Former Founders Fund GP Brian Singerman and co-founder and managing associate of Quiet Capital, Lee Linden, are looking for over $500 million for a brand new fund referred to as GPx, three folks accustomed to their technique informed TechCrunch. A significant portion of GPx’s fund will come from Founders Fund co-founder Peter Thiel, these folks mentioned.
GPx makes use of a two-pronged technique. The agency will make investments roughly 20% of the capital into funds managed by rising VCs who’re focusing on pre-seed and seed-stage startups; the remaining capital will go towards partnering with rising managers on main later-stage investments (most certainly at Collection B) of their breakout firms.
It’s a reasonably completely different strategy in contrast with how most enterprise corporations function. Whereas typical VC corporations make investments all of their capital instantly into startups, GPx is adopting components of what’s generally known as a fund-of-funds mannequin, a much less frequent funding technique the place a agency invests some portion of its capital right into a portfolio of different funds, reasonably than instantly in underlying belongings, reminiscent of startups. Whereas a fund-of-funds gives restricted companions a handy approach to entry under-the-radar or hard-to-access corporations, a big downside is the twin layer of charges: these charged by the fund-of-funds and people by the underlying managers.
Whereas capital raised by fund-of-funds corporations hit a 16-year low final 12 months, based on PitchBook, Singerman and Linden are betting that their private manufacturers, distinctive networks, and a technique that’s solely partially a fund-of-funds will encourage restricted companions to open their checkbooks for GPx.
Singerman and Linden could also be on to one thing. As enterprise capital concentrates within the largest funds, a few of these corporations’ greatest buyers are now not all in favour of being part of an enormous machine. They’re leaving the behemoth corporations to launch their very own investing outfits the place they are often extra nimble and specialised.
GPx is betting that the subsequent technology of VC buyers will determine and again many sturdy early-stage firms, permitting Singerman and Linden’s agency to co-lead later-stage investments within the rising managers’ most profitable portfolio firms.
Right here’s the place GPx’s technique turns into notably beneficial: Early-stage VCs typically attempt to train pro-rata rights in later funding rounds (Collection A, B, and past), however their fund sizes usually stop them from sustaining their share possession in top-performing firms. When confronted with such alternatives, small VCs typically scramble to lift particular objective autos (SPVs) from their present restricted companions. But, these processes are time-consuming, permitting different buyers to snap up coveted fairness spots in probably the most sought-after offers.
With GPx’s capital behind them, rising funds may have a chance to not solely train their pro-rata rights but additionally lead a later-stage spherical.
The Info beforehand reported that Singerman and Linden are launching GPx, however didn’t present particulars concerning the fund’s goal measurement and different technique particulars.
Singerman and Linden didn’t reply to a request for remark.
Editor’s word: This story has been up to date to replicate Peter Thiel’s involvement with GPx.
