Emerging funds trends & tech tools: Q&A with Max Fleitmann, VC Stack

Max Fleitmann started VC Stack to bring education and resources to an industry lacking in both. Having gained experience as both a founder and an investor during his career, he shares his insights on emerging funds trends and tech tools.

I started VC Stack, which I think of as the venture capital industry’s G2 or Capterra, to bring education and resources to an industry lacking in both. I’ve been an entrepreneur most of my life – I started my first business at 13 – and I could have used some more resources along the way. Ever since venturing into entrepreneurship in my teens, I’ve been lucky enough to gain experience on both sides of the VC aisle – first as a founder and now as an investor. Currently, I’m focused on building a venture studio in the space with projects like VC Stack, Startup&VC and BaseTemplates.

After turning down an acquisition offer for an e-learning company I built and scaled to more than a million monthly visits it was the first time that I came in contact with VC. We raised some money instead of the acquisition and had some ups and downs ever since. And at some point I decided to leave the company and change sites of the table to become an investor myself, because I was so fascinated by the whole ecosystem. The company still exists and is doing very well, with my original co-founders still running it. 

And on the other side of the table I’ve discovered something really interesting. As a founder, you have to be very optimistic all the time, despite all the challenges you face. But as an investor, you can’t have the same optimistic mindset. You have to say no 99% of the time, otherwise you’d end up with a mediocre portfolio of companies that can’t drive your returns.

What inspired you to start VC Stack?

At the end of last year, I realized something that really struck me… I was investing as a partner of Richmond View Ventures, where the focus was investing in Direct-to-Consumer (DTC) and SaaS companies. And I started looking at the whole VC tool ecosystem, because I saw this great misalignment. I had seen first-hand that investors are investing in the greatest technologies out there. But for our own processes we were still using Excel or other tools that were not made for this industry. This is just ridiculous. Investors should be responsible for finding the best deals and adding value to your portfolio companies. Everything else is a waste of time. So, if your time is spent manually uploading data into a CRM, that makes no sense. 

And funny enough VCs are competitive – every investor has to figure out their own set of tools, there’s virtually no resources or transparency within the community. So, I figured I’d create the tool I wish I had for myself – something like a Capterra or G2 for investors. 

VC Stack not only shows off all the different VC tools available, but also provides reviews and background stories of investors using these tools. It also creates a space where investors can exchange information, learn best practices, and see what others are doing. We also have a Venture Capital job board where we match people who want to work in VC with open positions at VC firms.

Our goal at VC Stack isn’t just to show off the tools, but to also bring some much needed education to the table. We’re approaching this in two main ways: 

  • Collecting LP pitch decks. There’s such a small amount of LP pitch decks available online. We’re trying to gather as many as possible and share them in order to provide a resource for emerging fund managers.
  • Having VCs share their tech stack. It’s always interesting to see what other funds are using. For example, connecting Affinity CRM with DocSend and an Airtable database. It’s really cool to be able to learn from one another. 

What are some notable trends in the VC ecosystem?

Besides money, investors have to bring something special to the table. 

These days, money is like a commodity. Good founders can get money everywhere, and because of the rise of global investing, they can attract investors from all around the world. Just five or ten years ago, founders were mostly looking for investors in their own country. Everything’s changed now, and founders can really decide who they want to bring on board. With the plethora of competition, it’s critical to define what makes your fund unique – what value you can offer founders that no one else can. Leverage your personal experience here, too. Maybe you have a unique background or experience that is highly valuable to a certain sector or company type. 

A rise in solo GPs. 

We’re seeing more single GP funds investing at the pre-seed or seed stage that are very focused on certain sectors within the market. These funds are growing quickly. A great example of this is Andreas Klinger, who leads Remote First Capital, a firm focused on investing in the next generation of remote work. As an article from The Generalist states, leading solo GPs manage more money than many funds, winning deals through speed, empathy, and expertise. 

Increased competition.

Competition has always been high in the VC ecosystem, and that will only increase. There will be a lot more competition on the best deals, and investors will be investing larger amounts at earlier stages. You can see that a lot lately with all of these huge seed rounds with already $10M or $20M. This is something that would have never happened five or 10 years ago. I think investors are realizing that it’s not only about the money you can bring to the table, but really about being the best investor for the founder. 

What should emerging fund managers consider when it comes to a tech stack?

How you want to build out your tech stack is a critical decision for emerging fund managers to make mostly because you won’t have time to spend on this. You can’t afford for these operational items to burden you.

First, the tools you’ll need as an emerging fund manager typically fall into two areas: 

  • Tools that can make a difference for your fund performance. This includes tools for proprietary deal flow, portfolio value creations, or tools used for sourcing deals that no other fund has. 
  • Tools that improve operational work. This includes managerial things like fund admin or LP reporting. 

Second, there are a few different approaches to choosing your tech stack:

  • Best of breed approach. This is where you’ll use the best tool available within a certain category. For example, you’ll use one tool for deal sourcing, one for LP reporting, and one for sending out your pitch decks and data rooms. 
  • One size fits all. If you’re looking for a one size fits all tool, the choices are a bit limited, but there are some available with additional functionality. Benefit here is managing less tools and probably less of a cost. 
  • Resource availability. This is where emerging managers must ask themselves, ‘what resources in my fund can I dedicate to operational needs?. If your budget is limited, I would focus on using tools that bring you the most value as an investor, like choosing investments and helping founders. And then as your fund grows, you can consider tools that help with things like reporting. 

What are tech stack must-haves for emerging fund managers?

I always use the ‘best of breed’ approach when choosing tech tools. I take a look at what is really important for me and my fund to be successful, and see what tools I need to achieve that. These are some of my favorites: 

  • Attio. This is a great tool for relationship management. It’s a modern version of a CRM, tailored specifically to Venture Capitalists. 
  • Affinity. This is another great option for a CRM, if you’re not a fan of Attio. A tool like this is so important to have as an investor, because you will build such a huge network, but that comes with a lot of responsibility to make sure you’re following up on emails quickly. 
  • DocSend. This is an industry standard. It’s critical to have detailed insights into your pitching and financial documents and to see exactly how, where, and when LPs are engaging with your content. 

What are common mistakes emerging managers make? 

Data quality 

I see a lot of emerging fund managers skip an important step when choosing tech tools: evaluating the structure inside the tool. Not thinking about a tool’s structure can lead to using tools that will give you poor data quality, and you don’t want that. 

Being an emerging fund manager is a very analytical role. You have to manage your pipeline, your investments, your deals, etc. And you can’t analyze any of that accurately with poor data quality. 

Internal processes 

Another common mistake I see is emerging fund managers missing out on great deals because of internal processes. Specifically taking too long to respond to founders. Now, there are these smaller funds or solo GPs that are really quick and can make a decision within a day. And you can’t really compete with that as a fund that takes 3-4 weeks to make a decision. 

The thing is, the founder’s time is best spent building the business, not fundraising, so the fundraising process should be as short as possible. 

What are your tips for new emerging fund managers?

There is a lot to handle as someone new to investing but my two most important tips for new fund managers would be: 

  • Focus on creating a fund that is special. Identify what makes you different from all the other investors. Define your ‘sweet spot’ – what you’re really good at and that you want to invest in. Use that to create a brand and build trust, because you’ll need both to get your foot in the door with a lot of founders.
  • Ask for warm intros. For example, when I would raise money as a founder, I would ask for an intro to a certain VC so that I can leverage the trust of the person making the intro. Now, as an emerging manager, I had no shame in using this tactic again, which has helped me land hard-to-get VC meetings and really grow my LP network. 
  • Reach out to VCs. A lot of outreach strategies I’ve seen work for VCs are the same ones I would use as a founder. Really, this boils down to sending specific, personalized messages that provide detail context. Personally, I hate receiving unpersonalized messages with no context. For example, if I’m reaching out to a certain VC, I’ll do my research and find something unique to include in my message that helps me stand out from all the other people just using automated scripts. 

What’s included in your VC pitch deck and data room?

What I think is necessary to include in your VC pitch deck is very similar to what I used to include as a founder. Besides, of course, the pitch deck, your data room should include more information on your fund. Specifically, legal documents, your own track record, research on the market you’re investing in, how you’re planning to build your fund, if you have a deal in the pipeline, etc.  I would focus my pitch deck around five things: 

  • Portfolio construction and thesis. What am I looking for and how many deals do I want to make? What is the expected outcome?
  • Deal flow. Where do I generate proprietary deal flow that other investors don’t have? 
  • The team. Ultimately, people invest in people. So I would focus on persuading my limited partners to invest into me as a person.
  • My fund’s USP. What makes my fund unique? There are, I don’t know, 20,000, 30,000 VC funds globally. There has to be something that makes my fund different and stand out from the crowd.
  • References. Most emerging fund managers have already invested in a company or have made a deal, so I would try to include references to show that I’m doing a good job as an investor.

Every document in your data room should be a check mark for the investor, and the more check marks you get the closer you are to bringing them on board. 

What was something you learned as an emerging manager that was most surprising? 

The biggest ‘wow’ moment for me was realizing how similar founder fundraising is to being an investor raising money from LPs. I deeply believe that a founder turned investor has a lot of advantages, because they have been pitching their whole life and they know exactly how this all works. I wish there would be more open education between investors and founders around creating compelling VC pitch decks. There’s so little information out there. 

Learn how DocSend can help accelerate your fundraising efforts and give you x-ray vision into exactly where investors are engaging with your pitch deck.