6 First Time Fund Managers Explain How They Are Preparing to Succeed During a Recession – Meczyki.Net

for a while Months ago, the enterprise market was on a historic bull run that lasted for the better part of a decade. Many new investors and funds entered the fray, but the past few years also saw a proliferation of new venture firms. This trend peaked in 2021, when 270 funds collectively raised $16.8 billion for the first time. pitchbook data,

This means that there are now about 300 firms in the US alone that have raised their first funds in a bull market and find themselves operating in very different market conditions today.

Over the past few months, many established investors have speculated that many of these new funds will struggle to survive even if the market turns bad. But these legacy VCs are forgetting that new entrants don’t need to think about an existing portfolio containing dozens of startups before making each decision.

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What keeps these first-time fund managers up at night is not their chances of survival or if they raise a second fund, but rather how to best manage their time and assets in a volatile market. “The biggest challenge has been around scaling up my team’s time, especially managing a growing portfolio at a time when founder support is critical,” said Ariana Thacker, Founder of Conscience VC.

Several such investors, such as Cambrian founding partner Rex Salisbury, said a recession is actually a good thing for new funds looking at their long-term goals: “The current macro environment is causing the most pain in Series B and beyond. But the exit environment that matters for a fund like ours, which is investing very early, is more than seven years in the future,” he said. “So, price compression in the short term, which is just starting to ease in the early stages of the enterprise market, is a tailwind, if anything.”

That doesn’t mean these VCs aren’t cautious about what they’re willing to bet on. Giuseppe Stutto, co-founder and managing partner of 186, said, “Our process for assessing companies hasn’t changed, but we certainly reorganized our compass to assess the present rather than the estimated future value of those companies.” in which we are looking to invest. Enterprise.

“It makes sense that we were more thoughtful than ever with respect to portfolio creation and ensure that we leverage more leverage in either vintage or ‘company stage’ pricing, e.g., 2021, pre-product, ex-revenue are not,” he said.

So how will he be a first time fund manager? Meczyki.Net+ asked six of them to find out how they are preparing to deal with this volatile market, how this environment has changed their approach towards investing and the best way to grow Fund II Is.

We spoke with:

Giuseppe Stutto, Co-Founder and Managing Partner, 186 Ventures

How would you describe the thesis and structure of your fund?

We are a $37 million pre-seed and seed-stage fund focused on multiple industry groups – fintech, web3, enterprise SaaS, digital health and consumer-based innovations. Although we are geographically agnostic, we anticipate that the majority of Fund I investments will be US based (today we have only one based internationally in Nigeria).

Our strategy is that of a seed-stage generalist. That said, we attribute our advantage to our ability to provide practical “0 to 1” company development information, given our founder/operator background and access to a network of industry leaders across multiple industries.

We have a traditional VC vehicle structure over a 10-year life cycle. The team today is made up of three full-time employees – Me (Founder, Investment Team), Julian Fialco (Founder, Investment Team), and Sophie Panaris (Platform and Ops).

How are you preparing for current, more conservative market conditions after raising funds for the first time in a bull market?

We like to think we are consistent in how we source and consider investment opportunities through both the bull market and the current market.

We started investing in September 2021, so we have a fair amount of bull market investments under our belt (about 10 of our 11 investments were completed during bull market times). We have two outstanding commitments, so we expect that by the end of August, we will have completed at least three investments after the bull market.

Our process for assessing companies has not changed, but we have certainly restructured our compass to assess the present rather than the projected future value of the companies we are considering investing in.