6 new funds see an advantage in entering the crisis without a large portfolio

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Who will weather the current VC downturn better?

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Will it be old investors with years of experience built up over several market cycles but who also have a sizeable portfolio to worry about, or budding managers looking at the market with fresh eyes and a clean slate? We’re going to find out.

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Last year, a record number of funds were closed – 270. PitchBook Datawhich means that almost 300 new managers raised their funds in a bull market and are now placing them in completely different market conditions.

We interviewed six new funds to better understand how this group of investors is coping with the crisis.

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Several aspiring fund managers, such as Giuseppe Stuto, co-founder and managing partner of 186 Ventures, an early-stage Boston-based universal fund, told TechCrunch that entering a crisis with a very small existing portfolio can serve as a big advantage.

“We don’t have any baggage that could come from having previous funds or having a lot of capital associated with what appears to be a highly overpriced vintage,” Stuto said. “Like a founder who sees the world differently than subject matter experts, we (new bosses) bring a fresh perspective on how certain issues and industries are evolving.”

Leslie Feinzaig, founder and CEO of Graham & Walker, a fund that supports early-stage digital startups, added that while she began investing in her fund during last year’s bull market, the focus has been on the company’s potential risks. managing the fund for the first time, there was no way she could jeopardize her promising track record.

“The big advantage is that we don’t have many previous investments that are currently high risk, and we don’t have to spend as much time sorting the portfolio,” Feinzaig said. “I can almost completely focus on the way forward.”

Because these investors have a smaller garden, they say, they can focus more on making sure the new companies they add to the portfolio are more resilient to current market trends.

One thing these managers are better equipped to plan their portfolio with is the runway. When 186 Ventures started investing in the fleeting days of the bull market, expansion funding wasn’t a big part of the conversation, Stuto said, but now that it’s clear this will be a problem for startups, 186 Ventures plans to focus more on making sure its investments allow for significant growth. runway.

“Interim funding was available last year, so it was easy to decide if you could attract new investors on a ‘small’ raise,” he said. “Part of our thesis now is that this bridge funding will likely not be as affordable, so depending on the industry and other funding partners, we have increased our ‘market-ready’ threshold.”

Ariana Tucker, founder and privately held CEO of Conscience VC, agreed and said that while she is still looking for the same kind of startups, she is definitely focusing on deals where the company has a 24 to 36 month runway.

Read full survey here to get a complete picture of what they are doing to prepare for the recession, how their approach to investing has changed and how to promote them.

Credit: techcrunch.com /

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