• What is your edge? I spent the past ~5 years speaking with, learning from, and investing in emerging managers. Through this process, I have looked at 500+ emerging managers, and the biggest takeaway was that only ~1% actually had a strategy that can create repeatable alpha for the fund. I plan on building Outlaw using the frameworks borrowed from the top 1% of other fund managers I have learned from.
• How does your other experience play into your ability to act as a good fund manager? On top of my previous investing experience, I have the benefit of being a bootstrapped business owner. This separates me from 99% of other fund managers I have met. Over the past five years, I have been 100% responsible for operating, growing, and maintaining quality for one of the top media brands in our niche. A bootstrapped business means that you assume all of the risk: I funded the company, I made every decision about software adoption and implementation, and I funneled profits back into paying others and growing marketing before I fed myself. Nobody else was there to shield me from the consequences of my decisions, and this has given me a learning playground that no job could ever provide. I believe this experience gives me a leg up as a fiduciary compared to others who have not had the same level of personal accountability for their actions.
• What is your portfolio construction? This fund will invest in 40 pre-seed and seed companies. The majority of the fund will go towards the first check, I will hold ~20% reserves, and I am projecting for 20% of capital to be recycled. More info on portfolio construction can be found here.
• How did you arrive at your portfolio construction given the strategy? Concentration ****should not be the goal for a small, first-time fund. I believe that 50 investments gives enough at bats for a fund to achieve power law outcomes.
• How do you think about follow-on strategy? I think writing 10 checks / yr over the deployment period is going to already force a large percentage of my time sourcing vs. working with companies. If I go over that number, I think I’ll become a sourcing monkey who is stretched too thin. I’m still trying to find the balance between shots on goal vs. ownership, but 40 over 4-5 years seems like the right number for me to be able to a) write large enough checks to win allocations, b) move quickly when I get conviction, and c) still have the bandwidth to works with companies who want and need more support.
• At what stage will you stop investing in pro rata? I do not plan on investing in any follow on past Series A (or $60m post-money valuation).
• Are you investing in sectors, stages, and geographies where you have tangible advantages over other investors? Yes - I have written market maps that show the themes and sub-themes this fund will invest in. LPs also have an active view of the pipeline to show all companies I am meeting with.
• What unique sourcing advantages do they have over other GPs? Every GP believes they have better deal flow than the next guy, and it is my job to convince LPs of the same. I have spent the past five years building relationships with other seed investors, and these investors are a phone call away. These deep investor relationships create information, information creates knowledge, and this knowledge is powerful. I also write a daily newsletter that goes out to 20k of the smartest professionals working in VC, finance, and tech every morning. We have worked with companies like Brex, Affinity, Sydecar, Harmonic, and others, and this media asset has given companies a reason to reach out and start conversations with our team.
• How do they typically communicate portfolio updates and pipeline with their LPs? I am an open book, and I have built previous business with the principle that building in public is an asymmetric bet. LPs will receive monthly updates, they have 24/7 access to me, and I share our live pipeline with LPs that commit above a certain threshold. I will be forever indebted to Fund I LPs, and I will do anything to make sure their investment in me is one of their best bets.
• Is their diligence process up to our standard? Investment memos are included in the data room. My general belief on investment memos at the seed is that they should be thick enough to get conviction enough but skinny enough to be done quickly. Speed at the seed is an advantage (especially without an established brand).
• Why do companies choose them over other funds? Talent, distribution, downstream capital.
• Can I be trusted with money? Bootstrapping Confluence and being responsible for every dollar in and out of the door has taught me more about money than any job ever could. I value LP dollars because I value my own dollars. I run lean, I do not plan on scaling AUM to eat more fees on the backend, and I don’t want to raise more than $20m for this fund because I know that raising more would make it more difficult to execute on the strategy.
• How are they incentivized to make decisions? I own the GP, and I control decision-making for the fund.
• Are we investing in the fund because we think it will lead to better co-investment opportunities, or is our decision based on their ability to distribute capital? That is for each LP to answer. I believe that investing in this strategy will lead to financial returns that you will not find at larger AUM funds. I have also set up the portfolio construction in a way where my low reserves creates downstream directs opportunities for LPs that want to use me as a curator for later-stage opportunities within the portfolio.
• What is your work background? All of my college friends went to work in traditional finance, and working at startups / venture was not a viable career path according to the business school. I ignored their advice, and I interned for free at a small fintech fund in Charlotte two years while in school, and that turned into a full-time role at graduation. I parlayed that experience into a better role working as an analyst at Mucker where I learned how one of the best seed funds in the world operates. I then worked on the operator side leading GTM at a company called Visible which sells portfolio reporting software to venture firms. I then worked as a principal for a family office in NY where I was focused on leading LP investments into venture funds. All of these were great work experiences, but I found most fulfillment and did my best work when I was working on something I owned and could act on with more autonomy. That led to the creation of Confluence and now Outlaw.
• What is your personal background? I grew up in Charlotte, NC, and I am the middle of three brothers. My dad was an entrepreneur, and I watched him fail one business before getting a small exit in his next. My mom was a stay-at-home mom. We grew up middle class, I went to public school, and I found that sports gave me the best odds to go to college. I got a scholarship to play football at Georgetown where I played three years before retiring junior year (watching a teammate and an opponent break their necks in the middle of a game took away the fire and made me question the risk-reward of continuing to play).
• Are we buying something more than returns if we were to commit to this fund? I work differently than most when it comes to how I work with LPs. I write a daily newsletter that forces me to stay on top of the biggest things that matter in the venture asset class; LPs get access to the condensed information, and I make myself available whenever an LP wants to talk through macro (or micro) things with me. I also run the largest private community of vetted venture investors. There are thousands of active members, and I am happy to act as a node for existing LPs to any other fund where I can make an intro. Lastly, I host annual events with a small number of GPs; any LP is welcome to these events at no added cost.
• Is the GP commit high enough that we feel they have enough skin in the game? I am committing 1% to the fund. If I was more liquid, that number would be higher.
• What do founders say about this fund? Back reference to find the truth.
• Can we meet other LPs from this fund? Yep - I’ll intro you to whoever you want to talk with.