experienced LPs, bringing together institutional investment experience that spans over a decade. Lisa Cawley, Layne Johnson, and Jamie Rhode have each built institutional venture programs within innovative family offices, financial institutions, and pensions. They have invested in venture capital across stages, sectors, and geographies, and in particular are known as a go-to for emerging managers.
Lisa Cawley is the Managing Director of Screendoor. Previously, Lisa worked with a private multi-billion-dollar global investment firm where she was involved in all aspects of managing the firm’s private market portfolio, including sourcing and manager due diligence, asset allocation and forecasting, and creating and implementing the firm’s investment data tools and analytics. Lisa started her career at Ernst & Young, where she served on private equity, venture capital, and public CPG clients. Lisa earned an MBA and an MSF from Loyola University Maryland, and she obtained a BBA in Accounting with a double minor in Information Systems and Spanish from Loyola University Maryland. She is a CFA Charterholder and holds a CPA.
You can find Lisa on her socials here:
LinkedIn: https://www.linkedin.com/in/31mml/
Layne Johnson is a Partner at Screendoor. Previously, she led the Venture & Growth Equity manager selection effort at the Teacher Retirement System of Texas (“TRS”). At TRS, Layne was responsible for setting the venture capital strategy, including portfolio construction, new manager sourcing and diligence, and increasing exposure to emerging venture managers. She had previously been at Goldman Sachs, since 2012, in the External Investing Group (“XIG”), based out of the New York and San Francisco offices. At GS, Layne initially worked on the hedge fund manager selection team and then moved over to the private side of the business to focus on technology and venture manager selection and secondaries. She also helped lead the Launch with GS Program, including sourcing, investing in, and building portfolios of diverse managers. Layne holds a BA in History from Yale University and currently serves on the St. David’s Foundation Investment Committee.
You can find Layne on her socials here:
LinkedIn: https://www.linkedin.com/in/layne-johnson-4b71b571/
Jamie Rhode is a Partner at Screendoor. She previously spent 8 years at Verdis Investment Management, an institutional single family office that manages capital for generations 7 through 10. At Verdis, Jamie focused on venture capital, private equity, and hedge fund investment sourcing and diligence. Using a data-driven approach, she helped revamp the asset allocation strategy and rebuild these portfolios. Specifically, through Verdis’s first institutional venture fund program, Jamie played an integral role in shifting the portfolio’s exposure from multi-stage to emerging managers and early-stage VC. Prior to Verdis, she spent four years at Bloomberg, where she held roles in both equity research and credit analysis. There, she created, managed and leveraged an extensive library of statutory, financial and market data for buy and sell-side clients who use Bloomberg to make investment decisions. A licensed Chartered Financial Analyst, she earned her bachelor’s degree in Finance and Marketing from Drexel University’s College of Business Administration.
You can find Jamie on her socials here:
Twitter: https://x.com/lady10x
LinkedIn: https://www.linkedin.com/in/jerrcfa/
And huge thank you for Linus, Kate, and Helen for jumping on the show.
Listen to the episode on Apple Podcasts and Spotify. You can also watch the episode on YouTube here.
OUTLINE:
[00:00] Intro
[05:58] Enter Linus and Kyber Knight Capital
[10:06] Why take the risk of betting on an emerging manager?
[18:40] The types of pushback Linus got when he was fundraising
[19:47] The incentives of an LP when investing in VC
[21:49] How do GPs ask LPs how they’re compensated?
[24:47] Enter Kate and NOMO Ventures
[28:31] What part of venture is most opaque?
[38:18] The things venture LPs look at beyond the metrics
[43:47] “Bad” advice from LPs
[46:27] Enter Helen
[46:48] Helen’s new podcast, Great Chat
[49:34] What is Articulate?
[52:43] Should emerging funds scale?
[1:00:47] How often do GPs say they want to scale
[1:03:03] Layne’s advice for GPs
[1:03:39] Jamie’s advice for LPs
[1:04:55] Lisa’s advice for LPs and GPs
[1:07:35] David’s favorite moment from Jamie’s episode
[1:09:53] David’s favorite moment from Lisa’s episode
SELECT LINKS FROM THIS EPISODE:
- Screendoor
- Homebrew
- Forerunner Ventures
- Precursor Ventures
- First Round Capital
- “The Bull and Bear Case of Early Distributions” with Jamie Rhode
- “Why an LP of GPs is Uniquely Valuable” with Lisa Cawley
- When VC Funds Become Firms, Part 1 | Lisa Cawley, Ben Choi, Jaclyn Freeman Hester | Superclusters
- When VC Funds Become Firms, Part 2 | Lisa Cawley, Ben Choi, Jaclyn Freeman Hester | Superclusters
- When VC Funds Become Firms, Part 3 | Lisa Cawley, Ben Choi, Jaclyn Freeman Hester | Superclusters
- Philadelphia Eagles
- Baltimore Orioles
- Houston Astros
- Dallas Cowboys
- Riverside
- Linus Liang
- Kyber Knight Capital
- University of California, Berkeley
- Stanford University
- Signia Venture Partners
- Andreessen Horowitz (a16z)
- Kyber crystal
- Jedi
- Disney
- Wiz
- Kate Rohacz
- NOMO Ventures
- Hunter Walk
- The Messy Middle by Scott Belsky
- Helen Min
- Great Chat Podcast
- “To early exercise or not to early exercise” on Great Chat Podcast
- Plaid
- Dropbox
- “Are SPVs for chumps?” on Great Chat Podcast
- Sequoia Capital
SELECT QUOTES FROM THIS EPISODE:
“My original intention was never to target emerging managers. My intention was actually to target funds that were the first institutional check into a startup because I was looking for a way to compound capital at an extremely high rate. And that just led me to backing emerging managers because finding a fund that was willing to invest at the pre-seed/seed consistently over a very long term either meant by the time they had a track record that underwritable with DPI, I couldn’t get in or they were an established manager that was slowly creeping up into bigger and bigger fund size so they were closer to Series A and Series B. What I ended up realizing is to go access that part of the market, I had to do emerging managers.” – Jamie Rhode
“A lot of what we do in underwriting is backward-looking, but really in VC, you want to be forward-looking. So it’s really important to be taking in those datapoints, but if you’re making a majority of your decision on those backward-looking datapoints, I would argue that you’re probably missing the mark when it comes to emerging managers. You actually want to be asking how do I know this firm–this team–is still going to have an edge in, inevitably, what would be a new market environment. There are going to be new competitive forces. There are going to be new technologies–new innovation. New at every level.” – Lisa Cawley
“I’m a firm believer that if you are waiting to see the proof smack you in the face, you’re actually not participating in the proof. You’re not getting that performance. You’re not getting those returns. You’re sitting and you’re waiting. And by the way, everyone else is doing the same thing, so you’re competing against them. Just because someone can identify that’s a great brand at that point, it doesn’t mean just because you have capital, you can get access.” – Lisa Cawley
“Don’t get swayed by capital.” – Jamie Rhode
“You can’t be all things to all people.” – Lisa Cawley
“Scaling is not synonymous with increasing fund size. To me, scaling means you’re increasing in sophistication. You’re increasing in focus. And that’s really a sign of maturity and fund size is a byproduct of that.” – Lisa Cawley
“GP-market fit is so crucial and you want to make sure you’re setting yourself up for success by being able to shine in what you’re best at and what your background and experiences set you up for as well.” – Layne Johnson
“Speed to fundraise does not always equate to a strong investor.” – Lisa Cawley