The Deck Deluge: Boris Wertz’s Journey Through 200 Decks from Emerging Managers Raising Today

With Boris Wertz,
Founding Partner, Version One
This week on Swimming with Allocators, Earnest Sweat and Alexa Binns welcome Boris Wertz, Founding Partner at Version One, about his experience as an LP investing in emerging fund managers. Boris discusses his motivations, such as giving back to the VC community, learning from innovative spaces, and achieving good returns. He also shares insights on the importance of having a differentiated strategy and the potential of areas like crypto and climate tech. Additionally, don’t miss our insider segment as Martin Armstrong of Armstrong International talks about the importance of nailing talent to build successful products and teams, emphasizing ownership and accountability.

Highlights from this week’s conversation include:

  • Boris’ Reasoning for Investing in Emerging Managers (0:57)
  • Wrong Reasons for VC Investment in Emerging Managers (3:15)
  • Funding Strategy at Version One (4:28)
  • Motivation for GP Level Investments (5:27)
  • Areas of Interest for Investments (6:59)
  • Relationship with Fund Managers (8:24)
  • How One Tweet Generated an Overwhelming Response (11:56)
  • Insider segment: Building Successful Teams with Ownership and Accountability (14:13)
  • Trends in VC (24:32)
  • Climate and Tech Funds (26:48)
  • Investing in Climate (28:55)
  • Fundraising Strategies (29:53)
  • Advice for Emerging Managers (32:10)
  • Fundraising Tactics (35:40)
  • The LP Investment Mindset (37:53)
  • Importance of Conviction in Risky Asset Classes (39:28)
  • Success Stories and Non-traditional Paths (40:02)
  • Selecting Emerging Managers (41:13)
  • Final thoughts and takeaways (43:33)


Boris Wertz is an entrepreneur turned investor. He is Co-Founder of AbeBooks, which sold to Amazon. And an early-stage investor and founding partner at Version One. Their Current portfolio of 100+ investments, includes Ada, Booster Fuels, Coinbase, Dapper Labs, Jobber, Outreach, Shippo, and Uniswap.

Armstrong International is a specialist financial services executive search firm with 30 years’​ experience across Public and Private Markets. Our consultants possess deep subject matter expertise within; Fixed Income, Equities, Private Equity, Private Debt, Digital (Data Science & Technology), Private Wealth, Corporate Finance, Real Estate, Infrastructure, Emerging Markets, Credit, FX, Emerging Markets & Commodities We are trusted by some of the world’s leading financial institutions, who use us for 3 primary reasons: industry expertise, speed of hire, and ease of doing business. We like to innovate and have been at the forefront of some of the most profitable and exciting changes in the industry, including the technology revolution and the ever-expanding world of Private Markets.

Swimming with Allocators is a podcast that dives into the intriguing world of Venture Capital from an LP (Limited Partner) perspective. Hosts Alexa Binns and Earnest Sweat are seasoned professionals who have donned various hats in the VC ecosystem. Each episode, we explore where the future opportunities lie in the VC landscape with insights from top LPs on their investment strategies and industry experts shedding light on emerging trends and technologies. Follow along and subscribe at

The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this podcast are for general informational purposes only.


Alexa Binns 00:12
Today we are speaking with Boris words founding partner of version one. Boris is an entrepreneur turned VC backing mission driven founders at the earliest stages. He’s on the show today. However, as an LP, Boris has backed close to 20 emerging GPS over the past five years. And recently, Boris innocently tweeted that he was looking to add three to four more GPs to the portfolio this year, quote, DMS open within days he had received over 200 decks. Be careful what you ask for. Boris, thank you for coming on the show. We’re so curious to hear what you’ve taken away from this firehose of GP outreach.

Boris Wertz 00:53
Great to be here. Thanks for the invite.

Alexa Binns 00:56
Thank you. You, you represent for us this LP archetype, which is the VC LP, we’ve seen many first time fund managers backed by more established VCs. And I assume the reasoning for some is access to early stage deal flow, insider information. I’m curious, what’s your reasoning? And why do you invest in other GPS?

Boris Wertz 01:25
Yeah, so I think originally, when I started about seven or eight years ago, it was really much more about giving back. The other people that put me into business when I was an emerging manager, a manager back in 2012, and helped me raise my first fund. And I thought, when I met an emerging manager that I like, I just wanted to be a small part of that person being in business. I think over time, I realized two more things. The first one was, I was just learning lots, I think, in the emerging manager space, it’s really where lots of the innovation happens. People that move very fast, great new models of great new positioning, great new offerings for entrepreneurs. And so it was just a great way for me to kind of stay connected and really close to where innovation is happening in the venture market. And then, over time, I think also, I refined my investment approach a little bit and understood the kind of good from a bad deal flow. And I really think that ultimately, I think I’m in a great position to make good investments in the emerging mattress space, and it can be a really good kind of return strategy. So it really evolved over time. But having said all that, VCs investing in emerging managers has become pretty standard nowadays, lots of bigger funds that have their own programs, or investing from the GP. And obviously much more professionalized than it was when I started seven or eight years ago.

Earnest Sweat 03:07
Boris, do you think they’re wrong reasons for VCs to be investing in emerging managers?

Boris Wertz 03:15
No, I don’t think it’s the wrong reasons, per se, I think as an emerging manager and taking money from another VC, later stage Vc, Vc, you just have to be clear about the intentions, right? And kind of on the softer side. People want to build a relationship. And I think that’s completely fine. Sometimes it’s, it has gotten much more structured these days, right? Were people asked for weekly pipeline updates, and weekly calls, etc. And if you have too many of those, then that really takes away from your time making good investments and thinking about your own firm. So I think it’s generally good with good intentions, but just be careful what you ask for.

Earnest Sweat 04:02
Yeah, at that point, I work for you and you’re my managing partner. Weekly. That’s correct. Pipeline meeting, upload your CRM

Alexa Binns 04:11
here. Exactly.

Boris Wertz 04:13

Earnest Sweat 04:16
Moving kind of the X execution, is the money coming from you personally, or is it actually a part of your strategy at version one.

Boris Wertz 04:27
So the vast majority is coming from my own personal money. We have done some strategic investments in, in other funds. For example, we invested very early in some crypto funds in 2016 17 was much to learn. I think, in general, we want to keep that apart, you know, kind of version one, our investors, our LPS payoffs for making direct investments in startups. And it’s not a fund to fund and anything we do outside of that to build our network and And LoRa, etc, should either come from the GP or from our personal kind of resources. And that’s how I think about it. But obviously, you know, kind of different models out there, some other people have dedicated pools within their funds to, to invest in other funds.

Alexa Binns 05:20
And, and what’s motivating you now to be interested in making three or four more GP level investments?

Boris Wertz 05:25
You know, I think it’s a really interesting phase in the same way that I would say, in the startup ecosystem, you probably have some of the most passionate and hungriest entrepreneurs out there, given that fundraising is really, really tough. You know, kind of the opportunistic people have probably left the market, I feel the same way about the kind of fund managers that are raising right now. The opportunistic people have left, that the people that have a truly differentiated strategy have true staying power really want to power through, we will make that their career we want to build a fund down the market. And so at the same time, you have very minimal interest right now from lots of LPs and to invest in emerging managers, everybody’s going back to the existing franchises, a branded, kind of BCS. And so from that point of view, I think there’s a real opportunity for Docker merchant managers that are hungry, that are smart, that are hustling at a time where there’s not a lot of competition for backing these types of VCs.

Alexa Binns 06:35
Yeah, yeah. Anecdotally, a couple, a couple of my friends on the LP side are saying it’s, it’s felt like an onslaught, the number of people who are showing up in their inbox asking you to fundraise starting now. Your tweet mentioned areas of interest, crypto climate, deep tech, India, how come?

Boris Wertz 06:59
So I think it’s very much kind of educated from our own thinking, Edward and one. So first one is a generalist fund, we’re currently investing out of a fourth fund, it’s a $70 million seed and precede fund. And the way we always think about alpha is, if we can invest in some of the best entrepreneurs, that kind of build something in new markets, at the start of a new technology wave, that’s where it really becomes interesting, right? And so we continuously think about what are these new areas that are interesting. And the four you mentioned, crypto climate, deep tech, India, are some of the really interesting new waves that we see out there. We invest in these areas at version one. But we also think that more can be done in these areas, and B C’s that are merchant managers that are specialized in these areas, can actually put themselves in a great position to generate amazing returns over the next decade or so.

Earnest Sweat 08:05
With the types of funds that you’re investing in, which I believe are preceded and seen by microphones. How do you position the relationship for Is it a one time engagement? Or do you see this as something that you’d re up in?

Boris Wertz 08:24
So I would say perhaps a little bit less formalistic diagun institutional P that always says, Well, if you back up on one or this fun, be definitely going to back in the next and perhaps the third fun from here. Some of the funds were invested a little earlier, I’m now infantry, so I’ve really upped over time, but it really depends on a few things, obviously, kind of how these funds evolve, and kind of what I learned more about these fund managers. But secondly, and probably most importantly, is also how the size of the fund kind of evolves. strong believer of small font sizes, drive, outsized returns, right. And obviously, some emerging managers go into a very quick path of scaling up and go from what is initially a $20 million fund to a $70 and $150 million fund over fund two and three. And that’s, that’s obviously I mean, great for them, if they can do that, probably not as much as my own investment strategy. So that would be less of a fit, going forward

Earnest Sweat 09:31
support. Do you think about what you can provide? And you talked about paying it for what else you can provide to these fund managers?

Boris Wertz 09:40
Yeah, listen, I think it always comes down to two or three things. Most important for every emerging fund manager is other LP introductions. And depending on the area, depending on the size of the font, obviously I have a bunch of other LPs I can introduce them to. That was certainly a little easier, let’s say two or three years ago than it is today. But I think I’ve been able to be really helpful to a bunch of my GPS, in terms of raising additional money. I think the second thing is kind of having been in emerging, Matt are having learned over a little bit more than a decade on kind of how to build a fund, how to think through portfolio construction, all of the stuff that just takes time to to mature as a boutique BC, I think, cheering up and you know, it’s, it’s, there’s no formal program or anything like that. But it’s certainly possible to connect with a bunch of RPO GPS over time, and try to give them advice as these questions come up for them. And then the third one is, is much more on the purely operational side. Like, as you grow, you can have fund administration, legal, CFO, et cetera, et cetera. I think there’s just a lot of advice that can be shared there. It

Earnest Sweat 11:09
makes me think of a friend of mine. cron yet at Kindred ventures always speaks about us amazing. Yeah, he’s an awesome guy. Speaking about, are you an investor or fund manager, and those are different things. And so a lot of people come in as investors starting to fund but need to get that experience of how to be a true fund manager, which includes the operations and the LP manager. So I want to continue on before you, you know, you sent the tweet, what is your mindset? What was the motivation? And kind of, what did you think? What did you expect? The response was?

Boris Wertz 11:55
Yeah, I mean, so, you know, I had been kind of relatively open about that. I was interested in investing in other VCs for some time now, but never really made it DOT public, as in a tweet, and I thought, like, why not? See what that unleashes? I certainly didn’t expect that reaction. I thought it would get a few dozens in bones, but not like hundreds, literally. So good. Just shows how many emerging GPUs are out there right now raising funds. And yeah, it was definitely something that had gotten much more reached than I had ever, ever expected. Yeah,

Earnest Sweat 12:39
so when I believe you get about 200? Yeah, that’s correct. Yeah. 200 GP decks? How did you sort them?

Boris Wertz 12:49
So I think there is one way very quickly about font sizes, I had a pretty clear idea about the kind of font sizes. So sub 20 million was one of the criteria. Secondly, I was very clear about what areas I was interested in, in investing. And we mentioned that before, crypto climate deep tech in India, so lots of generalist funds out there, that just had way too much overlap with what we’re doing at version one and two wasn’t really of interest. And then thirdly, lots of funds that are different geographies and kind of European funds, Africa, Southeast Asia. And you know what? Well, I’m pretty sure that there’s, there’s amazing opportunities, I wasn’t focused on that right now. So out of the 200, you can cut it down very quickly to perhaps 30 or 40, that actually falls into the criteria, what I was looking for. And then from there, it was just, it was a matter of looking at these 30 to 40 funds and looking at what is what fuels differentiated what is interesting, in what networks are they playing etc. And I had about two dozen conversations where it was digging in a little bit more.

Earnest Sweat 14:09
Now we’re gonna take a quick break to speak with our sponsor. On

Alexa Binns 14:14
The show today has industry expert and sponsor Martin Armstrong, founder of Armstrong International, the global executive search firm specializing in financial services. Thank you, Martin, for partnering on the show. Martin, what is the origin story behind Armstrong International. Armstrong

Martin Armstrong 14:30
International started when Goldman Sachs landed in London in 1987. And Goldman couldn’t get anybody to work for them. Nobody was interested in working for Goldman Sachs because nobody had heard of Goldman Sachs. They wanted to work for British banks like Watson Bearings and people like that. There was a very, very frustrated partner called Bob Steele, who Ah, who basically had me over to his office, this was I just can’t get anybody who wants to come and work at Goldman Sachs. And, you know, we’re a serious bank. And so I basically started to recruit for Goldman Sachs for 10 years. Over 150 people at Goldman Sachs built Armstrong International, on the back of that knowledge and really absorbed everything that I learned from that firm, which was, you know, the talent is really, really important. And in those days, every single partner cared deeply about talent. And, and, you know, so you know, famous people like Bob Mnuchin, who was like, the first one of the first people I worked with in the US, you know, these guys were really, really incredibly good at attracting great people, organizing those people, properly training those people. And it really got to a point I remember, you know, when I, you know, by 2002, having worked for them for 13 years, and doing a lot of recruiting for them, you know, the depth of the bench at that firm was, and still is, simply incredible. I mean, it was really incredible. And they should, that’s, you know, that was the mothers need. I learned that the knee of Goldman Sachs of how to be really, really good at recruiting people and how important talent was. So that was, that’s where we came from.

Alexa Binns 16:22
Now, everybody I know who’s spent any time there, the people development piece of Goldman is kind of legendary. So I can, I can see that you were part of you.

Martin Armstrong 16:37
I mean, the thing I found frustrating, to be honest with you as the 15 interview process, but you know, that type of detail, that type of focus really meant that they never made mistakes, or they very rarely made hiring mistakes, they were just really, really good at it, you know,

Alexa Binns 16:53
hard to get in. But once you’re there, you really want to be there. Does it make sense? Great. And what does Armstrong international focus on today? So

Martin Armstrong 17:03
Today, we focus on any financial services company, to whom talent is important, okay. And that tends to be venture capital companies, private equity companies, private credit companies, because in those companies, they, you know, the quality of every single person is really, really crucial. We tend not to work for franchise companies in the financial services business, these are, you know, where talent is less important than franchises more important, but we’re less interested in that. But the, you know, where we come across an organization that has a real commitment to and wants every single hire to be crucial, and to deliver the top line, that’s something we’re very, very interested in, and we’d like to work with. And we mainly like to work with founders, if we can, you know, we don’t like it, if somebody’s delegated the responsibility of talent acquisition to a committee, we’d like it to be somebody who’s a business owner, or a senior person in the organization who wants to have the very, very best team around them. And the great thing about the finance industry, and the venture industry, is that, you know, the quality of talent has a massive impact. You know, it’s kind of like a football team. So, you know, if you don’t have the right people, and they’re not organized properly, you’re not going to be successful.

Alexa Binns 19:04
That makes me curious, Martin, what, what is the argument for having founders versus a committee? Manage hiring why, why is this so valuable?

Martin Armstrong 19:15
I think it’s a sense of ownership. So when I started Armstrong International, I had a mentor, a guy called David Ogilvy, who had an advertising agency. And I used to write to him and he used to give me advice. And one of the things he said to me was, or he actually wrote it in his book, he didn’t say it, but I read it and I talked to him about it was in all of your, in all of your, in all of your towns and all of your cities, there are no statues to committees. Okay. And, you know, the difference between a founder and a committee is ownership, okay. A founder is on the line, you know, they are engaged. Each they’re fully dependent upon every hire. And it’s that kind of, you know, it’s the difference between, you know, bacon and eggs, you know, you know, the pig is committed to the chickens involved, right? So, you know, we’re interested in, in the, in the baking guy who’s really fully engaged or girl who’s really fully engaged and is absolutely committed to each hire and, and we want to be held accountable, you know, that’s really what we really like is when somebody says, you know, something, if you mess up, it’s gonna cost you. And we like corporate memory because you know, where we operate best is when somebody’s saying this, I’m, I’m making Barbie, I only want Margot Robbie. Okay, I’m not interested in anybody else, it’s got to be Margot Robbie. So we’re interested in, you know, we’re not interested in process recruiting, where you’re going down the list we’re just interested in who’s the absolute best person for this role that’s going to make the biggest impact on this role? And how deeply can we think about that? You know, so how do we really break this role down to human qualities that are gonna affect the outcome. And, you know, as you know, we have qualities, we’re looking for it in all people, we’ve got this thing called a Star Wars factor in our organization, it’s called the Jedi, which is judgment, empathy, drive and intellect. So we’re looking for that in every single person, you know, that’s their kind of universal qualities of talented people. But when you get into, you know, certain jobs, you know, if you’re into ops roles, or revenue officer roles or finance roles, you know, what you’re really looking for are very, very specific talents. And, you know, the one talent that we’re kind of, we’re not so hard on or that we’re not that interested in, is leadership. Because if you have a really well organized, talented team, there’s not a lot of need for that, you know, there’s just, if you’ve got people who are well aligned in a structured organization delivering, you won’t need a huge amount of leadership. So yeah, I don’t know if that’s true. That’s

Alexa Binns 22:15
good news. For anybody who’s been brought in through Armstrong International, you aren’t going to get leveled.

You’re, you’re the guy, you’re in charge. And I,

Alexa Binns 22:26
I believe you also have a lot of experience filling board seats, anything that’s helpful for us to know about what we should be considering. When filling some of these later stage boards. I

Martin Armstrong 22:40
I think that the most important thing is for people to know what a board is supposed to do. Okay? And you’d be surprised how many people we place on boards, where they don’t really know what a board is supposed to do. Okay. So the board is supposed to be there to look after the interests of the stakeholders. And the most important thing in that scenario is transparency and process. Okay. So the responsibilities of those elements of the process are handed out to different board members. We find that a lot of the time, some people go on boards, and they think they’re kind of in a quasi executive role. And you know, that’s not good. I think that if you’re going to serve on a board, your job is to hold the CEO, and the management team accountable for their strategy. Now, in some cases, one of the things we don’t like is when we see the chairman and the CEO being the same person, because in that scenario, you’re marking your own homework, right? So we like to have a vision between the board and the executive management team. We see the board is to hold the executive management team accountable and to deliver on the strategy. And, you know, we constantly remind board members and people going to serve on boards that they are there for the stakeholder. They’re not there for the management team. They can empathize with the management team, but they’re there for the stakeholder. And that’s very, very important to remember. Because if you are truly there for the stakeholder, then you don’t have a problem communicating with the stakeholder on your fears or concerns about a management team. And that’s something that doesn’t happen quickly enough in many, many cases. And that’s a big, big problem. Martin,

Alexa Binns 24:18
you are such a wealth of knowledge and a super connector in that ecosystem. Thank you. For folks who are interested in getting in touch with Armstrong International. Feel free to email QB at Armstrong. I n That’s UB at Armstrong i n And now back to our LP interview.

Earnest Sweat 24:36
What trends Did you see? And this makes me think of something I’ve recently read from one of our good partners SBB came out with their state of the market. And last year, the second half of 2023. They said that one in four funds that were raised or maybe raised. Were AI focused on So what trends have you seen?

Boris Wertz 25:02
Yeah, I mean, so first of all, I think it’s super important to remember that generally differentiation as a VC is relatively tough. Yeah. Yeah, a kind of capital in a certain way is a commodity. And kind of when you talk about trends and differentiation, kind of, I think it’s interesting, kind of important to note it is like, it’s not that easy to differentiate, right. I think the second thing, I think how to, to frame it, in terms of trend, I think it has gotten so much more important to show not tell, really showing a track record, really showing your network, really showing fields you’ve done and entrepreneurs you’ve worked with, versus just spinning up, spinning up, kind of the same words that everybody’s using it. But, having said all that, when you look at the trends, I would say word colorization is probably the most powerful one. I think we’re probably past the opportunity for emerging managers to come in as a generalist at this stage. But completely excluded if you have an amazing track record, perhaps you come from a from a from a branded firm, you have some unique network, but in general, I would say this is probably much more an opportunity for a climb a specialized climate five specialized crypto fund, specialized deep tech fund, and hardly also regional Stratton’s kind of seen tons of people that focus on certain regions, if that whole countries or kind of sub regions within North America, etc. I would say, but in general, verticalization, both around categories, as well as reasons, is probably the biggest trend right now.

Alexa Binns 27:12
Do you think those will scale? Okay, or those? Do those serve you very well, but not necessarily the GPS? forming them?

Boris Wertz 27:20
Yeah, I think it really depends. I think, obviously, the biggest challenge of worry, bleep focus funds is the category you have been betting on doesn’t really long run as long and as far as you thought, and you’re stuck in an area that is not not interesting enough and not growing as fast enough. The big advantage of a vertical fund is obviously you can go much deeper in terms of your network and the value add to your entrepreneurs. So it’s a real trade off. So I think the question is really what is the underlying trend? And how close is it to a generalist VC? So I would say when you think about climate and crypto and deep tech, these are actually areas that field a very large, lots of room to to run, and very different to how a generalist we see things. That is probably a little bit less true. So in AI, you know, AI, you would probably argue it’s an evolution of the current paradigm, from internet to mobile, to AI. Everyone’s going to have aI at some stage. So it’s not going to be a differentiator. And most likely, it’s going to be harder to compete against generalist funds as an AI vertical fund up crypto climate and deep tech feels very different in that way. I’m

Alexa Binns 29:01
intrigued that you’re looking at climate right now, given that it feels like it has maybe peaked and is leveling out.

Boris Wertz 29:26
So first of all, I think you should never overthink if you invest in the early stages or invest in an emerging manager that investment in the early stages, like reality is these are 10 to 15 year cycles like whatever it was in last year or is in in two years doesn’t really matter per se. Thinking about climate first of all, I think it’s a tricky area to invest in because of the underlying so many different things from hard science etc. to application layer, different business models, different regions, etc. But I think that the long term view would be, there’s lots we have to figure out as humanity on the technology side to battle the climate crisis. And there will be lots of business opportunities to go after, it’s certainly going to be a much bumpier road than investing in software, which has its strong business model. From the start across the board, it was much clearer to scale, with much more of a homogeneous market, etc. So, the climate, you could argue that the returns for the winner is going to be very, very large, but there will be lots of losers that are just not going to figure it out.

Earnest Sweat 30:52
Most VCs haven’t seen 200 GP decks, and they think they’re very special, because maybe they haven’t seen those 200 GP decks a few weeks into weeks.

Alexa Binns 31:06
Currently, fundraising. Maybe

Earnest Sweat 31:10
some most VCs ever seen 200 founder decks and two, but curious, this experiment experience, how’s it informed your own funds strategy,

Boris Wertz 31:24
listen to takeaways. decks are overrated, the more you see of them, the more generic they look at, and, you know, kind of, like, I’m just being taken back to our own fundraising in the past. And kind of you look at the decK and you put kind of work in the decK. And ultimately, to a certain extent, it’s generic, right, and comes back to much more important these days. It is shown knotel and a kind of decK as an entry point. But ultimately, it’s really hard for anyone to make a decision on a decK. It’s just not not that differentiated. But I think more importantly for us, when you see how many emerging managers are raising right now, is this ultimately, kind of the reminder that we we are competing in a in a in a hyper noisy competitive market, and as version one, we need to evolve, and we need to kind of earn the right to be chosen as a partner for entrepreneurs on a daily basis. So right, I think it’s an inspiration for us to step up our game and kind of think we’re always driven by that. But this is a great reminder of you know, that the noise is even bigger at the competition of the bigger and then moving fast. So exciting times, I think, for VCs to continuously evolve the game and step up their game.

Earnest Sweat 32:56
Since the tweet, you’ve published some takeaways and advice for emerging managers. Could you just give us a kind of overview of what stood out to you? And?

Boris Wertz 33:10
Yeah, I mean, listen, there’s a few things I already mentioned, in terms of differentiation is generally tough. It is. Secondly, it is super important to point out an investment track record. I think we’ve seen too many emerging managers that raise the camera for a pure operating background, and invested perhaps a little bit too quickly over the last two or three years, and now struggled with portfolio construction and stuff like that. So pointing out your investing experience. I think the two things on top of that, that I feel like are important to remember, the first one is a concept I call like, kind of my minimum viable fund, right? So given it’s tough to fundraise, right? Now, you might have an idea of what you want to raise, but perhaps you should start with like, what do you need to raise? And so it’s not the one but it’s the need, and really thinking, like what is the smallest font size you can you need to raise to prove out your strategy, right. And as an example would be as a seed fund. You don’t need to have follow-on money to prove out your strategy as a seed fund. It’s all about do you get in the most important deals? Do you get allocated those? It’s not about KDU optimizing your follow on strategy, right? So follow on. It’s kind of nice to have, you need to have a fun size that lets you get into 20 or 25 seat investments with the right ownership stake right. And then the last one is kind of less less learn is just avoid kind of the the The backdoors that the thing that decisions you take right now for short term gain, but long term, just another wrong decisions. And so I’ve seen a bunch of people that get approached when they’re in kind of the, the most despair, a moment of fundraising of taking on a partner that has on paper, a great fundraising experience. It has perhaps a good investment track record, and helps with fundraising, but it’s ultimately not the right partner to build that fund over the years. And while it might help you close that fund, you’re gonna regret it down the road, because you have a partner that just is not aligned with you in terms of how we want to build a fund, what kind of investments we want to do. And so it might help you with that fund, but it doesn’t really help you build a great font down the road. The other thing I’ve seen a bunch of times is obviously LPS that want to anchor the fund, but want to take a big piece of the carry and, you know, in certain situations, that might be okay. But if the carry is too big, and the care you’re giving up is too big, you set a precedent that’s just very, very tough to recover from. So just be careful about the one way doors that have just bad consequences in the long run.

Alexa Binns 36:27
And any tactics, or things that you found for your own fundraising, that you would pass along to emerging managers now that I believe you’re on fund four?

Boris Wertz 36:41
Yeah, I mean, listen, it certainly changes from fund one to fund four, hopefully, as you build out a track record, and you build up an LP base. I think for fund one, I think the most important thing is just you show fundraising tracks, right. And that is like an in when you raise for a company that is like half the target size rather smaller than larger and show very quick traction towards that 40 or 50%. Commitment. And from there on, it really gets much, much easier. The challenge is just that LPS in general have no rush, they have no urgency to act. And unless you and there’s lots of LPs, to be honest, that jump on a bandwagon once it is about to leave the station, right. And so you have to make sure that they feel this is about to leave the station. And you have to kind of get them to that point. And so I just feel it’s really tough. If somebody has to start with a very large font, and a target they want to raise, have no traction, and they start from scratch in public. And six months later, you still have no much not much traction. It’s just very, very tough.

Earnest Sweat 38:07
That makes me think of a quick story. I was hearing from another emerging manager that okay, this is VC hearsay but have some proof points that it happened. But she was told that this is probably in 2015 emerging managers at the time starting a growth fund, went to LPs and said, you know, after the meetings, LPs were saying, Oh, you guys a little bit early, we’d love to be in touch for this one, too. And their strategy was like, Oh, I apologize, sorry, if you don’t invest now that you won’t be invited for the next fund. And they were able to get some of those people to invest. Now that’s a way to create FOMO. And that’s

Boris Wertz 38:52
a conference of doing it. Like aggressive fundraising strategies can work out, but you have to have the conference understanding and a plan B. Yeah, to do all that. Right. Yeah.

Earnest Sweat 39:06
You seem like Boris, a very thoughtful individual that uses thesis as well. Thinking about your criteria of what even GPs were looking for. After reviewing all these decks. Do you still feel there’s a certain strategy that you want it to see that’s not really out there?

Boris Wertz 39:26
I would say it’s less about the strategy than more about a mindset. There’s not enough conviction in this market and among VCs, right. Lots of people always talk about conttrarian thinking but then they jump on the next momentum deal. I think like history have always shown that the more conviction you have, the more unique you are in your investment thesis, your investment approach, and you keep it up over the long term, the better you will do it and I think In general, and it’s not on NBC, but I think in general investors, and it’s the normal human mindset, it’s always easier to follow someone else or follow a trend or follow a category or back some momentum. But I wish there were people out there that have a very clear, concise contrarian investment strategy. And we’re okay to kind of go against the mainstream for a long period of time. I

Earnest Sweat 40:28
I really appreciate that conviction is so key. And it’s so surprising sometimes to me that individuals dedicated their careers to one of the most risky asset classes yet want to treat it like it’s private equity, and can be financial engineering, and moving with the crowds when there’s no data that proves that’s how you’ll actually have great, you know, realize returns.

Boris Wertz 40:59
Yep. Correct. I mean, I always, when people asked me about, about kind of, how quickly do you see success? And how do you look at things? You know, I always say, like out of our fund one and two, which is a 2012, and 2014, vintage and total of about 50. portfolio companies, right. So six will drive, ultimately 90% 95% of the returns right? Out of these six, there’s two that pivoted in between, there’s to DOT for five to six years had no kind of positive feedback loop on the planting market, they had a really tough time raising money. And on paper, you wouldn’t have seen it, that these are great companies. And you know, they were like in tough categories, what were perceived top categories or in a location that wasn’t really that hot. And it just shows that these outliers, these success stories, usually don’t follow a normal path. Right. And I think people are trying to jump way too quickly onto these mainstream signals. And ultimately, success looks very different. And it’s not that kind of straightforward path that people usually kind of think of investing against. Did

Alexa Binns 42:25
you personally have to really roll up your sleeves and help? I’m curious about those two dark horses that others didn’t quite understand, from, as they as you said, on paper, or what they looked like that they were worth committing more to, did you? I’m curious if you ended up having to be the one with the conviction to keep those a lot.

Boris Wertz 42:46
Yeah, I mean, certainly not alone, I think there were a few co investors that had the same conviction. But we certainly kept on funding these companies based on progress, right, and ended up with very large stakes in these companies because nobody else wanted to fund them. But it wasn’t like a single handedly effort of over one, there were other people involved. But ultimately, I think if you have that conviction, if you’re that close to the company, and you see the progress they’re making on a purely business building side, right? You can be relaxed and wait for the market to come and suddenly be defined as a hot category or a hot startup or a location you can build a company from that can be really important.

Earnest Sweat 45:41
Lastly, Boris, want to ask, you know, Would you like any more intros to managers and

Boris Wertz 45:50
always always, are you done? Have you found you’re not? I’m not done. I mean, ultimately, I committed to more than the three to four I had originally set out because I just got a firehose of intros. And actually, you know, kind of got to know some really great emergent manager. So I’ll continue to invest in that space. And, you know, this is not a one time exercise. It feels like it has crystallized around this one tweet and kind of a month long period, but obviously there are emerging managers at any stage throughout the year that are rising and so I want to continue that space. So please, something my way.

Earnest Sweat 46:33
Awesome. Well, of course, we want to thank you, not only for being on the podcast, but also just the gyms that you’ve been providing and showing as an established fund manager how to pay it forward. I think that speaks volumes to who you are and the change you want to see in the industry. So we just want to thank you for everything you do and for being on the podcast.

Boris Wertz 46:56
Thanks for having me. That was a lot of fun.

Alexa Binns 47:02
See you later, Allocator!

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The Hosts

Earnest Sweat

Earnest Sweat is the Founding Partner of Public School Ventures, a dynamic syndicate of over 600 technical operators, go-to-market specialists, and LPs. Previously, Earnest built new venture capital practices at Prologis and GreatPoint Ventures. His focus is on investing in value chaintech, specifically vertical SaaS, applied AI, middleware, and B2B marketplaces, which are poised to revolutionize foundational industries like real estate, insurance and supply chain. Earnest has sourced and led investments in companies such as Flexport, Flexe, KlearNow, and Lula Insurance.

Alexa Binns

Alexa Binns is an angel investor and LP. An experienced investor and operator, she has climbed the ranks from associate to partner at Maven, Halogen, and Spacecadet Ventures and built digital and physical products for Kaiser, Disney, and Target. Alexa has worn every hat in venture from fundraising to sitting on boards. She invests in companies with mass consumer appeal, focusing on the future of shopping, health/wellness, and media/entertainment. Key angel investments include The Flex Co, Sana Health, and Chipper Cash.

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