Link to podcast and transcript, organised by Venture Unlocked. The podcast was published 26 September 2024.
Saga Ventures raised $125m for their first fund. In this episode, the three cofounders and Partners, Ben Braverman (ex Flexport), Thomson Nguyen (Square), and Max Altman (Alt Capital) talk to host Samir Kaji on their fundraise, and the experience of raising in a tight fundraising market.
What I found interesting –
- Fundraising
- Samir Kaji: “The standard right now for a lot of EMs (emerging managers) is 12 to 24 months. I just spoke to somebody that’s been raising for 27 months. I think you guys were about three quarters (of a year) roughly from start to finish, maybe slightly less than that.”
- Admitted that the market is tough. Say “People are having a heck of a time raising new vehicles right now. And even LPs who liked and respected us didn’t actually trust that we had the dollars committed that we said they were going to sign on the day that we thought they were going to sign because it’s so unusual in this market.”
- They did two closes – a March close (just over half of the $125m) and a May close. Says the folks in the second close were waiting for the folks on the first close to actually commit, and only after seeing the ink dry, did they move!
- LP concerns: partnership risk
- Says “a recurring theme across every LP we had talked to was the threat of partnership risk”. They explained this primarily by pointing to the extent of connectivity between all their networks as well as their shared world view, as well as the complementary skill sets they were bringing to the table.
- A recent 20VC episode featuring Mark Goldberg of Chemistry Ventures talking about their first fund raise also alluded to the fact that the most common concerns LPs had about the team was that they hadn’t worked together previously, and the partnership risk this posed.
- Fundraising is like enterprise sales. The sharper your product, and better your understanding of where it fits in the LP’s strategy, the more likely the sale / partnership. The more complex the product the harder it becomes for the allocator / LP to fit into their asset allocation strategy / playbook. Talking about a peer who is struggling with fundraising, they say “And the reason is they’re selling this complicated product. It’s like a mix of public and privates. And if you’re an allocator, you don’t know where it goes in the spreadsheet.
- Samir Kaji concurs: “It’s something that I’ve talked to so many managers over the last 12 years about, which is don’t complicate the sale. Particularly early on, make it very simple. What bucket does it go into? And what is the main thing that they should take away in terms of the differentiation?”
- A book recommendation from the podcast episode: Bill Walsh’s The Score Takes Care of Itself. “We’re really not going to know the results of our investments for another six, seven years at least…you start evaluating yourself on inputs, right?”