Brian Singerman is raising over $500M for a new fund with a twist on the VC model

[ad_1] Former Founders Fund GP Brian Singerman and co-founder and managing accomplice of Quiet Capital, Lee Linden, are in search of over $500 million for a brand new fund referred to as GPx, three individuals aware of their technique informed TechCrunch. A portion of GPx’s fund will doubtless come from Founders Fund co-founder Peter Thiel, these individuals 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 concentrating 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 corporations.

It’s a reasonably totally different method in contrast with how most enterprise companies function. Whereas typical VC companies 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 widespread funding technique the place a agency invests some portion of its capital right into a portfolio of different funds, slightly than instantly in underlying belongings, similar to startups. Whereas a fund-of-funds affords restricted companions a handy strategy to entry under-the-radar or hard-to-access companies, a big disadvantage 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 companies hit a 16-year low final yr, in keeping with 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 companies’ greatest traders are not involved in being part of an enormous machine. They're leaving the behemoth companies to launch their very own investing outfits the place they are often extra nimble and specialised.

GPx is betting that the following era of VC traders will establish and again many sturdy early-stage corporations, permitting Singerman and Linden’s agency to co-lead later-stage investments within the rising managers’ most profitable portfolio corporations.

Right here’s the place GPx’s technique turns into significantly helpful: Early-stage VCs typically attempt to train pro-rata rights in later funding rounds (Collection A, B, and past), however their fund sizes sometimes forestall them from sustaining their proportion possession in top-performing corporations. When confronted with such alternatives, small VCs typically scramble to boost particular objective automobiles (SPVs) from their current restricted companions. But, these processes are time-consuming, permitting different traders to snap up coveted fairness spots in probably the most sought-after offers.

With GPx’s capital behind them, rising funds could have a chance to not solely train their pro-rata rights but in addition lead a later-stage spherical.

The Data beforehand reported that Singerman and Linden are launching GPx, however didn’t present particulars concerning the fund’s goal measurement and different technique particulars.