The Rise of the Solo Capitalists

From The Next Big Thing by Nikhil Trivedi — read the original.

Notes

• Angel investors have been very important members of the fundraising ecosystem for a long time. But over the last couple of years, there’s been an increase in individuals investing not just at the earliest stages of companies, but at the Series A and beyond. Angel Investing
• Super angels like Aydin Senkut, Jeff Clavier, Josh Kushner, Mike Maples, and Roger Ehrenberg grew teams around them to form what are world-class firms a decade later - Felicis Ventures, Uncork Capital, Thrive Capital, Floodgate, and IA Ventures, respectively. Others like Manu Kumar, Michael Dearing, and Steve Anderson (who is somehow not named in the BI piece) have remained solo.
• What are some of the characteristics that define solo capitalists? Fund Differentiation
  • They are the sole general partner (GP) of their funds
  • The solo capitalist is the only member of the investment team
  • The brand of the fund = the brand of the individual
  • They are typically raising larger funds and writing larger checks than super angels - i.e. $50M+ funds, and able to invest $5M+ in rounds.
  • They are competing to lead Seed, Series A, and later stage rounds, against traditional venture capital firms
• I was on a phone call with a very sharp LP several months ago who brought up the solo capitalists and posited that their rise may be the biggest threat traditional venture capital firms have seen in a long time.
• The importance of an individual’s brand has been steadily increasing in venture capital for quite some time. Founders are more often than not picking an individual partner who they want to work in a financing round, based on the relationship built with them, and based on their brand and expertise, instead of the firm’s.
• And because it’s unlikely that their fund sizes can balloon dramatically in size, the solo capitalists may generate higher multiple returns on their funds. Investment Returns
• https://twitter.com/semil/status/1278699530360254464?s=20