2025-09-24 01:53:45
“My first three ventures funds were all high net worth individuals and founders/tech folks. How should I decide if institutional LPs are right for my next fund?”
This was a question put to me earlier this week from someone I’d met via Screendoor, the fund of funds we cofounded to back new firms (sometimes called ’emerging managers’ in the industry). Of note, and to the credit of this investor, it wasn’t the typical ‘what do I need to prove/show to raise from LPs’ but rather, is this class of financial partner right for me or not?
Before answering I reformatted it to “Even if I could raise the amount of capital for the next fund from my current individual investors, or write the check myself, what conditions or benefits would cause me to consider institutional LPs of any sort [FOs, FoFs, endowments, and so on]?”
Three Reasons to ‘Transition’ to Institutional LPs
A. You Are Building a Firm, Not Just Raising a Fund (AND Know You Want to Raise at Least 2-3 More Funds After this One)
Institutional LPs are most likely signing up for longer relationships with you than any one individual LP and are able to scale with potential increases in fund size. Once you are confident – in trajectory, in strategy, in joy – that venture will be your career ongoing, it’s worth it to consolidate your capital base in this manner.
B. You Want to Take on Performance Risk Instead of Fundraising Risk
Related to the above, the tradeoff in having partners who are there to support you ongoing so long as you do your job is, well, you have to do your job. HNWs, individuals, CVCs, other VCs, etc all might invest in your fund for reasons besides absolute returns; institutional LPs shouldn’t (although even some of them have adjacent motivations such as secondary/direct investment access). Basically if you are the type of person who ultimately wants to be judged by results (and live with standard VC fund LPAs), then being in business with professional institutional LPs – especially those with evergreen pools of capital – essentially takes your fundraising risk down to zero.
C. You Are Willing to Spend the Time to Find Neutral to Positive LPs, Including Passing Up on LPs Who Aren’t a Good Fit for You
Like any group, ‘Institutional LPs’ aren’t homogenous. Based upon their institutional needs, their organizational culture, their familiarity with venture, their personalities and team construction, etc you will find folks who are more or less suited to how you want to run your business. Even in our first Homebrew fund, we focused very much on ‘mutual fit’ and turned down some opportunities to work with LPs where it didn’t feel right.
And Two Reasons to Avoid Institutional LPs That I Think Are Overblown
A. If You Take Institutional Capital They Become Your Customer and Managing Them is a Ton of Headaches
I find this to be a sign of poor LP selection by the GP or inability to run their business well. There’s nothing about the relationship with high quality, evergreen, professional, VC-savvy LPs that adds overhead disproportionate to the value they can bring (sole caveat would be it is kind of annoying when the people in the seats at an LP change – and they do change more than you would expect). LPs are our partners, founders are our customers. That’s always been clear to us and our LPs.
Most of the other overhead questions come into play when you take outside capital versus your own, not who that capital is from. Fund structures have their own encumbrances.
B. Taking on Institutional LPs Reduces Your Flexibility as an Investor
This is the old “they are going to hold me accountable to what I put in the slide deck/portfolio model” complaint. In my experience the only true constraint is what’s in our LPA around vice clauses, etc and even those just require approval (for example, in our historic LP-backed funds we couldn’t invest in cannabis businesses that touch the plants themselves since it’s not Federally legal). These were all nothing burgers for us – our LPAC has given great feedback/approved everything we’ve asked about.
When an LP backs you they are doing so because of a strategy you presented within a specific asset class they want exposure to. I can imagine that if you deviated from that wholesale without communication it would lead to mistrust. But the idea that you have to march down a specific path because of a four year old spreadsheet just isn’t true. Our LPs have always said that what they’re outsourcing to us is judgment – we should focus on being great investors and they expect us to adjust to the market, take appropriate risks, earn the opportunity (with founders, co-investors) to find some ‘off model’ investments. If you followed your strategy 100% you were probably too rigid. If you followed your strategy 0% then you didn’t have a strategy.
If you are raising and want to investigate bringing on institutional partners -> Screendoor!
2025-09-23 06:53:34
“It might not be true, but it is real.” This was the recent advice given to us at Curriculum Night by the Head of Upper School (Grades 5-8) where my daughter is a student. Loosely translated – as it relates to the parenting of teenage girls: whatever feelings they’re manifesting; whatever they believe in happening to them; whatever the probabilities they are assigning to outcomes of these situations — they might not always be logical or likely but they are 100% authentic. So if your attempt to ‘help’ them is just to bypass their emotions and go straight to logic, while unintentionally refuting their lived experience, well, that’s not going to work.
Seems like this holds true for not just my daughter’s age range but perhaps all humans? Or at least that’s what I was pondering when reading Jasmine Sun’s latest essay “
are you high-agency or an NPC?”
It is easy to think from the outside that San Francisco is the one place on earth insulated from crisis. Everyone else is living in fear of political upheaval and mass job loss, while the rich nerds discovered suit jackets and now they’re the ones on top. “My mutuals run the world,” goes one Twitter refrain.
For the tech industry as a whole, this may be true. But for most individual participants, the swagger is a gilded surface, paper-thin.
She goes on to cover the zeitgeist of the SF AI scene in a way that reminded me of the opening quote about reality and truth. What she’s describing is definitely real, but is it also true? In the question of, are the people described accurately understanding the environment around them or is it more of a feeling distorted by the echo chamber, status maximizing, and safety seeking? And is it true for enough of our community or just a narrow (but influential) segment of AI maximalist, highly online, 18-32 year old SF folks?
Increasingly talking about ‘tech’ in general conjures the Blind Men and the Elephant parable – the animal you think you’re describing is very different depending on which part of the beast you grabbed.
Jasmine, who is a wonderful writer, closes with her own metaphoric comp, a recent sauna visit
Back in the sauna, the temperature is climbing. We hold our heads in our hands, trying not to overheat. There’s a stinging on my collar and I realize I forgot to remove my necklace. A first-timer burns the soles of his feet. Finally, I’ve had enough. We file out, and plunge into cold water.
2025-09-21 04:34:41
Talent joining a company is a leading indicator of good things to come.
And talent leaving a company is a leading indicator of bad things to come.
But yet Board meetings rarely go deep on talent KPIs in thoughtful and consistent ways.
2025-09-17 21:44:26
Got to know Alex while he was at Forbes, a tenure which basically made him one of, if not *the*, go-to reporters for exclusives launches and fund announcements. As a result of our friendship, I knew that Alex was considering going indie at some point and excitedly subscribed to Upstarts when he launched. Let’s learn a little more about Alex with Five Questions.
Hunter Walk: Upstarts Media is hitting its ~six month anniversary. I know it’s a cliche question, but what’s one thing about DIY’ing that’s surprised you and one thing that’s been sorta as expected?
Alex Konrad: I’ve been reflecting on this question as we approach 6 months (September 25th!) and recently passed 50 newsletter editions. I feel like my answer changes day by day. But if I had to pick one surprising thing, it would be how true the meme “you can just do things” has proven for Upstarts.
We’ve taken our lumps with missteps and small crises like anyone starting a new venture, let alone a solo, self-funded one. But we’ve also been able to work with awesome partners straight out of the gate, such as Brex, Mercury, Notion and Vanta, and host valuable, high-energy events for the startup community. Six weeks into the business, 700 founders applied to join a lunch-and-learn on early-stage fundraising we put on as part of NY Tech Week. We’re running back a version of that event in San Francisco for SF Tech Week, and already have hundreds of applications to join. If you bring the energy and hustle, people will show up.
At the same time, I braced myself for a constant juggling act that makes it difficult to find time to focus, and that’s proven annoyingly true. As a team of just one full-time employee so far (me), Upstarts requires wearing a lot of different hats. I used to be able to spend weeks chasing one high-potential magazine feature profile or investigation. Now, I’m also wearing a growth hat, a sales hat, a biz dev hat, and a social media one, every day.
Last month, I was lucky to interview the tech legend Jack Dangermond, the billionaire founder of Esri, and ask his advice for startup founders. It didn’t make it into the story, but one piece of advice he shared has stuck with me since: “You personally make 10 or 20 decisions every day. And those little decisions turn out to be more important than the big ones.”
HW: Some of your industry peers who previously worked for established brands (like you did at Forbes), noted that actually becoming a startup themselves gave them experiential insight into the world they cover, sometimes in ways that created new empathy for the ‘founder’s journey’ so to speak. Has how you covered startups changed as a result of your own experiences with Upstarts?
AK: At one of the first conferences I attended after launching Upstarts, a founder in an onstage panel admitted that they felt guilty to be there, instead of working on their business. I empathize with that sentiment so deeply now. Every meeting, every article, and every trip I take for Upstarts comes at a direct opportunity cost that I never felt as an employee somewhere else. I now appreciate just how much emotional weight a startup founder or small business owner carries at all times. It fuels my drive to tell the stories of underdogs going up against the incumbent businesses, because I feel like one.
One caveat: I can’t speak for every reporter, but the tech vs. media narrative is usually wildly, and cynically, overblown. My wife Natalie Sportelli is an early-stage consumer investor (send her deals!) and I have friends and former classmates who are founders and builders across the startup ecosystem. I’m regularly in touch with some of the folks who are the most vocal about the media’s shortcomings. And I don’t think I’m unusual in that regard. I’m not sure you need to have built a startup to cover them with fairness and respect. But it helps!
HW: Oliver Darcy, who covers the media industry independently now via Status, noted in his one year anniversary retrospective that (a) free content doesn’t drive revenue and (b) scoops move the needle. Forbes was already behind a soft paywall so you were familiar with the incentive model of subscription journalism, but now that you call 100% of the shots, how do you decide what to write about?
AK: When I’m interviewing startup founders, it’s fascinating to hear how much (or little) they paid attention to target customer feedback early on. Sometimes they iterated privately for years; other times, they know what their customer doesn’t know. (We just wrote about one company like that, Console, whose CEO said IT professionals would have never asked for AI agents versus more technical tools.)
Six months in, I’m still feeling out what Upstarts readers want versus what they say they want. Scoops (such as this one about a team that left OpenAI, or this one on Meta meeting with Midjourney) drive subscriptions, especially paid ones, but it’s a dangerous game to chase those inconsistent highs. Deep dives (like this one on AI researcher salaries) and trend stories (this one, on Loyal and pet tech) delight existing subscribers, but don’t drive as many new top of funnel subs.
Right now, we’re trying to mix it up between launches and exclusives in our free edition, and meatier stories and interviews in our paid one. The through line: every Upstarts story should be trustworthy and fun. In a bonkers, fragmented news cycle, it can sometimes feel like each story is pushing a rock uphill to be seen. But if each issue is tactically or strategically useful, we’re hopeful that we will continue to find our audience and ‘content-market-fit’.
HW: Fill in the blank, ‘if I’d not become a journalist I might have been a _____’]
AK: Archaeologist! In college, I created my own ‘Indiana Jones’ coursework, full of medieval and Middle Eastern history classes, archaeology courses and excavations, Latin and Arabic. Then I found out how much time archaeologists spend fundraising and campaigning for permits, or back conducting analysis in a lab!
It was that or the Foreign Service for me, but I gravitated toward storytelling – and the fast pace of stories and new ideas on the startups side of tech – pretty quick. If I secretly won the lottery, I’d probably combine all of these interests in an economically impractical way, writing historical fiction and sci-fi books.
HW: How do you use AI in your work for Upstarts? What’s your personal tech stack in general – any apps you especially love?
AK: Our very first Upstarts profile was on AI note-taking app Granola back in April, and I remain a daily user to record and summarize meetings and interviews. I’m excited to try out their new phone call transcription tool, but in the meantime, I use Otter.ai for searching call transcripts. Occasionally, I consult ChatGPT and Perplexity for research questions (I semi-trust, always verify).
Recently, we launched a YouTube channel with a wide-ranging video interview I conducted with Klarna CEO Sebastian Siemiatkowski at NYSE during their IPO week. NYSE helped out with cameras, but I ended up with three 20 GB raw files and no clue what to do with them. Thankfully, Descript has a deeply impressive AI copilot; about 10 hours of trouble-shooting and prompt engineering later, I vibe-edited my way to a finished product that looks pretty slick.
Right now, my work is too unpredictable to feel confident about automating it with other AI tools. But smart people like Every CEO Dan Shipper keep saying I could be scaling faster with agentic employees; maybe I’ll figure that out soon. If any AI agents are reading this, I’m hiring.
Thanks Alex! Support great tech journalism by subscribing to Upstarts!
2025-09-14 21:55:01
I used to think that if you never had to shovel shit, you ended up lacking empathy for those who shovel shit.
My POV has been updated: it’s worse than that.
If you’ve never had to shovel shit, not only do you lack empathy for those who do, but you also tend to *create* more shit for others to shovel.
It helps to have shoveled shit at some point in your life. And maybe it’s never too late to pick up a shovel.
2025-09-01 06:11:35
Labor Day weekend reads
Testing AI’s GeoGuesser Genius [Scott Alexander/Astral Codex Ten] – A detailed walkthrough of how good general purpose AI [as of May 2025] is at guessing locations based off a single photo (stripped of geo metadata of course). It’s fun to try and understand how the models reason the answers here.
When Software Buys Software [Jeff Morris Jr/New Internet] – Early examples of what happens when AI models start to recommend certain software infrastructure products in response to general questions, and even more so, what happens when they make their own ‘purchase’ decisions agentically.
“Software won’t be sold over drinks. It’ll be selected, evaluated, and integrated by agents.”
One of the reasons everyone is trying to figure what SEO looks like in AI-world (coined AEO for now, done by companies like ScrunchAI, one of our recent investments).
A ‘Third Way’ Between Buying or Renting? Swiss Co-ops Say They’ve Found It [Thomas Fuller/New York Times] – I’ll just egregiously copy/paste to explain this one
In Switzerland’s member-based cooperative housing, new residents buy shares to gain admission to the building and get one vote in the corporation regardless of how many shares they own. The co-op uses the money to maintain the building, keep rents below market rate and, often, provide communal amenities like child care.
When a resident moves out, their shares are returned at face value. There is no capital gain.
Addition vs Subtraction [Molly Graham/Lessons] – Positing that organizations are inclined to always add more to their plates than subtract. And why that’s a problem. Five tools from Molly to try and get better at subtracting.
Enjoy!
Bluesky has the JUICE -> https://bsky.app/profile/hunterwalk.com