Creating a new venture fund: formation, follow-on strategies & more with Acquired | E1258

Episode Summary

Executive Summary: Jason Calacanis, Ben Gilbert, and David Rosenthal discuss David’s new microfund and the choices that shape venture returns: portfolio size, follow-on rights, SPVs, ownership, and using investor networks to support portfolio companies. They also examine media as a source of deal flow and leverage, debate venture-capital models and firms, introduce SOC 2 compliance through Vanta, and set up a future discussion of the industry’s “Mount Rushmore.”

Main Topics: Launching and structuring a microfund: David describes Kindergarten Ventures, a small traditional fund expected to make roughly 20–40 investments of about $100,000 each, with no reserves. The hosts discuss operating costs, fund administration, and using a podcast and professional network to generate deal flow. Ownership, follow-ons, and SPVs: The guests debate whether David should seek pro rata rights and use SPVs to let LPs participate in promising follow-on rounds. Jason argues that early small checks can create access and information advantages, but that meaningful ownership in standout companies is what drives exceptional fund outcomes. Portfolio support and fundraising leverage: Jason describes tracking portfolio updates to identify companies that may need capital, making proactive financing offers, and helping founders raise from strong investors on workable terms. The discussion highlights fundraising introductions and support as a major way VCs can add value. Media, networks, and scaling investor work: The hosts consider how podcasts and communities can attract founders, create trust, and strengthen deal flow. Jason also describes scaling through team support, founder group sessions, portfolio-focused podcast episodes, and delegating routine work while reserving his involvement for major company crises. Venture strategies and firm performance: The discussion contrasts seed investing as a way to discover companies with reserving capital for later growth rounds, and debates ownership, returns, and the records of prominent venture firms. The hosts begin defining criteria for a future “Mount Rushmore” of investors. SOC 2 and startup security compliance: Vanta founder Christina Cacioppo explains that SOC 2 reports help B2B companies demonstrate security to customers. She says the process can be expensive and time-consuming when handled manually, while Vanta aims to reduce the work and cost.

Key Arguments: Exceptional venture returns depend disproportionately on owning a meaningful stake in a small number of major winners, rather than simply making many investments; institutional LPs therefore focus on ownership and the ability to follow on. Even a small initial investment can be valuable if it creates a trusted relationship and access to future allocations. Pro rata rights or SPVs can help investors increase exposure when a company performs well. A fund manager’s network can become a practical fundraising resource: frequent company updates can reveal growth or financing needs, allowing investors to offer capital early or help founders reach outside investors. Podcasting and community-building can be more than marketing: they can attract founders, deepen relationships, and give portfolio companies visibility, while operational delegation helps the investor scale that work. The guests argue that early-stage investing can provide an information advantage for later investment decisions, though they note that unconventional strategies can take time to gain institutional LP acceptance. SOC 2 is a commercial trust requirement for many B2B startups because prospective customers want evidence that their data will be handled securely.

Data Points: Kindergarten Ventures target fund size: A couple of million dollars - David describes the fund as a small traditional fund; the exact final size is not specified. Kindergarten Ventures planned portfolio: 20–40 investments, around $100,000 each - David’s stated investment plan, with no reserves. Jason’s syndicate membership: About 8,300 members - Jason gives this figure while discussing syndicate deal demand and possible growth. Jason’s syndicate deployment goal: $250 million per year for 10 years - Jason describes a future ambition; he says this would amount to $2.5 billion deployed. Portfolio companies currently raising: 65 of 325 - Jason says this prompted him to shift staff time toward fundraising support for existing portfolio companies. SOC 2 manual process cost: $20,000–$50,000, potentially $100,000 - The hosts and Vanta founder discuss the possible cost of handling compliance manually. Vanta customer spending and labor: About $10,000 and as little as 20–40 hours of work - Christina Cacioppo describes typical customer spending as starting around $10,000 and says the time requirement can be reduced substantially. Potential syndicate allocation demand: $6 million requested for a $750,000 allocation - Jason recounts strong demand for a high-profile deal, with the allocation divided among 150 investors at $5,000 each.

Pivotal Quotes: "It's time in market, not timing the market." — Jason Calacanis: He argues against selling standout public-company investments too early and favors letting winners continue to grow. "The amount of work it takes to put in 25 or 50K is the same amount of work as putting in 3 million." — Jason Calacanis: He uses this point to encourage David to consider larger investments and build meaningful ownership in the strongest companies. "Hope is not a plan." — Doug Leone, as quoted by Jason Calacanis: Jason recalls the advice as the reason he encourages founders to articulate and review a concrete multi-year plan.

Implications: For emerging investors, the episode emphasizes matching fund strategy to capacity while building ways to support winners through follow-ons, SPVs, and fundraising help. For startups, investor access, clear plans, and demonstrable security can improve financing and sales prospects.