Real talk on fundraising for a small fund

The dangers of starting a blog post after midnight.

Just switched over to using Substack to share my blog with those who asked for it by e-mail. So… now, it’s a newsletter? If an RSS reader updates in the forest, is it even a blog?

I don’t really have a particular goal with this. I’m just sharing.

When I started leading deals at First Round Capital, I sourced investments in 8 companies. GroupMe, Singleplatform and Backupify all had really good exits, especially if you’re just looking at the multiples of the pre-seed/seed rounds, which is what I’m focused on now. I found GroupMe at the Techcrunch Disrupt Hackathon. Singleplatform was a referral from an IT consultant who was trying to sell me stuff—which was pretty much the most random source ever, and Backupify was actually my own idea built by someone far more capable than I was to see it through. Moat, the biggest exit out of the bunch, was sourced when I met Mike Walrath at a tech event. We started talking about cycling and electronic shifters (which I definitely couldn’t afford) when he mentioned this new company. I knew he was a big fish, and rather than try to beg my way into the round as a lowly Principal, I checked my ego at the door and immediately called Josh Kopelman from the event to give him a heads up that he needed to ring up the team to try and get us into the round. I have no idea whether Mike even connected the call from Josh to the cycling chat, but we got in and Moat sold for $850mm.

Honestly, I felt pretty smart after my first two years at First Round. I had two of those exits within those first two years (!) so I figured I knew what I was doing.

I have now been investing on my own at Brooklyn Bridge Ventures for almost eight years exactly—which is pretty much about the time people say it takes to build up a company to a big exit. Right on time, I’ve got a company from my first fund doing a roadshow right now that could net a big exit by the end of the year.

Yet, I’ll admit, it has been a lot harder than I thought it would be. I have two other companies in that first fund that, at one time, looked like they were sure winners that could return the fund. One flew too close to the sun and stalled out, but not before I basically raised my second fund off of its initial growth.

The other is basically waiting out the pandemic and might still turn out ok, but we’ll see. There are others, but they’re still pretty young. I’m optimistic, but it doesn’t show super well on paper.

That leaves me out raising with two funds under my belt and no big exit and no unicorn valuations. I have some excellent companies whose future I’m very excited about, but they’re about 3-4 years old and will need another year or two before we can start counting any chickens. Even then, as they say, don’t count the money until it’s in the bank.

It’s been incredibly difficult for both professional and personal reasons—and if I hadn’t met my wife Aja in late 2017, this would have all been a pretty dismal time, to be honest.

Let’s start with my fundraising timeline. I kicked off the idea to my current LPs that there would be another fund in February of 2019. My first set of important meetings was with an endowment that had invested in my second fund. While I had hoped they would grow into this next fund, they did some very thorough work and wound up recommitting for the same amount. Turns out they have standard sized bets for funds of my size.

Whomp whomp.

A week later, my mom got diagnosed with a brain tumor. The doctors didn’t give her very much chance of making it too far past six months. My October wedding date seemed like a very uncertain goal for her, so we scrambled for the only other date our venue had open, which was less than three months away. We spent most of the next 86 days wedding planning, which pushed off the raise until summer.

My LPs wondered why the docs were taking so long.

I got in a good two months of raising, which seemed promising at first until things started to come apart. A large family office that had invested prior turned over its staff. The new point person seemed intent on bringing in new managers. He told me they would consider “next year’s fund”, which didn’t make any sense because I wasn’t raising an annual fund. He said they’d consider any “special situations” funds I was doing—at which point I realized that he had never even looked at the deck and had zero intentions of doing any real diligence.

My largest investor was a financial firm that invested in my prior funds to get into the VC business—and in the six years since they first invested, they had built out a team and a strategy that no longer involved doing much seed. There was no longer a strategic reason for them to be in my fund—but they were still great supporters and decided to join in for one last fund at half their prior commitment.

They didn’t need to do it, so it was much appreciated. They even asked me if I wanted to stay independent—especially in the face of the need to keep on fundraising solo.

Nah. I never liked group work.

I updated everyone where I was in the summer. When the endowment saw how much I had raised up until that point, which wasn’t helped by the fact that most of my other investors were individuals who couldn’t write a third check, they decide to add a new stipulation—a minimum close. It was a frustrating development because I was counting on them to be a part of the first close. They wanted to make sure I was “viable” and I assured them that I was by far the scrappiest GP they new. They didn’t really look through the numbers—they just invented a number they thought was where viability was and set it.

Between all these cutbacks, my total was half of what I thought it would be heading into the August venture snooze.

And then, my mom fell.

Her tumor had grown to four times the size that it was in March. She had made it through my June wedding—the whole night, in fact, and even came to brunch the next morning. However, the steroids she was taking and the radiation treatment was fighting a losing battle. Her tumor grew to four times its original size and by the time September came around, there was nothing more they could do for her.

She had started to become a bit of a wobbly walker by then and she fractured her pelvis on her dining room floor. I had taken her out for lobster rolls at the Red Hook Lobster Pound the day before and I had to catch her getting in and out of the car. I thought about saying something about it to my dad, but never got the chance to, which I regret.

My well thought out post-August vacation fundraising plan became a race to clear everything off my calendar so I could figure out how to spend as much time with her as possible. She spent the next six weeks in a rehab facility.

I thought I could bring my laptop and source leads while I was there at night, relieving my dad after sending him home. My mom isn’t a great sleeper, though—and so I just wound up stoping the clickity clak, closing my laptop and sitting in a dark room while she slept.

I closed a small handful of LPs and got to a first close.

More importantly, my mom made me promise to get her home no matter what. I moved everything off the calendar again and promised to start working from their house a few days a week when she got home in early November. We got her a hospital bed in the living room and she seemed ok, right up until two days before she passed.

My last interaction with her when she was awake was her last meal—she had tiramisu from Positano's. My dad had brought it home for her and I don’t think I’ve ever seen anyone enjoy a dessert more.

Before I left, after I already said and kissed her goodbye, she grabbed my hand, looked me in the eye while bringing my hand in closer and said, “You know, I love you.”

I honestly think she knew.

She didn’t really wake up the next day—she was just kind of out of it all day and passed on that Tuesday morning, alone with my dad in the hour window between when one aide left and the other took over. It took me so long to get to their house in the morning. I wandered around Park Slope for 20 minutes because I couldn’t find my car—and then we got stuck in rush hour traffic on the way there.

I’m pretty good at mentally preparing myself for things. Eleven years ago, I was paddling on the Hudson River in a kayak when a helicopter hit a small plane and they both went down. I paddled as hard as I could to get over to the other side of the river, arriving third behind two boats that beat me to it. The whole time I thought about what I might see—thinking about whether there would be wreckage, or bodies or anyone left to save, and what I would do.

That’s why I was ok when I saw her. It’s all I could think about on the ride over—what was she going to look like and how was she going to feel.

It was ok, because I was preparing for it. I had been preparing for it for eight years of emphysema—through hospital visits, surgery, ups and downs.

My dad went into list-making mode. We made phone calls all morning. I started picking out pictures for the funeral. You will not get to see the one of me on the toilet at four years old reading the Charlie Brown Encyclopedia.

I’m very rarely surprised because I’m always thinking about what could be. That’s why getting a no from an investor doesn’t really bother me—because I’ve already thought about the fact that it’s a possibility.

There was no reaching out to any investors during the holidays. All I wanted to do was to decorate our tree and bake the cookies and struffoli she would have made.

Did I mention my dad’s dog nearly died the week after?

Poor Joy was looking so mangey because we were so focused on my mom that we hadn’t taken her to the groomer in a while. We realized she needed to get up to date on her shots before the groomer would take her. We went to the vet and she had a reaction to the shot.

She passed out on the vet’s table and threw up and was just laying there with her tongue hanging out and a glazed look in her eyes.

My dad was like, “Please doc. Please take care of her. I just lost my wife, I can’t lose my dog, too.”

It was literally the saddest moment I have ever experienced in my life. I put my face right up to the dog and I told her, “Not today. You cannot die today. Give me six months. Give me two months. Whatever, just not today.”

She wound up pulling through—but yeah, after my wedding, things in 2019 kind of sucked.

2020: “Hold my beer.”

In January, I pulled myself together and got back out there. I spent some time updating my deck, doing some outreach and started lining up early February meetings.

One of my founders texted me, “What are you telling people to do about the Coronavirus?”

It was the first anyone had asked me about it. He seemed paranoid.

I took my last LP meeting the first week of March and clearly, I didn’t close anyone that I had met with at that time. I wrapped up the closings on a few deals I had in progress—which I’m super glad I did, because those companies are now doing terrifically well. One just got a seed term sheet for twice the valuation I put in at in the pre-seed and the other is doing $200k/month in revenue.

I started picking back up with a few LPs in May—and for a moment, things seemed pretty good. I had a few people on the hook, but it was short-lived. Only one of the four panned out, mostly b/c of fears of what the second wave and economic uncertainly might look like—along with the election. One group that was really interested had their other money in real estate. They told me they had no idea how to budget for the next year of whether they were going to be able to have any cash. Rents were coming in, but who knew for how long.

Come back next year.

Then, my endowment bailed completely.

Turns out 2020 was a new year and a new budget—and that budget had been severely cut back on venture because of the pandemic. Plus, they weren’t thrilled that things were taking so long. When I shared with them that in the last year I had gotten in a whopping three months of fundraising because of everything that had happened, I realized that I was too small for them to have been paying attention to me. They didn’t know anything about my mom and my personal situation.

Life of a micro-fund, I guess.

Nowadays, the usual NYC suspects for raising aren’t really around. You can usually count on high net worth folks to be curious about a good opportunity, but it’s hard to convince someone that you’re a better opportunity than the public market when anyone who had been sitting on Tesla for the past two years was up about 8x.

Meanwhile, I’ve got another company out of the five I invested in out of this new fund also approaching $200k/month in revenue and I just want to go back to investing.

Honestly, I hate fundraising.

It’s not the telling my story or that of the founders I’ve backed. I love that part because I’m excited about my story. I hate the process of finding people to work with based on one and only one criteria—how much money they have. It’s nothing I ever want to value someone for, despite my very practical need to do that.

This makes me a very terrible fundraiser for my own fund.

The other day I ran into a guy who is absolutely excellent at it—he’s built a machine of leads to the rich as far as I can tell.

Me? I just randomly get e-mails in my inbox or find a rando on Twitter to DM in the most unpredictable of ways—which is why I’ve never been any good at teaching people how to raise a fund.

Just… talk to a lot of people, I guess?

Finding big pools of money is something you will very much need to do if you want to be in venture. It’s not just about investing. So much more of it is about connecting to money than I ever thought it would be and that’s the most disappointing thing about it.

Despite that part, I have had a charmed professional life. I could never have imagined going from a 25-year-old analyst at an institutional investor to seeing what I’ve seen and being a part of this community.

For over fifteen years, I’ve had a front-row seat to the growth of the NYC tech—and I’ve been honored to contribute whatever I could to it. I was there for the first Etsy VC pitch meeting in a Fort Greene apartment. I watched Twitter blow up at SXSW in 2007—even got into the Twitter book about surfacing it to the USV team, which was awesome except for the part where Nick Bilton (of all people) felt the need to describe me as “shorter” (I’m 5’11”, thank you). When my own startup was failing, I was helping Foursquare’s seed round happen—even switched seats around at an outing to Citifield for my 30th birthday to help make the right connections happen. I built communities, ran 100’s of events, and met thousands and thousands of amazing people along the way.

It has been an absolute joy.

I’m glad I went out on my own to do this, too.

If I hadn’t, I probably wouldn’t have been able to write about supporting the June protests, eliminating bullshit network barriers like warm intros, investing in diverse founders, and how fundraising favors white men.

And there’s no way I would have been able to start Circulate, a majority-minority networking event where we match and build connections between Black and other underrepresented founders and future founders with industry leaders—a group that is disproportionately white men.

Based on what I saw of my industry, I don’t think most other firms I could have been at would have let me try it. They’re too busy awkwardly trying to explain their overdue search for a new “diverse” partner and why it took until 2020 to realize that a fund full of white people was a problem. I watched in June as VCs tiptoed into race conversations in a way that revealed their discomfort, fear, and unfamiliarity around doing hard work and taking risks in this area. I guess it’s easier to put other people’s money to work than to acknowledge your own privilege.

I had a lot of great conversations this year—not all of them were easy or comfortable, but they were real.

I’m fortunate to have learned that there’s so much more to pushing our society forward than just teaching everyone to code as the solution to everything. I’ve had to start muting libertarian VC Twitter. That’s a fantasyland where everything would be better if the government and politics would just get out of the way so they can go back to investing on top of the infrastructure that taxpayer money built.

That’s not to mention that they’re doing it with dollars that are incentivized to come their way because of favorable tax treatment and loopholes.

I have no idea how much I’ll be able to raise for this fund, but the best dollars I have raised so far are the ones I raised for a Black female VC starting her own first-time fund. I hope she’s far more successful than I’ve been able to be up to this point.

The funny thing is, I think I’m a hundred times better investor today than I have ever been. I’ve seen multiple cycles, dealt with so many different types of founders, seen so many models, and while I still have so much more to learn, the idea that I was any good when I hit four out of my first eight deals out of the park is a joke.

I’m the best bet I’ve ever been today—and I think my recent investors are going to get the benefit of that.

I decided this past weekend to stop raising by Thanksgiving, no matter how much I have. There aren’t going to be any flashy announcements of a big new fund to go after bigger opportunities. This fund, for sure, will be smaller than the last—which will certainly come off as a failure.

I take comfort in the recent announcement of Greycroft’s big new funds as they very nearly never raised a second fund back in the day. Not everyone produces LP money with the snap of a finger—not even Alan Patricof.

If you’re struggling, this post is for you.

After this fund, who knows. To be honest, I actually think these last two funds are going to be very good funds—and I even think I have a good shot of pulling out that first fund to a decent return, too—even if it takes longer than we thought. What I do know is that I’ll never stop working hard for my investors, I’ll be as transparent as I can be, and I’ll do whatever I can to help them get where they want to be in their own investing.

That’s why I share my deal flow with them free of any additional fees and carry. That’s also why we do educational classes on VC best practices. I’m here to make money for them, but if I can make new and better investors, too, that’s just as rewarding.

Over the holidays, I’m going to spend more time with my wife and my dad, and try to make the holidays as good as they can be.

I sent a note out to a bunch of investors on the fence lowering my minimums for the fund so I can just make an end run to the finish line. If you want in, reach out. If you don’t, well, I’m proud of the work I’m doing regardless. I say no enough and get that it isn’t personal.

I don’t always get it right—but I’m trying my hardest to make NYC a better place to build a company, and that, no matter what I do, I will never stop working on.

I count myself lucky. Some people never do get to that close. I do have money and I’m still writing checks—living to die another day, as they say.

My wife went to sleep like four hours ago. She is a gift and so is every moment I spend with her.