Creating a new venture fund: formation, follow-on strategies & more with Acquired | E1258

TL;DR

Two experienced angel investors, Jason Calacanis and David Rosenthal, discuss the challenges and opportunities of starting a small fund, adding value to startups, and making smart investment decisions.

Transcript

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Key Insights

• 👻 Starting a small fund allows for flexibility and the ability to leverage existing networks and revenue streams to sustain the fund's operations.
• 🔊 By focusing on smaller investments and high volumes, the fund can diversify its portfolio and increase its chances of finding successful startup investments.
• 🤪 Providing value to startups goes beyond just financial investments; active engagement, guidance, and access to networks can significantly benefit founders.

Questions & Answers

Q: How does David plan to sustain himself financially without management fees?

David plans to generate revenue through his podcast Acquired and other sources while relying on the acquired slack for potential investments and deal flow.

Q: How does David handle the potential risks of managing a small fund with limited capital?

David mitigates risks by starting small, adopting a high volume of smaller investments strategy, and leveraging the Acquired podcast's network for deal flow.

Q: What are the benefits of not participating in follow-on investments?

By not participating in follow-on investments, David can focus on making new investments and expanding the fund's portfolio over time.

Q: What is David's strategy for providing value to startups in his portfolio?

David plans to provide value by actively engaging with founders, offering guidance during challenging times, and leveraging the power of the Acquired podcast network for additional support.

Summary & Key Takeaways

• David Rosenthal is starting a small fund called Kindergarten Ventures with a capital of a couple of million dollars, focusing on early-stage investments of around $25k to $100k per company.

• By not taking management fees or participating in follow-on investments, David plans to rely on other revenue sources, such as his podcast Acquired, to sustain himself financially.

• The fund's unique approach allows him to leverage the Acquired podcast's network and acquire deal flow on the side while relying on the expertise of his partner and CEO, Nat Manning, to manage the fund's investments.