The advantages of being a Gen Z VC
You could call me a “Gen Z VC,” but you could also call me many other things. I’m 22, and my partner, Josh, is 24. We’ve done this ourselves so far: we raised our own fund on nights and weekends and now we’re investors. You can add any adjective you want in front of the word “investor” and it will still probably hold true for me: Gen-Z, woman, state-school (since I went to San Diego State)…
I feel lucky to be in the position I’m in right now: I’ve been able to relentlessly pursue my dreams, and yet I still have 20-30 years left to hone the craft of venture. But I also feel lucky that when we discuss trends in the creator economy or within Gen Z in general, we’re not just using an external anthropological lens–we’re actually living that reality! Josh and I are content creators and community builders, and you don’t have to explain “what the kids are doing” to us.
I’m thrilled to be an active participant in a generation of folks who are helping each other succeed: with communities, education, advice, and introductions. We’re firm believers in the idea that the people you look up to should be your peers. A special shout-out here to my emerging manager support group, Transact Global, Sutton Capital, Gen Z VCs, and my lovely group chats for supporting me through this journey and giving me people to admire.
A product-driven strategy for product-led companies
There are two core aspects involved in deploying venture capital. The first is your firm’s investment thesis, which covers the broad characteristics of the companies you work with. This includes things like the types of companies you invest in, what stage they’re at, and what sector they operate in. The second is your firm’s portfolio construction, which governs how you execute your thesis: this involves check sizes, whether you make follow-on investments, and how many companies you choose to invest in.
The thesis driving Behind Genius Ventures is to invest in growth-driven, product-led companies at the earliest stages (think seed and pre-seed stages). Beyond this broad strategy, we’re currently excited about a few key areas, including API-first products and infrastructure, the creator ecosystem, wellness, and audio-first tools. With such a sharply-defined project, we’ve got a clear idea of the kinds of people we want to partner with: the founders we look for are user-obsessed, product-centric, and community-fluent. They’re often Gen-Z or underrepresented.
Our portfolio construction is equally focused. We write $100k-$200k checks into pre-seed and seed companies. We don’t make follow-on investments out of our core fund, but based on our experience leading special purpose vehicles in the past, we’ll be looking to lead SPVs to allow our LPs to invest in future follow-on rounds.
Our community-first approach to investor outreach
Most conventional venture firms choose solely to raise from family offices, fund of funds, and high net worth individuals. Because of our fund’s size, we’re below the minimum size they like to invest in (often over $50m). We chose to take a community-first approach to fundraising, so our LP base is diverse: we have many first-time LPs who are angel operators, institutional firms like Tribe Capital, and GPs at other firms like Andy Weissman, Phin Barnes, and Bobby Goodlatte.
One thing I learned a lot about while fundraising was the importance of listening to your intuition. When I was writing our first templated email, a friend pushed me to set our initial investment amount at $75,000. But that felt off to me: the usual minimum check size for a venture fund is $250,000 or more, as a result of the 99 investor limit for funds over $10M.
One of the fabulous things about raising a fund under $10M is that the number of investors increases to 249. So we threw the $75,000 minimum check size out the window, and that allowed us to be much more flexible with the types of LPs we could bring on board. In fact, some of our smallest checks have been the most helpful.
Our email-first meeting strategy
We built momentum early on with notable angel investors, especially at product-led growth companies, and got introductions to GPs at funds like Andreessen Horowitz, Moxxie Ventures, and Village Global. We’ve since co-invested with each of them too.
Virtual meetings actually made it easier to raise our fund. Josh and I both initially started investing in a remote-first world and plan on building a remote-first firm in the future. I was able to talk to investors from New York, San Francisco, and the Philippines on the same day.
Getting from the initial deck upload in DocSend to first close so quickly required a dedicated meeting strategy that reflected my personality. I’m a default-to-email kind of girl. Since I also have a full-time gig as an operator at WorkOS, I simply didn’t have a ton of time for Zoom meetings. We built our outreach strategy around Close, a sales CRM, Zapier, and DocSend. Every time a potential investor opened our DocSend link, I got a task assigned to me in Close to reach out to them. I would then send over a templated email about my background, my partner Josh’s background, the thesis of the fund, a list of advisors like Eric Bahn and Arjun Sethy, and a list of early LPs like Tribe Capital and Andy Weissman.
In this initial email, my call to action was always “Let me know what questions you might have about investing.” This gave potential LPs an easy opt-out if they didn’t want to reply, and was less of a pain than immediately going to my calendar and trying to find time for a meeting. It also allowed me to answer FAQs over email rather than going to the trouble of scheduling a call only to find out that a potential LP wasn’t going to be a fit.
Next, I sent regular progress updates to folks who had initially engaged with my template email: about every three days to a week, I let people know when new LPs joined or when we landed a couple of exciting initial investments.
I was inspired and encouraged to take this approach by Sahil Lavingia, the Founder/CEO of Gumroad who’s also a VC. The constant update structure was, in my eyes, a much better way to check in than just saying, “Hey, did you read my email?” This strategy has confirmed that updates like these give people an opportunity to get to know you in a way that’s not directly tied to your time and daily schedule.
Four key lessons learned
Even though we got to first close in a month and a half, we learned a lot along the way. A couple of shifts in perspective ended up being really valuable.
The first was embracing the fact that we had to be fearless: we learned to be direct with investors, not to be afraid to ask tough questions, and not to be ruffled by “Nos.” I’m not going to beg someone to join our fund: if they were meant to join, they will; it’s only a matter of time. This helped us focus on the long-term, since the relationships we’re building will extend far past our first fund, into building a future firm.
The second was understanding that venture is about fitting within broad “bands of consensus” for portfolio construction. Keeping things as graham-cracker bland as possible from a fund setup and back-office perspective was really important. I had heard about fellow emerging managers getting grilled about small, nuanced changes in how they did fee structures or incorporated new elements into their portfolio constructions. These aren’t areas where you want to spend your precious time.
Third, we learned to absorb feedback on our pitch, not our fund strategy. Josh and I are pretty open to feedback on our pitch: we realize that our role is to translate our vision for the future into something potential LPs can understand. This can be deceptively challenging, since we’re forced to communicate explicitly something that appears implicit to us. But when it comes to our fund strategy, we stick to our guns. In a couple of early conversations, folks pushed back on why we weren’t planning to make follow-on investments out of the fund. Josh and I chatted about it internally and decided to follow our intuition: we’d stick with our no follow-on portfolio construction, given the size of our fund and our intention to earn SPV allocation later on. We’d heard about other fund managers who had adjusted their fund strategy based on external feedback, and over time it became very difficult for them to articulate why they had chosen their particular strategy.
Finally, I learned that I had to improve my task management skills. Task management is something I’m continuously working on: it’s difficult to keep track of minute tasks when you’re on super high-velocity calls all the time. Hearing feedback from investors that I was ghosting them was really disheartening. This is why I’m currently revamping my task management system. It’s never going to be perfect, but at the end of the day all you can do is a) apologize, b) take ownership, and c) try to improve. There’s a great article by Tim Ferris called “The Art of Letting Bad Things Happen,” which really helped shape my perspective. Sometimes you have to put blinders on for a bit to really focus on a big, life-changing opportunity, even if small “bad” things happen as a result.
Nail your portfolio strategy, communicate wisely, and trust your instincts
There are three pieces of advice I’d like to pass on to fellow emerging fund managers. The first is to get confident about your portfolio construction and master the way you talk about it. There are many different ways to play the game in venture and you need to be able to articulate your particular nuances well. Expect to get pushback on a few key things: how your portfolio construction affects you operationally, how it affects returns, and how it shifts your decision framework.
The second piece of advice is simple: don’t talk about anything until it’s closed. But do over-communicate once things are closed.
Third, lean into your intuition. You may not feel it working until you’re so close to the wire that you can feel your heart pounding–and that’s when everything will become crystal-clear.
Despite the sleepless nights, we wouldn’t change a thing
Looking back on our raise, I don’t think I’d change anything about it. The learnings we got from our mistakes were priceless. We had many sleepless nights and I definitely cried more than twice. Fundraising is grueling, but I’ve come away with so much more empathy and appreciation for the folks who’ve gone through it before me and for all the nuances that come with it. It’s a lot of responsibility, but hey: no gravity, no glory.
(Image credit: Nel Cepeda, San Diego Union Tribune)