Episode Transcript
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(00:00):
About fundraising.
It's about managing your firm.
It's about setting up a platform for growth andsustainability.
And I think how we our platform and how wethink about driving value for GPs is freeing
you all up to do, I think, the things that arereally difficult, that require a lot of talent,
(00:20):
require a lot of specialty.
And that is raising capital and deploying thecapital, picking good companies.
It's not necessarily the third part, which iswhere we can step in and provide technology and
data to allow you to manage the firm.
I do think we can drive value around thoseother two pillars, but I would say one of our
primary focuses is freeing you up to the thingsthat I think you're really uniquely positioned
to do well.
(00:42):
Welcome to The Investor, a podcast where I,Joel Palafinkel, your host, dives deep into the
minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
(01:06):
So we are live here with Kelsey.
We were lucky to have Tony, one of the other cofounders join us earlier.
So excited to kind of hear a little more fromKelsey.
You know, what we discussed last time wasreally just hearing the origin story of Omni.
So I know you do have a legal background.
(01:27):
So maybe what we could do, Kelsey, is just heara little more about your career, how you
supported venture capitalists and really howOmni came about.
And just tell us where you guys are now as faras just the evolution of the technology of the
team.
You guys have definitely scaled and come a longway.
And I think we also have some time for you todo a little bit of a demo so that way people
(01:48):
can kind of see how they can leverage yourtechnology to kind of support them to have
better reporting and communication to LPs.
Yeah, awesome Joel.
Thank you again for having me and giving mesome love by getting in front of your awesome
cohort here.
(02:08):
So yeah, what's a bit unique about myentrepreneurial background and journey is that
I began my career as a corporate attorney.
So started my professional life as a lawyer,worked at some large law firms and started at
Wilson Sonsini, is where I met my co founderTony.
So Wilson's a very large, well known tech lawfirm on the West Coast.
(02:32):
And our company's actually headquartered inSalt Lake.
And coincidentally, they just recentlyannounced opening an office there.
And so began my career as an attorney and spenta number of years at large law firms doing
corporate transactions.
And really, my specialty was representingentrepreneurs and management teams, as well as
(02:53):
investors.
And part of what makes that experience reallyunique is I saw lots and lots of transactions
and probably in the order of hundreds oftransactions as deal lawyer, either on the
company side or the investor side.
And I think what's interesting about that isyou, and for me, I got the opportunity to work
(03:17):
alongside entrepreneurs and see really,particularly Wilson Sonsini, which is a
company, mostly a company law firm.
They mostly represent startups.
And in that experience, I got to see multipledifferent rounds of financing in different
sectors, whether it was life science,technology, financial technology.
So working with really all sorts of differententrepreneurs across different industries and
(03:39):
got to see how deals were structured, thethings that founders cared about when they were
raising capital.
And then the move to DLA really opened up mypractice and my platform to working more with
investors.
So DLA is a much larger, more global platform.
And at DLA, had the opportunity to work moreclosely with traditional venture funds, family
offices, high net worth individuals, corporateventure funds.
(04:02):
And so for me, cool part about my legalexperience was just getting to work at all
sides of the table with different stakeholdersand different investors.
And I would say a lot of what Omni does todayis shaped and informed by the experience that
Tony and I had as deal attorneys.
And quite frankly, a lot of the frustrations wehad as lawyers, putting transactions,
(04:24):
investments together, trying to bring partiestogether.
Just the, I think the realization that theindustry we knew as deal lawyers was really
lacking a lot in data and information and justthe ability to access information and bring
data into those multimillion dollar and$100,000,000 plus transactions.
Much of what we do today, and I think it flowsacross a lot of different dimensions of the
(04:48):
company, is just informed in large part by ourexperience as attorneys.
So what we built at Omni is a data analyticsand infrastructure platform.
We are bringing data and analytics to theventure capital and private capital markets.
Our core platform that we've built today is wework with many venture capital investors and
(05:10):
other types of investors like family officesthat have direct investments in the companies.
So what we do is really unique.
We analyze and it all sort of ties back to ourDNA as lawyers, but the source of our data is
the underlying legal agreements that sit behindthe investments that venture capitalists are
making.
So these are the long detailed, volume thiscopies of contracts that sit behind a typical
(05:34):
series A investment, for example.
We go into those hundreds of pages of closingdocuments and we're extracting lots of data,
validating it, analyzing it.
And then I think the platform and thetechnology makes it useful and actionable and
accessible.
So that's kind of sort of what we do at ourcore and how we're working more broadly in the
ecosystem.
We work with, I mentioned just the types ofinvestors, but all different sizes of
(05:58):
investment firms from the Sandhill Road namesthat you all know down to emerging funds that
are spinning out their first fund.
It's a $10,000,000 initial fund.
They're trying to build a firm and build aportfolio of good investments across the
corporate venture funds and high net worthindividuals and family offices.
So kind of bringing a lot of those differentplayers together.
(06:19):
And at this point, the platform, I thinkaddresses a variety of use cases down to the
specific role, whether it's a general counselat a large firm or a CFO or to the investment
team or even solo GPs.
And we can talk about sort of how we drivevalue for solo GPs and emerging funds, but it's
(06:40):
nice that the platform does also drive valuefor the multi billion dollar beginners in the
room too.
Yeah, Kelsey, that's really helpful.
One thing that Tony touched on, he gave alittle bit of insight on what you need to think
about when you're an emerging fund, maybe anano VC and then evolving into your fund two
and fund three.
Can you maybe double click on that a littlemore in terms of your perspective as far as
(07:04):
with tools like Omni or just kind of LPreporting, what do you need to think about as
you're starting to scale and get to theinstitutional size of a fund manager?
Yeah, it's a really hot topic and aninteresting one.
Tony and I maybe have similar views anddifferent views on this question and just
really topic at large.
(07:25):
But one of the cool things that I get to do atOmni at this point is we're developing
analytics for, at this point, a broad range ofstakeholders in the private capital markets.
It includes GPs like many of you on the linetoday, but I'm also doing a lot of discovery
interviews and market research with limitedpartners and allocators and large sources of
capital that actually fuel all of your funds.
(07:49):
So for me, it gives me kind of a unique windowon how, as you follow this kind of the trail of
capital, how allocators and LPs are thinkingabout investments.
So I think, and maybe have some hot takes thatwe could talk about, but I think for me, as I
advise and talk with many emerging managersthat are either spinning up their first fund,
(08:10):
they're thinking about the longevity of theirfirm and raising subsequent funds.
I think there's really three aspects to if youdistill down venture capital list and down to
three things from my perspective, I think it'sreally focused on fundraising, focused on
obviously picking very good companies.
(08:30):
But the third pillar, is really important thatI think is a really steep learning curve is
actually managing your firm.
Dispelling, I think some common notions of whatit is to be a VC, it's only about picking good
companies.
Well, that's not all it's about.
It's about fundraising.
It's about managing your firm.
It's about setting up a platform for growth andsustainability.
(08:53):
And I think how our platform and how we thinkabout driving value for GPs is freeing you all
up to do, I think, the things that are reallydifficult that require a lot of talent, require
a lot of specialty.
And that is raising capital and deploying thecapital, picking good companies.
It's not necessarily the third part, which iswhere we can step in and provide technology and
(09:14):
data to allow you to manage the firm.
I do think we can drive value around thoseother two pillars, but I would say one of our
primary focuses is freeing you up to the thingsthat I think you're really uniquely positioned
to do well.
Yeah, no, that's really helpful.
And then when you think about just compliance,what are some things that you need to make sure
(09:35):
that you're monitoring?
And it sounds like you guys have a lot ofreally cool tools and capabilities that do
that, that I know you're gonna demo in a littlebit, but what are some of the biggest risks
that you see more prevalent with like thesmaller funds versus the bigger funds?
I can imagine some things that have beenmentioned in the past is just reconciliation of
(09:57):
shares and just making sure that what was onthe system of record matches what maybe you as
a fund manager see, because sometimes maybe thenumbers don't match up.
I think that's kind of a critical thing becauseif some of the numbers are off, mean, that
equate to probably millions of dollars, right?
Yeah, can be what would seem like very simpleand straightforward aspects of managing a
(10:23):
portfolio, which is making sure you understandexactly what you own.
And one of the unique features about investingin the privates is these securities that you're
investing in are pretty complicated in terms ofthe, you know, what the legal rights and the
economics and how those function in different,you know, future follow on scenarios or
different exit events or liquidationpreferences.
(10:45):
So it's much more complicated than buyingGoogle in a, in a public market.
You actually really have to understand thesecurity.
And so our platform can do some pretty simplethings like just surface and help you
understand exactly what you own and confirmthat what you think you own is what you
actually own.
And then we do more powerful analytics aroundthe And I think part of the challenge, quite
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frankly, with, I think, emerging managers iswhen you pick your good companies and have good
relationships, do you have the capability andthe strategy to defend that ownership later
when the companies break out?
So that's something I would think a lot about.
And if I were spinning out to start a fund, Iwould think about as my job as a GP is at some
(11:32):
level maximizing returns for my LPs.
And I think one of the things I would want tothink a lot about is how you defend that
ownership later where some of the largestabsolute dollars are returned to LPs.
Happens in the growth rounds, but some of thelargest dollars are coming back.
Michael and being returned to lps from thosegrowth growth investments and so doesn't
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necessarily mean that you need a growth.
Michael fund or growth strategy when you'restarting now, but I would at least think about
that from a strategic standpoint and aninvestment thesis.
How do you plan to defend that ownership later?
And there's lots of creative ways to accesscapital for follow on investing, but do you
have the right to do that?
If you're sourcing these founder relationshipsand you're early in the company's life cycle,
(12:16):
do you have the legal rights to actuallyexercise a pro rata position later?
And those types of things, one, we can surfacethose insights for you, but it's also helpful
to understand what's market when you're makingthese investments.
And should you be, if you're, say, deployingagainst like a seed strategy, should you be
(12:37):
demanding pro rata rights in every investmentthat you're making?
And what does that actually mean for the followon rounds that are likely to come?
Yeah, no, that's really helpful.
So maybe I'm always a nerd when it comes toproduct strategy.
I would love to hear how you guys came up withyour MVP.
(12:57):
So you guys had the legal background.
Did you guys think about just pulling thisdata?
Because there's a I come from the FinTechbackground, right?
So I know with all these hackathons, there'speople that kind of pull these APIs and there's
a lot of cool data providers that support likethe fintech ecosystem.
So is that kind of how you went about it in thebeginning?
Because there's a lot of cool APIs from likeEDGAR filings and other data sources.
(13:22):
So that kind of how you started or did you kindof go about it a different way?
So I'm always just kind of nerding out on howyou guys came up with like your first version.
And was it really just kind of talking to aspecific client and then doing more of a
bespoke thing?
Or how did you kind of get to the first problemthat you solved and then really think about,
(13:44):
hey, you know what, this is more of a B2Bsolution that could be repeatable.
You obviously can't, I would say you probablycan't always solve the workflows of like 99% of
every person, but there's probably like 80%workflows, right?
Where you have some product that like everybodyneeds, right?
So maybe you can talk a little bit about howyou came from like this professional background
(14:06):
in the legal space, and then now you're kind ofthinking about product and then trying to solve
the problems with the first iteration and thenscaling that.
Yeah.
And it really comes back to what you do as adeal lawyer and spend your life in these
private agreements.
I think a lot of the pain and frustration wehad is burning the midnight oil, spending
(14:30):
hundreds of hours in these transactions as alawyer.
And then at some point in the future, it couldbe a month, six months, a year down the road, a
client, a partner, someone in the firm, myself,I would have a question about that transaction.
What did we do in that deal?
How is it structured?
And the way that we would go about getting thatinformation is extremely manual.
It lives in an unstructured PDF document.
(14:53):
Gotta actually go probably find the printversion of it.
Law firms still print a lot of closing volumesout, but I'd go find the version of the closing
set and would have to review that filemanually.
Just some of the frustrations were all of thisinformation was agreed to negotiated.
It should have been captured and cataloged.
I would like to access that in a keystroke.
(15:14):
That seems like a that I should be able to doin a multimillion dollar transaction context.
And so for us, a lot of the pain was aroundjust as a lawyer, the data I wish I would have
had at my fingertips.
But how we arrived at the MVP was bringing thatknowledge to the table with market experts and
research, doing tons of interviews with allsorts of different personas at VC firms, solo
(15:39):
GPs, but also interviewing general counsels atbillion dollar funds, talking to CFOs, fund
administrators, trying to just coalesce aroundlike where is the, we have a good sense of
where the data opportunity in the gap is,trying to square that up with pain and how can
we bring value into a product that wouldaddress use cases today and how can we do that
(16:00):
in like a minimally viable way.
Tons So of market research, and then weeventually figured out sort of initial go to
market scope of data that would drive value.
And then from that, think to our team's credit,the product and the scope of data is very
iterative and reliant on customer feedback.
The scope of data maybe started here, but as wetook the product into the market and you start
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thinking about interacting with folks that havedifferent use cases for the data, it's just
expanded the scope and power of the analyticsover time.
So it's at this point pretty mature again inthe sense that it can be valuable for a large
multi billion dollar fund with hundreds ofactive companies in the portfolio, but also in
the same vein be valuable for an emerging fundthat's got maybe 15 companies in the portfolio.
(16:43):
And you all probably know the portfolio likethe back of your hand, but I can guarantee you
as you go on to your next fund and add morecompanies, your companies will begin
entertaining capital raising rounds on afrequent basis.
You'll probably get to the point where therewill be a deal on your desk almost every week
is probably what it amounts to.
(17:04):
It's just how dynamic and active thesecompanies can be.
Yeah, no, that's really helpful.
Well, we'd love to take a spin into theproduct.
I gave you share access.
If you could give us a little bit of insight interms of what you guys are building, give us a
little sneak peek, then maybe tease us a littlebit with some cool features to come.
(17:28):
That would be great.
And then I want to keep this interactive.
So guys feel free to chime in.
I know Lance was asking about Asia.
So Lance is he's an emerging manager inSingapore.
So are you guys thinking about coverage ininternational markets as well?
Is that like on the roadmap for 2022 or youguys mainly focusing on like North America for
(17:49):
now?
Yeah, mean, we're at a high level like in thebusiness of servicing our existing customers
really well.
And the reality is you peel back the curtainbetween any fund operating in this day and age.
They have investments outside of The US.
And so absolutely, it's an opportunity thatwe're really focused on really for our existing
(18:10):
customers.
But the nice thing for us is that it does openup new markets and new investors and new VC
firms to go speak with.
But we're taking, I think, a calculatedapproach in that focusing on our existing
customers that actually have a decent amount ofcapital and investments overseas and driving
value for those investments.
So Singapore is definitely in the mix in termsof pretty active geographies where USBCs are
(18:33):
placing capital as is India, Europe, Israel.
So I think definitely focused on it and wouldlove to just for the folk, I think the
individual investing in Singapore would love anopportunity to understand and learn more about
that market.
It's definitely one we were interested in andwant to do more research and discovery.
(18:54):
And is that a pattern that you've been seeingrecently in the last year, just kind of more
and more overseas activity with firms likeTiger Global coming in, we're hearing news with
them getting into Pakistan and Israel.
So are you just seeing that more of a macrotrend us just kind of going more cross border
and taking advantage of possibly some of thesecross border B2B SaaS companies that are coming
(19:19):
in at a more attractive valuation.
I'm certainly seeing that with just all thefund managers that are coming into my cohort.
So I'm seeing some fund managers, a lot of themthey're based in The US, but they do have a
cross border focus because sometimes there'sreally attractive opportunities.
You can get like maybe a $30,000,000 company,but that type of company in a different country
(19:42):
could be probably like a pre money valuation of10,000,000.
So I've been seeing some of that, but I'mcurious on your end because you guys have
mountains and mountains of data.
So just was wondering on your end if you sawanything like that.
Absolutely.
There's tons of investment, dedicatedinvestment strategies outside of The US.
(20:04):
And I think LPs are also thinking about thataccess to looking at signal for geographies
that are at the beginning of their kind ofexplosive period.
I think one of the, just from a dataperspective, the markets we're really
interested in are Europe, Israel, and India.
I think Asia is also really interesting, butjust how we're thinking about priorities.
(20:27):
We are also a startup ourselves, so we can'ttackle everything at once.
But the ones we're probably most focused onare, yeah, Europe, Israel, and India.
Cool.
So yeah, I gave you share access.
Did you want to maybe pull something up?
If you have it, if not, we can just kind of domore of a Q and A.
(20:49):
Yeah, Joel, think if it's good with you in thisformat Mhmm.
I like to say the the platform definitely has alot of sharp tools.
It it I think I it'd be the most valuable todemonstrate it for specific use cases.
I I think q and a would be would be awesomefrom my perspective.
Yeah, that sounds great.
Yeah.
So let's see.
Does anybody else have any questions in generalabout just best practices for when we were
(21:15):
chatting with Tony, he just kind of had somehigh level pieces of advice for emerging
managers.
So any just general advice that you have forfund managers as they're starting the journey?
Because I have a few people that are juststarting out.
They're just getting their fund docs, they'reforming the entity.
(21:37):
So what should they be thinking about right outof the gate as they're kind of creating the
firm and going through this journey?
Yeah, I think it's such a good question.
One, think Tony and I think about it a lot andwe're growing our business right now, but we
try to think about it from the perspective ifwe were starting a fund, what are some
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considerations we would wanna really look at?
And definitely it's a big part of it is aroundthe goals of what you're trying to accomplish.
That can inform the types of capital and LPsthat you would want to talk to.
So there can be a lot of just initial duediligence and homework around, I'm trying to
raise a fund and this is my focus and my sectorand my thesis.
What types of LPs are tracking that and lookingto invest actively in that space?
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And then there can just be a lot of kind ofearly screening too, thinking about the types
of institutions.
Raising a $20,000,000 fund, probably not a goodidea to talk to an institution that has a
minimum check size of $50,000,000 So it's thosetypes of things to really do your homework and
try to understand what is the addressable groupof investors that would even invest in a fund
(22:46):
like mine.
And then I hate to use buzzwordy stuff, but oneof the things that actually matters in the
fundraising process is differentiation.
Let me qualify that with, I was just speakingwith a pretty high volume LP and their funnel
is 1,400 funds this year.
(23:07):
Just looking at this year, they startedtracking and we're thinking about top of their
funnels, 1,400 managers.
It got that down to about 80 commitments.
And so it's helpful to, if you're speaking to ahigh volume investor like that, that's looking
at a ton of deal flow, separating yourself fromnoise and actually figuring out how you
articulate that differentiation is going tomatter.
(23:29):
They have to look at differentiation to be ableto make decisions quickly when they're dealing
with that kind funnel.
So I think differentiation is really important,and that can mean so many things.
LPs are looking for differentiation across somany different dimensions, whether it's ESG,
investment sector, geography, which we talkedabout.
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And so I think it really squaring that up withwhat you're trying to do at your firm and
trying to find a really good match for capitalthat's looking to invest behind that kind of
approach.
And from a macro standpoint, what's great aboutinvesting in venture right now is I would say
generally speaking, you have lots of availablecapital that is trying to get more and more
(24:11):
access to venture.
So the availability of capital, as I'm sure youall know, is better than it's probably ever
been.
And you just have at a macro level lots morethan is trying to get access into the venture.
So differentiation can really streamline andset you up to succeed.
Yeah, you started talking about ESG and impact.
Is that kind of a common thread that you'reseeing from just interest with families?
(24:36):
I only ask because when we had our allocatorsummit, we did a survey and a big trend was
FinTech and healthcare.
So that's kind of what I saw.
This is mostly on the East Coast, but any othercommon threads that you're seeing as far as,
what's getting the LPs excited?
Obviously performance and track record andnetworks is one thing, but I wonder, there
(25:02):
because you guys are on the West Coast and outin Utah.
So I'm curious if there's a different appetiteor just things that are getting these LPs
excited because that might be good insight forthese fund managers to be aware of as well to
be aligned to.
Yeah.
And LPs are definitely, I mean, mostlyinvesting in the human capital part of what
you're doing.
And so there are things to differentiate justaround diversity right now.
(25:26):
If you're a diverse manager, there are sourcesof capital out there that are specifically
looking for you.
That can be one way to think about it.
And yeah, ESG is a hot topic and it goes backto like sort of depends on which LPs you're
targeting.
But if it's a state run institution that has aregulatory framework around it, but it also
(25:47):
answers to the public, there might be specificparts of their ESG platform that you could be
relevant and differentiate from and make it areally attractive investment for them.
Also, if family offices or high net worthindividuals are part of your focus, there can
be specific family offices that are looking tomake an impact in a certain sector.
(26:07):
So I go back to like the homework is reallyimportant on your end too, to do the due
diligence that you're even targeting the rightLPs or whatever right checks into a firm.
I've been seeing a trend of a lot of familyoffices also start their own funds as well.
So they'll put in some of their own wealth intothe fund, and then they'll also lever up and
(26:27):
raise about 150,000,000 to $200,000,000 fundson top of their own commit.
Their commit is obviously much more than a 1%,but I was wondering if that's something that
you're seeing as well, because that might be adifferent profile for you guys too, just
thinking through those needs of those personasas well, because they're thinking much more
long term and there may not be maybe a seven toten year horizon to kind of return the capital.
(26:50):
It's more of like probably a recycling vehicleor just kind of a vehicle that's kind of
working in perpetuity.
But you know, is something you guys are seeingas well in terms of just the allocators also
becoming fund managers?
Yeah, definitely.
Like a co invest part of their operation issomething we hear all the time.
(27:13):
And I think a lot of LPs are looking foropportunities where they can co invest and they
can maybe access their own larger sources ofcapital to put at work at later stage rounds,
which require bigger checks.
So I think part of it is that sort ofproprietary deal flow.
You do identify the big companies, definitelysee whether it's family offices or even larger
(27:37):
LPs, there's an appetite to co invest alongsidetheir managers.
And there could be economics for the managersthere.
It's not just through passing the deal to yourLPs, but you can have sort of shared upside in
those opportunities.
So absolutely direct deals by LPs is, I thinkit's gonna continue.
That trend is gonna continue.
Yeah, mean, a common thread that I've also beenhearing from LPs is just investing in great
(28:02):
managers to just get access to your point.
They want to go direct, but a lot of timesthere's really, really exciting opportunities
that they just can't get into.
It's just the opportunity fills up really fast,but if they strategically are able to invest in
a manager that has that unique access, thenthey can kind of get the access and get the
exposure at a more broad level, kind of at anindex level of all the companies.
(28:27):
But then if they have those co investmentrights, then they can hopefully get share in
some of those outsized returns at theconstituent level investing in those direct
deals as well.
So I've been hearing the same thing.
It's almost like another sourcing mechanismbecause normally some family offices and LPs,
they'll hire like their own staff, like theirown associate or principal to try to
(28:48):
organically source the deals.
But leveraging kind of maybe a small nominalallocation into a manager could also equate to
a great way to source deals as well.
So that's what I've been saying.
Yeah, one thing that's reminding me of aconversation I was having recently, So at a
very large firm and the ways LPs can dodiligence the topic of attribution, who at the
(29:14):
firm gets credit for the investment.
It can be a pretty nuanced analysis.
So at a maybe a really large mature VC, itcould be an individual or team that gets
attribution for sourcing the deal.
It could be a different individual and adifferent team that actually manages the
founder relationship.
It could be an entirely different team andindividual that analyzes it and should get
credit for the follow on investment strategy.
(29:36):
So I think one of the challenges as a smallershop is you sort of have to do all of those
things yourself.
But I tell you, like at the large end of thespectrum, LPs are even due diligence on
different segments of the investment approachfor a single portfolio company.
Yeah, no, that's great.
And what I've also been seeing is, so one of mymentors told me that there's also some
(30:02):
databases, I think there's some institutionaldatabases where you can submit your firm or
yourself to kind of get that attribution aswell.
Way, when these bigger LPs are diligencing you,at least you can pull up, you can come up in
some of those databases as well.
So is that something you recommend as well?
(30:22):
Yeah, I think attribution is probably one ofthe things they care about the most.
And how do you actually sort of back up thereal or hypothetical portfolio that you're
presenting?
And it goes back to my human capital point.
Like I think a lot of LPs are looking for along term and the fund cycle is long.
(30:43):
It's like ten years.
I mean, that might be changing.
We'll see how that evolves.
But they're looking for a long termrelationship.
And there are some LPs that have thirty plusyear relationships with their firms.
So how you can really defend that what you'rekind of claiming as attribution is super
important.
Yeah, it's part of the diligence process.
(31:04):
And I think really sophisticated LPs can gopretty deep on just the attribution subject in
terms of the own due diligence that they'regoing to do.
Yeah, so I think Ryan, you're mentioningprequen.
Are there any other platforms for just maybejust helping with better attribution?
(31:27):
I guess is there or is it really just kind of,yeah, I guess what are some ways that you can
develop that attribution?
Does it just automatically get picked upthrough like the EDGAR filings or are there any
other tips that you'd advise these emergingmanagers to kind of just get better exposure of
their track record, especially if they're superearly, right?
(31:47):
There's probably some time to liquidity andgetting credit for some serious returns.
Yeah, think it can depend on a lot of things.
If you're spinning out of a pretty matureventure shop, I think there's ways that you can
talk about the portfolio that you built orhelped build.
(32:08):
If you're not coming from venture, you'recoming from a company or an operator, what we
see is you may have built an angel portfolioover five to ten years that you've done in a
really strategic kind of deliberate way.
That can be a portfolio that you look to asinforming your investment thesis for an
institutional fund.
And then I've even seen, there's lots ofcreative approaches to how you could think
(32:31):
about attribution and what you would ultimatelywant to put forward to a potential LP to
convince them to make an investment in yourfirm.
Yeah, that reminds me of one of our firstsessions in the last cohort.
One of the mentors came in, one of the LPmentors said that they do track like a
synthetic record, right?
Because some of the people that are on theirfund one, they do have an angel track record,
(32:56):
but it's not an institutional fund.
So, you can piece together at least indicationsof good access to quality deals, and then you
can look at those companies, other VCs have coinvested.
So I think you can still get credit just fromshowcasing that you were on the cap table.
Just that data as well is kind of in a lot ofthose systems of record.
(33:20):
So I think that could probably be pulled upsomewhere, just probably even on Crunchbase or
PitchBook, I can probably I know PitchBooksometimes too, they probably do this as like a
growth strategy, but a lot of times PitchBookwill reach out to you and say, Hey, I noticed
that you invested in this deal.
Is this correct?
And then you can actually go in and tell themto update the data.
(33:42):
And then I think that for them is aninteresting funnel for them to maybe hop on a
call with you and sell PitchBook.
But it's also a great way to kind of just makesure those records when people Google you come
up, which is really good.
Then as far as LP pipeline strategy, anyfeedback that you have as far as just building
(34:06):
and engage the LP community?
Obviously, there's different rules for the waythat your fund is structured, right?
So there's people that are like under five zeroone that can talk about it on Twitter, but any
tips or any strategies that you've been seeingfrom the managers as far as just kind of
building an engaged and active pipeline?
And also right now it's the end of the year.
(34:27):
So people are just kind of wrapping up.
Any tips with just kind of the holidays withthings winding down and then maybe just getting
ready for January?
Do recommend conferences, creating content?
I guess the people that you've seen just inyour career that have been really successful,
(34:50):
maybe what are some, are there any commonthreads that you've seen?
And I'm happy to keep this interactive too.
So guys, if anybody else, managers have anywisdom, feel free to chime in as well.
Yeah, the timing, it goes back to like sort ofunderstanding your target LPs, but it turns out
(35:10):
that timing even around sort of tax planningand the LPs on investment strategy can matter.
Know there are LPs that would prefer to makeinvestments this side of the calendar year
versus the next.
There could be a lot of reasons for that.
So I think there probably are still lots ofdeals to be had throughout the rest of the
year.
And it does get into sort of understanding someof the motivations behind other allocators
(35:35):
deploying capital, but there can be some prettyinteresting arbitrage there as to why you
should try to target capital this side of theyear.
Yeah, so there's some people that want to knowa little more about the products.
We can take that offline.
What other questions you guys have?
I guess maybe we can take some questions.
(35:56):
We have a little bit of time here, but anybodyin the audience have any questions about just
LP reporting in general or just best practicesfor managing the firm and fund?
Yeah, had a quick question, Joel, for Kelsey.
Kelsey, you were describing the product interms of taking a look at all the underlying
(36:21):
legal data.
Do you guys as a shop also take a look at yourown aggregated data to see what kinds of deals
actually make the most sense in terms ofstructuring?
And then would you report that back to themanagers to give them a sense of what kind of
legal structure makes the most sense ifthey're, whether they're seed or series A,
(36:43):
these kinds of pro rata rights make the mostsense or the way that this contract is actually
best practice, those kinds of insights as partof what you guys work on.
Yeah, so one of the It's a good question.
One of the cool things we're doing, and I'mpretty sure this may be a hot take, and I'm
pretty sure we're probably the first foundingteam in history to use real market data in our
(37:07):
own fundraise.
When we raised our series B, was led by JPMorgan, we used market data just at the founder
level in our negotiations with JP Morgan, butalso other investors to help just inform what
we're trying to accomplish together as capitalpartners of ours, but also as a business.
(37:28):
And the data was extremely informative andhelped, I think, shape discussions and move
discussions in the right way, where havingthose same conversations in the absence of data
can be challenging and it's sort of the blindleading the blind at some point.
So for us, it was really cool to access thatdata.
And it covered topics everywhere from dilutionto valuation to size of option pool.
(37:51):
We looked at the database to see for a companyin our stage and sector raising this amount of
money, how should we think about marketparameters?
And I don't think market data will ever dictatehow you all are structuring your deals, but
it's super important to driving negotiations ina really good direction.
So we definitely used it and we do havefeatures in our platform that allow you to
(38:12):
access market benchmarks and information interms of your own deal structuring.
Yeah, one topic that I'm really excited abouttoo is just the convergence of public and
private markets.
I know I've spoken to a few people about thison the string here, but with the crossover
funds, there's public markets that are kind ofgetting into private markets.
(38:33):
So, do you think that that's something that isjust going to continue to evolve?
And then have you got you talked about pullingin some market data, right?
So, do you think that will eventually cascadewith kind of your product strategy to kind of
go into more of these hybrid funds?
And then just long term, what are some thingsthat are just probably still far away, but just
(38:55):
next generation things that you're excitedabout maybe to do on your roadmap, whatever
you're allowed to share.
But would just be curious to know, hey, longterm, what are some exciting opportunities or
maybe just really complex challenges that maybethere isn't a solution for that would be
exciting to kind of innovate on?
(39:16):
Yeah, I'm definitely focused on, I would justhow we think about that is the evolution of
private markets.
Yeah.
And the main trend that we're seeing is moreand more capital coming into private markets
and a demand for that capital actually tradinghands more frequently than it does now.
(39:38):
That's kind of in the subject of liquidity.
So how do you actually turn unrealized torealize gains in performance?
And one of the historical staples of privatesecurities is they're illiquid.
They're hard to get liquidity for until there'sthe big event, the IPO, M and A event.
And what we see is lots of innovation, lots ofneed for data to facilitate more liquidity.
(40:02):
So we're certainly really just excited aboutmore capital and growing capital markets and
how they're evolving.
And just as those markets, I think, evolve andmature, the need for data, the need for
information to facilitate better deal makingand better transactions.
So that's like high level kind of what we'reputting a lot of placing our bets on is that
(40:24):
these markets are gonna continue to grow andevolve.
More capital is gonna come in.
There's gonna be a higher demand for even moredemand for access to early stage and startup
companies and venture.
And we're certainly putting a lot of ourproduct roadmap around that vision.
Yeah, and then when you talk about, youmentioned liquidity, think two exit points that
(40:44):
immediately come to mind is obviously sellingyour pro rata rights.
You can spin up an SPV and give those pro ratarights to people.
Then you can also just kind of sell into thesecondaries.
Are there any other exit points for liquidity?
I mean, probably just quicker exits, right?
People are strategically making other exits,but just curious if I'm missing anything as far
(41:06):
as just other things that you're or just thingsin the future of like vehicles to kind of get
to quicker liquidity that probably that moremaybe a real time not real time, but just much
more frequent digest of data and calculations.
Yeah, it's the conventional kind of structureof a private equity or venture capital fund is
(41:30):
certainly changing, and part of that is thisnotion of liquidity.
What we see in our data is there are liquiditystrategies that are truncating that ten year
kind of fund cycle.
You can capture venture returns on a prettyquick timeline.
And there are liquidity providers, there aresecondary funds and capital providers out there
(41:54):
that are trying to access those deals at thatpart of the growth cycle.
So definitely, I think it's one of the probablymost interesting parts of the market is how
fund construction, portfolio construction,liquidity strategies is changing and evolving.
This is high frequency stuff where youmentioned kind of Tiger that's coming in and
just doing some pretty incredible things thatwe haven't really seen happen in venture.
(42:21):
There's so much activity and opportunity tocontinue evolving for private markets.
Just back to my experience as an attorney,there's the way that deals are done in the
private markets today, think will look entirelydifferent in ten years, even five years.
It looks even different.
I've been out of law now for five to eightyears and it even looks a lot different today
(42:43):
than it did when I started practicing.
Yeah, I mean, I've been really going deeper onWeb3 and there's just a lot more people having
a liquid strategy with crypto.
They do some Web3 venture deals, but then theyalso have some holdings that are liquid as
well.
So I think that's gonna be more prominent.
Then now there's NFTs.
(43:04):
So tracking whatever the cost basis is forthat, and then just understanding how liquidity
happens.
And then somebody also anonymously asked me aquestion about just funds tokenizing.
I mean, heard a lot of that.
I heard a lot and saw a lot of that like in2017, but then it kind of went away with the
(43:27):
whole ICO craze, but I can imagine probablysome of that, you know, it's just the crypto
and Web3 ecosystem is becoming more mature now,there's more traction, so I see it, you know,
having a place somewhere, but have you hadstarted to have some inbound interesting
conversations with funds that are thinkingabout that?
(43:50):
Because the crypto strategy is a whole othergame, Some of those securities are going public
in like three to six months on like thesecrypto exchanges.
And then I wonder if some of them also havelike a hybrid strategy with venture.
So I was just curious if you started to hearsome conversations on that.
And then do those people need kind of a specialplace too, far as like a different user?
(44:16):
Yeah.
So for me, one, definitely falling outside ofmy general swim lane of expertise.
I can tell you our product and technology teamis really, really focused on this subject.
What I do know is how quickly crypto has comeonto the scene and how quickly there's also a
very, you know, there's lots of demand forunderstanding the data and how those markets
(44:40):
function and just the need for a provider likeOmni to come in and analyze that segment.
So we're really focused on it.
And I know from a technology standpoint, we'rereally, really focused on it as well.
Yeah, no, that's really helpful.
Yeah, so any other questions guys?
(45:00):
Hi, thanks for the discussion and presentation.
I think in earlier stage funds and looking atresources and how you're spending your
management fees, do you view that thedevelopment of this platform is either making
super associates, or do you see those roleskind of disappearing more?
(45:29):
So Tough question I know, but I guess
How I think about, how I would wanna, well,one, I think your firm should have a data
strategy.
How are you going to leverage data?
I can tell you the largest and mostsophisticated firms are leveraging data.
They have entire teams of engineers and folksthinking about data strategy and how they're
(45:51):
deploying capital and raising capital.
So as a firm that doesn't have nearly theresources of a $400,000,000 seed fund, for
example, there is an element of competitionthere and just wanting to think about how can
you level up your firm's operations to meet adata strategy that's fit for 2021.
(46:11):
And good to know sort of what the big ones aredoing and how quickly they're moving.
And I mean that in all seriousness, are lots ofresources being allocated within a very large
firm around that firm's own data strategy.
So I think for a solo GP or for an emergingmanager, there are platforms and technologies
that can allow you to level up to bring andexecute on a data strategy that large firms are
(46:37):
also looking at as well.
Was it that that I answer your question?
Yeah, you did.
You know it's always as I said in emergingfunds is you're looking in terms of allocation
of resources.
Our associates and principals play fairly keyroles for us, and I guess where I'm trying to
(47:00):
look as you go through an ROI of looking attechnology.
I mean we spend money on PitchBook, Crunchbase,F6S.
We are developing our own data platform also,but we do do very manual today going through
you know, we have 35 companies in ourportfolio, and we spent a lot of time in the
deal rooms.
It is it is a big time sink, but I as I said,was flippantly asked around costs, but I can
(47:25):
kind of assume probably what your platformcosts are based on value that it could provide.
But really looking in the same, sorry Iapologize I have a bad cold, so I sound a bit
like graffy duck.
You know how you make that transition, but isthe aim from a data strategy in the sense of
making you know the partners super strong or isit about removing a lot of legwork that happens
(47:54):
in the associate and principal side?
Yeah, it's a good question and I think I wouldbe hard, I'd be challenged to tell you that
anything I'm doing is gonna make you a betterinvestor right now.
I think five years from now as our platformevolves and these markets evolve, I think we'll
maybe have a different discussion about howdata can actually make you a better investor,
(48:16):
can drive returns.
But I do think at a very foundational level,how I'm thinking about it is that LP that's
looking at 1,400 managers and they're trying toget down to 80 to 100 commitments.
That's an opportunity where I think you can letdata be your differentiator and you will
differentiate if you're very tight around yourinformation.
You can answer questions about the portfolio,your investment strategy.
(48:38):
How do you think about follow ons?
What is the co investor syndicate that looklike for you when you make an investment?
Who follows on in the rounds that you lead?
Those types of questions are reallyrudimentary, the things that you can answer, if
you can answer them and present really well toan LP that's also looking at a $600,000,000
(48:58):
firm that has their operations dialed in verytightly into our teams of people that are
focused on these types of things.
I think if you can kind of match the posture ofa large firm from an operations and data
standpoint, and just from a reportingstandpoint, you will differentiate.
So I think absolutely data as we evolve as acompany, as I think as these markets evolve, I
(49:20):
think leveraging data to make you a betterinvestor, to allow you to raise better funds
and find signal and alpha faster and in a moreunique way is certainly possible.
But I think how we're even approaching it todayis just trying to go back to my three pillars.
Raising capital, picking good companies,managing and running your firm.
I would rely on scalable solutions that helpyou kind of manage your firms, the operations
(49:44):
and the data to free you up.
I mean, your time is limited.
I know how hard you all are working.
And so if we can free you up to do the thingsthat you're just uniquely positioned to do,
which is pick good companies and raise capital,that's a win for us.
Yeah, Doug Dyer came in, he was awesome.
He used to be an LP and he had a really goodExcel spreadsheet, which was like a budget.
(50:11):
And it was like, it tied into the managementfee.
So the management fee would flow into a reallythorough analysis of like your budget, So if
you have a salary, that's gonna be taking up aportion of your management's fees.
So you need to be thoughtful of that.
And then there is a fixed amount of money thatyou have for different software and tools,
(50:32):
whether it's Omni and Calendly and Zoom, allthose things add up.
So I think another thing that you wanna thinkabout is if you save money, but then you're
creating more overhead because you have to do alot of manual work, then I think you could have
to pay more money for the pain of like fixingthe mistakes that you made, right?
(50:52):
If you made a really costly mistake where youhave to pay a fine or there's a compliance
issue, then that would, know, thinking throughthat, right?
That could probably cost a lot more than havingto pay for a solution or a software that could
help you not deal with that.
So I think part of it is also valuing your timeand then the risk versus, and then just
(51:16):
balancing that out with your budget as well.
Yeah, if you could, we talked about pro rata,if you should have, based on market data and
based on other firms that are similarlysituated, if you should have had pro rata
rights and you don't actually have those rightsand you get elbowed out of a follow on round,
that I can guarantee you the returns or themissed returns there are gonna cost you a lot
(51:40):
more than what you're gonna spend sort ofunderstanding those rights in the first
instance.
So making sure that you have them.
Yeah, Fred Wilson wrote a post about that,about just honoring the pro rata rights.
But do you see, I guess from a legal standpointand then just kind of from the tech side, is
that a common thing that happens?
(52:00):
People just, they just decide to botch you outor, I guess how can firms prevent that, I guess
from not getting boxed out?
Is it just better communication?
Is it something in writing to kind of mitigatethat or how have firms tried to handle that
(52:22):
risk, guess, or is there not a solution for it?
You just try not to let it happen?
Well, yeah, I think the best approach is to getthem contractually.
It's part of your investment.
I think sort of in addition or even in asubstitute for that, it does come down to
relationships.
(52:42):
You And can get allocations in later roundsbecause you're a really trusted advisor to the
founding team.
And those can be contractual or not.
You can also get elbowed out for those samereasons.
The alignment of interests can change amonginvestors and founders at different stages too.
So a lead investor to later round might in someways be more aligned with the founders than you
(53:05):
are as a seed investor, for example.
So contractual rights can de risk a lot ofthose things, but still ultimately I think
comes down to relationships and your ability toadd value to the founding team or to the
company as an investor.
No, that's really helpful.
Yeah, I think that's just kind of a lesson thatI've learned just in my career and venture.
(53:29):
One thing that's helped with me also is reallyjust the currency of connecting people.
So I'm not sure if you resonate with that too,but if there's like an LP that maybe is focused
on healthcare, connecting them with maybeanother LP that's also interested in healthcare
that could have a synergy and then alsopossibly even connecting them with a fund
(53:49):
manager that maybe has access to those networksand communities.
So definitely, in my experience, being aconnector in general has been really helpful as
well.
And I just found that pro rata article, so sendthat to you guys as well, it's pretty good
reading.
So, we got about five minutes left, so ifanybody else has any final questions, chime in.
(54:13):
What I always do at the end Kelsey is I ask theguest speaker to just kind of share any words
of wisdom from maybe a mentor that they had orfrom maybe a leader at one of their past jobs
or family members.
So any just general words of wisdom for, youknow, emerging managers or people just trying
(54:33):
to start their, you know, maybe get into theirsecond, you know, fund from fund one.
Yeah, that's a good one.
There's lots of nuggets
that Yeah, just shape how I
man, I think the human capital part of whatwe're all doing is so important.
(54:56):
It came up in just the pro rata question, yourrelationship with founders matters.
LPs are investing in people.
And I think establishing trust and reallyapproaching sort of understanding that dynamic
in these markets.
I mean, this is a business and we're investingcapital, but so much of it operates on
relationships and interpersonal dynamics.
(55:17):
So it might be the case that you fall in lovewith an LP and for whatever reason that LP
can't make the commitment to you and fund one.
But if you work and develop that relationship,they might show up in a later fund with a very
large check.
So it is part of building out your network andsome of this does take time to marinade, but
(55:38):
you just never know later when people couldshow up and actually be a really valuable
relationship for you.
So for me, I guess human capital relationshipsand do right by people.
Yeah, mean, one thing that I'll also add justfrom getting all these insights from you and
Tony is really just building a solution to aproblem.
So whether you're in business development ormarketing, if you're really solving a problem,
(56:03):
then you're really hopefully able to change theworld, right?
So you guys saw a problem and you guys solvedit.
I think when you're building a firm, trying tofind what your thesis is and maybe align to
that.
And that could be something that's of interestto the LPs.
So kind of to your point, you mentionedtargeting LPs.
So if there's definitely LPs that are trying toget into really exciting FinTech deals, they've
(56:29):
had a problem getting boxed out or just notincluded, and you're the one that can kind of
give them that unique expertise, think that'sreally interesting.
And then, there's another fund, he's not heretoday, but he focuses on like FinTech in
Southeast Asia.
So I feel like that's a really unique niche andthere's a lot of high interest in that sector,
(56:50):
especially in that region.
So if there isn't too many other players, thenyou have a really a huge competitive edge.
Definitely stand out because it's just a super,very focused area to get into.
So that's what I'll say just kinda to add on tosome of the insights that you guys gave, but
(57:11):
yeah, Kelsey, thanks so much for your time,Jake, everyone else from the Omni team, just
giving you guys a shout out, appreciate all thesupport.
And for everybody else, thanks for joining.
And can reach out, it looks like Jake pingedhis email so you can reach out to those guys if
you guys need anything.
So thanks for everything.
Joel, thanks a lot.