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This new platform is teaching emerging fund managers how to survive and thrive

·5-min read

More people have begun turning to venture investing as a full-time pursuit, only to discover that it's not as easy as it looks. That realization explains the rise of Oper8r, a for-profit, venture-backed accelerator that launched last year as a kind of Y Combinator for emerging fund managers. It explains the broad appeal of AngelList, which handles a lot of the hassle of fund administration in exchange for a fee.

Now, Plexo Capital, which is both a venture firm and an outfit that backs other venture funds, is taking the wraps off its own program to help educate investors on the many facets involved in everything from forming a fund, to raising capital, to properly managing those assets.

Called, GPx, the program features an impressive number of free, educational modules that have been recorded by a long list of esteemed VCs and limited partners, including Charles Hudson of Precursor Ventures, Michael Seibel of Y Combinator and Beezer Clarkson of Sapphire Ventures. But the program is also organized around cohorts into which a select number of emerging fund managers is invited to work more closely with course instructors, service providers (like law firms) and subject matter experts.

Notably, GPx is a not-for-profit program but rather sponsored entirely by Alphabet (which is Plexo Capital's anchor investor), City National Bank, Practical VC, and the global law firm Gunderson Dettmer. The presumed benefit to Plexo Capital is that it gives the firm better insight into managers it might want to fund, but to learn more, we caught up quickly yesterday with firm founder Lo Toney. Our chat has been edited lightly for length.

TC: What's the overarching objective here?

LT: I would say our objective is to really add as much value as we can as an LP. When I started Plexo Capital, coming out GV [where Toney was an investor previously], I realized there were so many resources that we had there. I didn't have to think about a lot of the back office because there were finance and legal and operations teams to handle all the things related to reporting and putting together docs for deals. Also, Alphabet is the sole LP of GV, so there wasn't a need to fundraise. When I went out to start Plexo Capital, [it was eye-opening].

What is the advantage to you in putting together this platform? Do you get a stake in the managers accepted into the cohort?

There are a couple of advantages that we take very seriously. Number one, we like to be aware of what's happening in the market and this is a way to get another touch point with GPs to understand globally what their thoughts are about putting together a fund, and what's the profile of folks [and] what types of opportunities are they targeting.

This is also a really good way for us to give back. For too long, the information required to make that transition from being a great investor to hanging one's own shingle and becoming a great fund manager has been a little hidden. I was fortunate to have people like Georganne Perkins [a longtime former director of private equity at the Stanford Management Company] to really help me understand all of these nuances. But there is so much that's not known. People really don't know what they what they don't know. There is no kind of comprehensive "VC Fund Management for Dummies" book.

Are you an investor in these funds? Is that part of the deal?

We have in some cases committed to some [of the funds] and in other cases, we have not. But there's no cost, there's nothing that we do to have any preferred economics.

The goal is to be able to create a community amongst the [cohort] to be able to kind of go through the modules on the website -- the video content -- at their own pace. Then with the cohort, we bring those folks in to go deeper on select topics like, for example, portfolio construction, or how to identify a family office, or how to put together a go-to-market strategy. We also provide access to some of our professionals on the Plexo Capital team. Vishal [Tripathi], who's our portfolio manager, works with the GPs on a one-on-one basis on portfolio construction. We have Kuji [Chahal] who runs investor relations for Plexo Capital, and he sits down with each GP and he helps put together a bespoke list of prospective LPs, then helps the GPs with the right approach to access those LPs.

Do these have to be people working on their debut funds? Presumably there are a lot of people who are launching second funds who could also use some help.

We just completed our first cohort where we had about 13 GPs from about 10 firms, and they are, for the most part, [working] on Fund One. We'd like to isolate this to folks who are emerging managers looking to do their first fund or fund two -- that's where our sweet spot is.

But whether it's someone's first fund or fifth fund, anyone that wants access to the open source content can go in and register for it. This is a journey. This isn't a static process. I'm still learning myself.

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