Former Founders Fund GP Brian Singerman and co-founder and managing companion of Quiet Capital, Lee Linden, are searching for over $500 million for a brand new fund referred to as GPx, three individuals aware of their technique instructed TechCrunch. A portion of GPx’s fund will doubtless come from Founders Fund co-founder Peter Thiel, these individuals stated.
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 (almost definitely at Collection B) of their breakout corporations.
It’s a reasonably completely different method in contrast with how most enterprise corporations function. Whereas typical VC corporations make investments all of their capital immediately into startups, GPx is adopting components of what’s often called 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, fairly than immediately in underlying property, equivalent to startups. Whereas a fund-of-funds gives restricted companions a handy method to entry under-the-radar or hard-to-access corporations, a major 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 corporations 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 corporations’ finest buyers are now not involved in 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 following era of VC buyers 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 notably 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 lift particular function autos (SPVs) from their present restricted companions. But, these processes are time-consuming, permitting different buyers to snap up coveted fairness spots in essentially the most sought-after offers.
With GPx’s capital behind them, rising funds can have a possibility 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 dimension and different technique particulars.
Singerman and Linden didn’t reply to a request for remark.
Editor’s observe: This story has been up to date to mirror Peter Thiel’s involvement with GPx.
