How the World's Most Scalable Venture Fund is Disrupting Investing
Updated: Sep 21, 2020
Our guest host on the Disruption Everywhere Podcast is Dr. Georgios Varsos, his background is as a neuroscientist and a mechanical engineer. He is currently a venture capitalist investor at VU Venture Partners. VU Venture Partners is a multi-stage investment fund, focused on pre-seed through growth stage companies with offices in San Francisco, NYC, and Hong Kong. VU was created by top performing VC investors Skyler Fernandes and Andrew Zalasin, who have 35+ years of VC experience, investing $1.8B+ in 250+ companies, and have returned >4x net cash on cash to investors. The Partners were early investors in Facebook, Uber, Venmo, MakerBot, Wisdom Tree, Le Tote, FabFitFun, MeUndies, and Beyond Meat.
VU invests in 2-5 companies per quarter, initially investing $100K-$1M per company, and up to $10M in follow-ons where VU may lead or participate in multiple rounds. VU is industry agnostic and has 6 core deal sourcing teams - two generalist teams (Consumer & Enterprise), and three more vertically focused teams (Fintech, Healthcare, Frontier Tech, SpaceTech), investing globally.
What’s disruptive about VU is it its unique fund model, which allows VU to be the most scalable venture fund in the world, sourcing ~4-5K companies per quarter (~18-20K deals per year, ~10x traditional funds, ~4x billion-dollar VC funds) and investing in 0.1% vs. 1% of deals. Key part of the model is the investor accelerator program, Venture University, where every 3 months VU selects ~30 investors to join its investment team. The individuals within a cohort include angel investors, family offices, first time fund managers, recent top undergrad or MBA students, industry experts, and experienced professionals. VU's investor accelerator is a modern-day trade school, where individuals gain high quality investment experience through a VC/PE Investment Apprenticeship and take academic courses as part of VU's Executive Education Program.
The additional value of the model are the key advantages that VU can offer to startup founders compared to other funds, namely a larger & more powerful network, and more follow-on capital:
· Larger & More Powerful Network: Most seed and Series A funds only have 3-7 investors on their team, where VU has ~40 investors on the team, and has a massive network of 200+ VU alumni investors working at other funds. This larger investment team and its network offers proprietary access to potential clients, employees, advisors, partners, future investors, and acquirers.
· More Follow-on Capital: Most seed and Series A funds don’t reserve much or any capital for follow-on investments. VU has deeper pockets, by reserving 2/3rds of the fund for follow-ons, we can invest up to $10M in each portfolio company.
To summarize, the disruptive fund model of VU offers a win-win situation for both individuals breaking into venture capital, private equity, and angel investing, and for the start-up founders who gain access to a large network from which they can benefit in a plethora of ways besides access to capital.
Dr. Georgios Varsos book recommendation: The Art of War, by Sun TZU