The Money Behind Money in VC | Julia Maltby

Speaker A: Lp's talk to each other a lot. Like we are very intentional about not outsourcing our diligence and doing our own first party work and like taking signal from the market but also being able to make non consensus bets and having conviction in the work that we do. That said like, there have certainly been times where L.P. uh, has been describing like a really shitty situation with the GP that they were looking at and it just so happens that I was looking at them too. And that uh, doesn't mean it's a no, but it's definitely a data point. And I think that there's a lot of talk about partners at venture funds gossiping and sharing. Deals flow and my experience has been it's 10x stronger in the LP community.

Speaker B: Welcome back to Tank Talks. I'm your host Matt Cohen, Founder and Managing Partner of Ripple Ventures and today I'm sitting down with Julia Maltby of Fengate Asset Management. Julia has lived the full VC life cycle. She started as the first full time employee at Plum Alley Investments, ran partnerships at WeWork, spent five plus years rising from associate to principal at Flybridge, and even ran her own seed fund at Deco Ventures before jumping from the GP side to the other side of the table as an LP at Fengate, investing in early stage VC funds and direct opportunities across North America. In today's chat, Julia shares exactly what she wishes every emerging manager knew about fundraising. From how to stop leaving first meetings as a polite maybe to start qualifying LPs like a sales funnel and to building reference lists that actually close commitments. Julie explains how gps can demonstrate thoughtful processes instead of just outputs and numbers, and how to back your edge with real data instead of VC speak. If you're a GP in the middle of a raise, an LP navigating the endless number of emerging manager pitches, or just someone who wants the no spin playbook from someone who's sat in every seat. This episode's for you. Now let's jump into the tank for this week's episode with Julia from Fengate. Thanks for joining us in the tank today. Julia, hello.

Speaker A: It's great to be here. Thanks for having me.

Speaker B: You know, Julia, you and I have been chatting for a little bit now and you jumped into VC earlier than I did in 2014 as the first full time employee at Plum Alley Investments. Right out of college you were laser focused on female founders and crowdfunding. But before we get into how you got into vc, I would love if you could tell our listeners sort of your early childhood background, where you grew up, you know how you got into the investing space in the first place.

Speaker A: Yeah, absolutely. So, um, gosh, where to start? So I, I come from a family that's not at all in the business world. Neither of my parents have MBAs. They were both lawyers. My dad was a public defender. For a long time he worked for the aclu. So I grew up with that kind of as the north star of something that I would end up doing. Yeah. With that in mind, I went to a small liberal arts college. I studied architecture and then kind of like racial and gender inequality. I thought I would end up doing one of those two things and ultimately got really interested in like technology and startups my senior year of school and tried to figure out if there was a way to kind of like pursue that in conjunction with one of the things that I, you know, viewed as a little bit more of like a pure career path that I had cared about, you know, for most of my life before that, and ended up finding this company, Plum Alley Investments, which at the time was investing both through SVBs and through crowdfunding and female founded startups. This was 2014, so that was like, not in vogue. And like, the stats for money going to women were like, pretty abysmal. And yeah, I didn't know anything about finance, if I remember correctly. I think I just DM'd her on LinkedIn and pretty much said, I don't know anything about finance, but I love what you're doing and like, can you give me a shot for a couple of months? And she graciously responded to that note. And three months turned into two, three years, something like that.

Speaker B: So all from a cold DM lesson for founders. And anyone out there always send that cold DM?

Speaker A: Exactly, yeah.

Speaker B: Did you write the LSATs?

Speaker A: I did not, no. Thank God.

Speaker B: So you didn't get that far?

Speaker A: I got very close and my siblings did not escape it, but I did.

Speaker B: How did your parents feel after you turned, uh, 180 on that career choice?

Speaker A: And I think that they're wildly supportive. I think they were. I think they were like, okay, interesting. And when I applied to business school, they're like, okay, I didn't see that coming, but they've been very supportive.

Speaker B: And that was your first sort of foot in the door into venture, but you really didn't have much exposure to understanding what venture capital or even startup investing was. So were you just drinking from a fire hose for those first few years? Tell us about that experience.

Speaker A: Completely. Yeah, it was me and the founder, uh, you know, a handful of other early Employees, like, literally at her kitchen table in New York, we were building kind of this platform out for facilitating the crowdfunding and the SPV investments. And so that involved working with a team of developers in the Philippines, like, actually building technology for the first time, which I hadn't done. It involved, like, sourcing and underwriting deals that involved, like, wrangling angel investors to actually put the SPVs together. Yeah, it was complete wild west. Like, I just was saying, yes, I can handle that. Absolutely no idea what I was doing.

Speaker B: So you're actually building product too. You weren't just, like, actually doing the investing side, which is pretty cool. A lot of people don't understand, like, being in a VC role, you still actually have to do a lot of things that aren't being done before. And it's not just deploying capital, which we'll get into. But how did you end up finding your role at a small little company called WeWork? Uh, you know, in the partnerships and

Speaker A: BD side, when Plum Alley got legit, we grew out of the kitchen counter. We got a WeWork, because that's what you did in, like, 20, you know, 14, 15. And I really leaned into the, like, we work network in the community and, like, got to know the team there and ended up meeting, candidly, like, Adam and Miguel in an elevator. I got an opportunity to speak at a summit that they were doing and got a job offer. And I had one been thinking about getting more slightly later stage operating experience, and then secondarily had always loved architecture. That was the other thing I thought I might pursue. And so it felt like another great way to kind of get at a thing that I cared about, but within technology and startups and investing. And, yeah, I actually took a job there that, candidly, I knew I didn't want and then pretty quickly tried to identify an executive that I would love to work for, just that I could learn from, because that's kind of what happened to me at Plum Alley. And I found this guy, Nick Warswick, and I pretty much did the same thing I did with Deborah, my boss at, uh, Plumalli, and was just like, listen, I'm on this team, but, like, I feel like I can do more. You must have projects, like, someone can help you with. You just, like, give me a couple months to, like, prove that I can be valuable. And he said yes. And I ended up working under him for a couple of years, which was awesome. He was the chief revenue officer, so, like, all sales and marketing, like, rolled up into him.

Speaker B: Wow. So the hyper growth Phase you got to experience at WeWork, you were in one of their earlier New York locations, I assume, just happened to run into a physical cold DM with Adam in an elevator. And what was the sort of traction like at that stage when you joined and what kind of growth did you actually see firsthand?

Speaker A: The traction was, like, off the charts. I mean, like, we were. Our North Star was selling desks, and we were selling thousands, tens of thousands of desks.

Speaker B: It's like selling iPhones.

Speaker A: Exactly. But there was also, like, steep competition, like, Industrious. There was a bunch of kind of, like, other names that, uh, I viewed as, like, peers and fierce competitors. And we were doing all kinds of rogue things to try to steal market share from them, you know, including. One of the more fun and more rogue things we did was, like, set up a full glass truck box where we, like, assembled, like, a mock WE workspace within it. And we would, like, in front of the industrious locations and just hang out outside and, you know, hand out promo codes. And there was times we literally got, like, chased by the police because they'd be like, you can't be on our property. So it was. It was like all hands on deck, like, cell desks, like, at all costs.

Speaker B: That's amazing. And were you always based in New York for WeWork, or were you traveling and expanding around the world for them?

Speaker A: I traveled a fair amount, but I was. Yeah, I was always in New York, which was where the, uh, HQ was.

Speaker B: Okay. And that time that we work obviously left a lasting impression on you, but you probably saw also how the hyper growth comes with exceptional capital burning, you know, experiences and how capital efficiency can cut both ways, uh, in the venture world. How did you find yourselves going back into the venture investing side as an associate at flybridge in 2019?

Speaker A: That's a good question. I feel like I learned so much about, like, how to. And how to not run a business while I was there. Say what you will about WeWork, but Adam Neumann was, in many ways like a very exceptional CEO and leader to work for. His storytelling ability and his charisma obviously did wonders with investors when it came to fundraising. But internally also, like, employees were working around the clock for virtually no pay and, like, genuinely loved, like, the mission. Love the company. Like, their heart and their souls were, like, poured into it. And I don't know, it takes a certain type of CEO to be that inspiring and kind of, like, have people collectively align around a shared mission. And, you know, I gave him a lot of props for that because I Think it was pretty unique. And I don't. I still don't see it very often.

Speaker B: Uh, can you share a bit more from your personal experience? Because I think it is important to hear exactly how that charisma and that ability to look deeper in oneself from somebody's external, you know, point of view to say something to you, hey, Julia, you are a genius. You can figure this out. Go do it, is a very exceptional thing. And I agree, like, people say what you want about Adam, but he did inspire an entire generation of nobodies essentially, in the startup world, building to something great. So what was it that you experienced firsthand there?

Speaker A: I don't know. There were a lot of things that, in retrospect I think you could label as, like, gimmicky that actually worked really well in terms of, like, collectively aligning the employee base around a shared goal. We had saying, it's like, thank God it's Monday, or like, we over and like, you know, they would do stuff like on Monday night, cater like an amazing dinner at the HQ office and yeah, people love to stay and, like, stick around and like, talk about what's

Speaker B: set the tone for the rest of the week.

Speaker A: Exactly. And just, yeah, these things when people are like, Monday suck, you know, they constantly were putting a positive spin on.

Speaker B: It's actually Friday sucked because you have to stop working.

Speaker A: Exactly. Yeah. So he, uh, did a really good job at that. And that's amazing. Plenty of negative learnings as well, but I don't know if you want to.

Speaker B: But they're learnings, you know. Right. That's okay. They're learnings. How did you take that into your investing role when you joined Flybridge, you know, the company or the firm? Flybridge is well known for making some great bets, you know, in companies like Firebase and Mongo, you know, a great firm to be able to get your training ground on in terms of the venture role you had as an associate and then rose to principal. But during that time there, what did you learn about the difference between, like, picking winners, you know, playing on the momentum side of things and finding, like, durable businesses to back over a longer period of time?

Speaker A: I think there were a couple of things that stuck with me from WeWork that I, like, pulled to Flybridge and, um, Flybridge, one of the GPS that I knew and, like, worked very closely with. This guy Jesse Middleton was on the founding team of WeWork. So that's how that all came to be. Like another just. WeWork continues to be like the common thread throughout my career in terms of like the constructive learning side on WeWork. A couple of things I think. First, the importance of not deviating too far from like the core product and like core business competency was a big one. Like WeWork's coworking business was amazing. And as we all now know, there was a lot of other stuff that we ended up doing, from wave parks to schools to coffee creamers. I hope this is all public. But like, you know, like that's where things really felt like they started to go off course, if you will. And then secondarily and like again this was. I was privy to this because it was the team that I was on. But um, the importance of like pricing integrity and like not being liberal on discounts and like really always having like a firm sense of like what your product is worth to a customer, which you know, when you're trying to sign a huge tenant. Yeah, of course you want to like give them a concession. You do a multi year lease and like it all theoretically make sense. But it felt in many instances like we didn't, I didn't really know like what the true like value of like a desk was to a customer because there was a lot of pricing flexibility. So that's something I. Both of those things I thought a lot about during my time at Flybridge and like various extrapolations.

Speaker B: So you would go down to like the systems of how decisions were being made and look at them as a way to say, okay, this is logical. This can be, you know, structured at scale. No, not just on like a, uh, you know, off the back of a truck kind of thing when like opportunities came your way, which is super interesting. A lot of the best founders that we talk with are already thinking about systems when they're only 10 people. Like as if they had a hundred people. Is that kind of what you're saying?

Speaker A: Yeah, certainly that's a part of it. And I think, I don't know, tying it back to like a more like basic business school pricing concept. Is another partner at Flybirds that used to always say like, is this a hair on fire problem for customers? And just thinking about, you don't really know the answer to that question if you don't know what they're willing to.

Speaker B: I hate that question. As an early stage investor only because like there's no product yet almost. And like they're saying this is a hair and fire problem. But like, I don't even know if my product is going to be that solving it or it's like, hey, if you built this and then it was turned off. For somebody who was loving it, could they still do their job? It's hard to answer that question so early in the game.

Speaker A: Yes, I agree with you in a lot of senses. I don't know. The company that comes to mind that I worked really closely with is called Glimpse in the Flybridge portfolio and they did quality control for electric vehicle battery cells and you know the. Why now is this a hair on fire problem? Of course you have all of like the macro conditions around sustainability and EVs and whatnot but you also have like battery fires and like specific manufacturing errors that are happening in a consistent persistent basis at ah, at the manufacturing level. And there are indications to suggest that uh, this is something that is a hair on fire problem for a customer versus just like hey, macro market is like moving in this direction.

Speaker B: Yeah, absolutely. Well you spent five and a half years at Flybridge. You left to found Deco Ventures in 2023 as a small specialized seed fund. You know, what was that like going out on your own? How did that sort of impact you having the responsibility to go out and invest your own capital? I guess from your LPs and how did you think differently about being a first time gp?

Speaker A: Yeah. So the Deco vehicle is actually seeded by Flybridge Capital. I don't know if that is evident but Flagridge was very generous with me and kind of like helping me set up my own fund effectively that operated at an earlier stage than what they were focused on. So I mostly did pre seed. They focused on seed and like in many senses that uh, was a helpful sourcing channel to them as well. They've done that with some other people and it's been you know, very effective. What they look at the percentage of their seed deals that come from some of those vehicles. But yeah, nevertheless like I certainly was running that on my own. And the biggest I guess change and kind of like making decisions on your own versus having a team is that you don't have people to like rip with you and tell you that you're wrong. Like you just can or not do a deal and you have to actively surround yourself with people that are gonna push you on your thinking because you know, you're not in a partnership that's you know, naturally set up to do that.

Speaker B: Which is yeah, I always find interesting when GP solo gps like say well it's okay because I'm not really solo. I have other GP friends that I can talk to about stuff. But is that the same as being like a partner with somebody on a fun now that You've moved over to the LP side?

Speaker A: Um, I think it depends. Like, there are some GPS that I think very intentionally surround themselves. I think other GPS is frankly less of a compelling, like, sparring partner, but rather like industry experts in the spaces that you invest in that you go to, and you're looking at a deal and you're like, tell me why I'm wrong. Like, I'm gonna give this guy a million dollars. Like, tell me why I shouldn't.

Speaker B: That's a great point. Yeah. Sparring partners should be people that could actually call your bullshit out. Uh, not just gps are there to support you on the good and the bad.

Speaker A: Exactly. Yeah. Every GP will say that they do that to some extent. Right? Every solo gp. But, like, there are a couple of my mind, frankly, that we've talked to that stand out is like, here's my, uh, diligence process. Like, here's all the people I go to, depending on the vertical that I'm investing in, to tell me that I'm wrong before I give someone money. And, like, those that, uh, the integrity of, like, that process, when you're the only one making sure that it remains in place, I think is really important.

Speaker B: That's amazing advice. Well, let's get into that because we're here to talk to you about some of the fun stuff that you've been writing about on Substack. You made the transition from GP to lp. First off, you know, what made you want to step into that role, moving to the LP side And tell us a little bit about the. The place you're at now with Fengate when you joined last summer, in June of 2025.

Speaker A: Yeah. So I candidly had not been in. I was not intentionally looking to, like, become an lp. I had a recruiter reach out to me about Fengate, which I'm blessed and thankful for. Fengate, for those of you that don't know it, it's an incredible company. It's headquartered in Toronto, been around for over 50 years. 24 billion in committed capital. Have done a ton of investing in kind of like real assets, physical infrastructure and real estate over that time, and ventures, a newer endeavor for them. And candidly, like, that's the component of it that made it exciting to me is that it was kind of a blank slate. They were like, we know we want to do venture. We think we might want to do some direct and co invest. We know we want to do fund invest. We know we want to do more in the United States. But, like, other than that, it's Kind of a blank canvas. And so that in conjunction with like the team just being off the charts amazing, was what made me decide that this would be a good, good next step. And I, yeah, I'm beyond happy. Like I can't say enough good things about um, it.

Speaker B: Super cool you got cold DM this time instead of you doing the cold DMing, but you now sit on the other side as I mentioned the table as an LP evaluating hundreds of emerging managers, which you write about your thoughts on Julia's field notes. First question is how has your definition of a differentiated GP change from, you know, where you were the one pitching to now you're the one receiving the pitch?

Speaker A: That, ah, is a good question. I think that what I would say is that there's a lot of different ways to win in venture, which I think uh, most venture capitalists understand. And differentiated is therefore tied to the specific way in which you win. I think there are some GPS that really went on being deep domain experts. There are others that frankly went on calling them likable is a little bit too watered down. But you get the direction and kind of understanding which swim lane you're in, like why you win and like doubling down on that is what's working for you. I think I used to have like more of a one track like approach to thinking about what differentiated means. And now I realize that there's a lot of different ways you win and if you're differentiated in your lane, that's great. You don't need to be differentiated as compared to all the other ways that people win.

Speaker B: Yeah, it sounds like pattern matching for GPS doesn't really work because everyone has different patterns that work for them. And if it's working, that's great. You know, you've also probably seen a lot of GPS pitch. You know what is one of the biggest misconceptions GPS have though, when they're pitching you as an LP about how you make decisions that they would have thought differently until they actually heard you tell them like, actually we don't think like that as an lp.

Speaker A: I think there's two things that probably stand out. One is that maybe this is obvious, you can be an incredible GP and have a great fund, but like not be a fit for an LP like within their portfolio construction. It may be that they, they right now are really focused on GPs that are going to give them access to SPVs or opportunities at a later stage. And that's just not part of what your thing is. It may be that you're amazing in industrial asset Investing and they've already got three of those and so unfortunately that slot has been taken. And so we try to be pretty transparent when we pass with a gp. And there are certainly times where gps kind of like argue back and disagree and usually it's not really a you thing. Like you are great, this is a good fund, it's just not a fit for perhaps for what we're looking for right now. And I think that often times is the reality more than perhaps GPS realize then um, the second thing I would say, which again maybe is obvious but like LPs talk to each other a lot. Like we are very intentional about not outsourcing our diligence and doing our own first party work and like taking signal from the market but also being able to make non consensus bets and having conviction in the work that we do. That said like there have certainly been times where uh, LP has been describing like a really shitty situation with the GP that they were looking at. And it just so happens that I was looking at them too. And that doesn't mean it's a no, but it's definitely a data point. And I think that uh, there's a lot of talk about, you know, non partners at venture funds gossiping and sharing deal flow. And my experience has been it's 10x stronger in the LP community.

Speaker B: Yeah, unbelievable. I've heard that many, many times. And it's actually crazy because sometimes you don't have a great pitch with an LP as a GP and then you have an inbound LP come to you say hey, I heard you had a great call with so and so like oh wow, that's great that they had great things to say even though I didn't feel like it was the strongest. But you wrote about something in your uh, 2025 November substack post about LPs want to see process as much as they want to see output. Uh, so what does a strong process case study actually look like when a manager is pitching fengate?

Speaker A: Yeah, so that point pertains predominantly to the way in which you make investment decisions. Obviously how you find deals, but also how you decide which deals to give capital to. Again an obvious point, but if you have two amazing deals in your fund one, and I'm talking to you about fund two, I don't have any economic upside in those deals. Right. I want to know what you did that is repeatable, that's going to benefit me if I invest in your next fund. And so we've seen some exceptional data rooms, one GP of which we've backed where he's just very clearly laid out like, this is how I met them, this is what I liked about them, this is what I saw. This is why I did the deal, this is why I almost didn't do the deal. And this was the conclusion across every single deal he ever did for the first two funds in, like, uh, a remarkably transparent way that made us be able to see the patterns in his process and feel confident that the couple of good deals he did have in the prior fund, like, weren't flukes. It's great, but like, too often GPS will just talk a lot about what a company does or how well a company is doing in a prior fund and that I just need to know that you can do that again.

Speaker B: And so that's super great point. You can't overlook this more. Like, there's so much data that happens prior to writing the check that GPs know in their head, but they can't translate that back to an LP who's meeting them for the first time. And so you need to track, yes, obviously, the companies you say no to, why you said no, what was your reasoning behind it? And it doesn't have to be the same every time, but it has to be tracked. And the ones you say yes to, it's like, how did you meet them? What was the timeline for you to meet them on? How did you even get the round structured in the first place? What did you do after the investment? And then the coolest thing is how many of those other deals you got related to that first founder you backed. Yeah, we see that a lot.

Speaker A: That's a great point. Yeah. That should start to be your strongest source of deal flow, like relatively early on. And so the splintering effect there of, uh, a foundry fact is, is key.

Speaker B: You've seen a lot of data rooms. Let's talk about the data rooms that you've seen that literally light up your eyes when you see things that you're like, no other GP is doing this. And then let's talk about some of the things that, like, are just table stakes that even some GPS are still missing. Choose which one you want to start with first.

Speaker A: We always say the more information, the better. I think that a lot of gps I find will, like, conclude a call by saying, like, I'll say, this was great, I'd love to see your data room. And they'd say they'll respond with, what would you like to see? And I'd say everything and say, I may not respond to you this week, but, like, I will read Everything. And we will have a better second discussion because I have more information. There are still a lot of DPs that kind of like trickle stuff out to you. You know, they'll share like a deck and then like a preliminary soi and then like a reference sheet with five names on it. And like slowly as I'm asking questions, I'm starting to get more documents and realizing that like the initial data room I got was probably 10% of what's actually there. This may be a personal preference, but I'm very much in the camp of like, just send me everything you have, like I will read it or I'll read what I would like to read. And like, I promise your time will be better spent on a second call with me if I'm not asking you stuff that's already written out that we could have prepped for before.

Speaker B: Do you think they're gating it or they just don't have it built yet?

Speaker A: I think they're gating it.

Speaker B: Why do you think people are gating stuff? Bad experiences with other LPs leaking stuff. They're just not well versed probably.

Speaker A: I think LP is like rightfully so. Have a terrible reputation of getting data rooms and not looking at them. And like, they're like, I don't want to send you all of this like extremely proprietary information. If like you don't even give a

Speaker B: about my friend, I'll be honest. Like, we don't want to give up all of our sois to every LP after our first call.

Speaker A: Absolutely.

Speaker B: But I think what you should do as a GP is you should do references on that lp. Right. So if we're talking with Fengate and we know another person that you've backed M like, hey, they're asking for a data room. The GP's like, just give it to them. They're a good firm. They understand the data that you're sharing them is proprietary. They're a good LP for you to share that information with. I think it goes both ways. Right.

Speaker A: 1000% you should be referencing LPs and LP. This goes to me and my team too, because we're not perfect, but we should be aware of our reputation and market. You know, there's been one or two times where something has come up or someone said something about M my team. And I really take that to heart because like all we, you know, it's a reputation game at the end.

Speaker B: I take the negative references harder than I take the positive references. For sure. You know, you talk about how GPS should be Proactively writing The memo that LPs will eventually write about themselves, you know, including the risk and mitigants about what they should be considering before making the investment. What does that level of transparency look like and how is that a differentiator for GPS thinking that way?

Speaker A: Again, maybe this is a relatively obvious point, but the way that LPs make investment is make investments in GPS is very similar to the way that GPs make investments in founders. Like we have a team, we do our diligence, we have to present to an ic, we write a memo. That memo, same with a startup memo, is going to have a section on risks and ideally mitigates for those risks. And the best thing you can do is just control the narrative. Right. Like best case scenario, you highlight mitigants to risk that we're both aware of and in a way that I'm not going to be able to without you providing you that information. So uh, the simplistic answer is that it's inevitable, it's getting written like in your best interest to control the narrative.

Speaker B: It's hard to get that right obviously from the GP side, but the best thing you can do is just to try and write the LP memo like you know as much about your LP as you know about yourself. Yeah.

Speaker A: And it's. Sorry, the advice was to write the memo on yourself.

Speaker B: Exactly. But I'm just saying as if the, you know, fengate was looking at it for the first time.

Speaker A: Yeah, absolutely. And some, I mean there are GPS. I don't know, 10, 20% of the GPS we see in their data rooms will have a. Here's the memo. And when I was at Flybridge actually we did that as well. We wrote. It's a great idea, 20 page memo, uh, like let me just do your work for you. Feel free to edit, you know, like edit this. If it's like when we make an

Speaker B: investment memo for a deal we're leading and then a co investor asks us for our memo to copy it for their own ic. Yeah, love that.

Speaker A: Exactly. Yeah. Helping us.

Speaker B: Yeah, you push your managers to show real traction. KPIs for portfolio companies rather than just the markups or up uh, rounds. I think this is very important. Hard for some managers to grasp. We do this a lot at Ripple. Why is this such an important thing for you as an lp to see a GP doing so?

Speaker A: Obviously in today's market it's important because valuations are oftentimes completely detached from reality and like business fundamentals, there are plenty of instances where I see a company raising a series A to 300 million post and they're pre product and another one has got 7 million of amazing stable committed ARR. So the delta between where the company may be relative to its valuation is just so huge right now. Um, it helps to provide actual KPIs to ground LPs. I think secondarily a thing that I care a lot about is how investors think about follow on investment decisions in pro rata. I find that usually those decisions are pretty fast and loose and there's arguments to be made for why that's the case at the seed stage. But this is something again we did at Flybridge, which I thought was a great practice. When we wrote the pre seed or the seed memo, we had a section that was like what we need to see or believe at the next round to commit capital. And we pulled those memos up. When a company was doing pro rata and it was okay, did they get three out of five and what, you know, what was the miss on those two? And to the extent that those can be tied back to like specific operating metrics, be that on sales and traction or revenue or product velocity or whatever, it's just a good way to hold yourself accountable for like how the portfolio is also is like progressing and then like when you want to put in more capital.

Speaker B: Yeah, absolutely. A couple threads on that. First off, when you see something that has a $300 million pre product, you know, valuation, I assume internally you're kind of putting your own SOI together, marking the book as if you would think this is the fair value on a prior fund when looking at a new

Speaker A: fund in most instances. Yeah. Mhm.

Speaker B: Is there a significant gap these days than you've ever seen when looking at portfolios of the past?

Speaker A: Yes. Objectively true.

Speaker B: Yeah, it has to be true. And in terms of the rounds we're seeing these days. Right. You know, and then in terms of the reserve strategy writing follow on capital, you know, when you write the first check at let's say the precede like us and you have an idea of what a reserve will look like. The timing though is sometimes opportunistic versus waiting for the next round to actually happen. Do you look at those differently or just reserves in general? Let me know how you think about reserves and how you're uh, trying to make the best follow on dollars go the farthest. Because sometimes people don't even have reserve strategies. They call them deserve strategies.

Speaker A: Yeah. To your first point, I think that the proactive follow on before a round is catalyzed is that's Amazing. That's what those are our favorite, right? Yeah. You have insider information and you should be using it consistently. I think the companies that I'm most excited about that are raising follow on capital, it's oftentimes from insiders that are just like, wow, this thing is really ripping. And I, before anyone else finds out, I would like to own a little bit more of it. So yeah, no, I think that's phenomenal. And like we very much look for

Speaker B: that just in terms of the reserve strategy. Whether it's like again, you have a 7030 model, did you adhere to that or is that not as important as like the thought process behind just doing the reserve? Because some people have a 5050 or 6040 model. It's kind of hard when the rounds are super competitive. They don't have super pro rata or whatever. Does that also play into your decision of how they actually get their reserves in?

Speaker A: Yeah, absolutely. And we don't have a hard and fast rule around like the appropriate reserve ratio. A lot of it obviously comes down to fund size, but there's a lot of early stage funds we've looked at that have absolutely no reserves. And I think that model works very well.

Speaker B: I think SPVs are playing a large part into that though.

Speaker A: They are. But I think there is a class of investors that I see this more with investors that used to work in like private equity or more like fundamental oriented investing realms where they're like, yeah, not that much more has happened in the last eight months from when I gave this company $2 million. And like I just don't think it's worth 80 when it used to be worth 30, 30, you know, eight months ago. They're just like a little bit more fundamental in their thinking. And that again, that's not always great, like it's situation specific. But I think that that type of thinking, you know, perhaps with a smaller fund size and like a good SPB strategy, like there are different ways that, that it can work.

Speaker B: Absolutely. For all different sizes of funds too. Right. I want to talk about references because you really focus in on this in terms of how building reference lists is one of the most practical things that GB can do when establishing themselves for LPs. So first question, you know, what do GPS get wrong about references? And second question, why do they deliberately want the founder references from situations that were good where you actually think the best ones are the ones from that things that went poorly.

Speaker A: So to answer the second question first, as we all know, like most startups don't work 50% of your portfolio is probably going to zero. Like, those are the founders that still need to be shouting from the rooftop that you are a great partner to work with. And so, yeah, we want to hear from the founders that aren't ripping. We want to hear from the ones that went to zero and do they still have nice things to say about you? In terms of common misconceptions, I think that most GPs assume that all references need to be positive, which isn't necessarily the case. As an example, if there's a specific risk we have in mind about a gp, we're not sure how big of a risk it is. It can be helpful and confirmatory to hear that, assuming it's not a deal breaker from a reference or two, just to be like, okay, yeah, we've kind of like properly quantified that risk and like, we get it and we like have this mitigate in mind. But yeah, it just kind of like confirms a lot of the first party work that we've done. And so that's one reason they don't need to be positive. And the other reason is that like, great investors can be a little abrasive, a little prickly, you know, and if everyone's like, I love you, probably what that means is I'm just going to end up like talking to so many references because I feel like I'm not getting like enough meat on the bone and like, I need more specific.

Speaker B: You want the spikiness, basically. You want to understand those spiky points just like we do when we look at founders. There's three kind of references though. There's GP references, like co investor GP references, there's LP references, and then there's founder references. Which ones would you give a Highest weighting to vs lowest?

Speaker A: Founder ones are definitely most important for obvious reasons. I think on the LP side, something I care a lot about, we care a lot about is transparency and communication, things like that. Um, exactly. And just like good governance. And those are the data points you get from other LPs. I think the hardest GPS to diligence I work with or work with are the ones that insinuate everything is just like up and to the right all the time. Then I'm looking for, you know, other GPs that have portfolio overlap with you to like figure out how these companies are actually doing. They don't fundamentally trust you, which is like the worst relationship you can have with a GP and an lp. So I care about the LP references not because I care about some, you know, flashy name brand endowment I often ask the gp. I tell the gp, like, I don't really care about, like, the name brand LPs that you have in the fund. Like, tell me about the people that really know what it's like to work with you, even if it's some random person that gave you 25k and like, that's. That I care about.

Speaker B: Um, that's amazing. You know, speaking of transparency, you've been pretty transparent in how you talk about being an LP and also how GPs should think about talking to LPs. You're at one quote, stop being a maybe argue that too many GPs leave their first meetings as a qualified maybe instead of forcing clarity on the LP. So asking as a GP, myself and for all the other GPs out there, what should the questions be asked by the GP to the LP before you hang up that call?

Speaker A: Yeah, simplistically, I think you just want to ask, do you think I could potentially be a fit for your program? Like, is this interesting? And if there's anything that's an immediate hang up in your mind, like, would you feel comfortable communicating that? Because I might have data or a reference or some other resource that can help you work through it. I think it's can be very awkward to do that. And it's best to kind of give grace to the LP to be like, exceptionally honest with, like, where their head's at, which again, can be a little awkward. But it's in your best interest, just kind of speed things along. Because a lot of times I think I probably said this in the post, like, we think you're great. Like, you're obviously smart, you've raised a ton of money, you're doing something amazing, you're working with great founders. But I've got a pipeline of like 27 funds I'm talking to right now, and there's two that I'm super pumped about. And like, the honest answer is I just don't really know yet, like, what makes you special. And that's a terrible thing to say out loud to someone. But it's, it's less that, like, you are not special. It's just like, I'm not sure what makes you special yet.

Speaker B: That's honest feedback though, and it helps a GP like us as well, like, figure out, like, okay, we got to prioritize pipeline, just like the LPs do do. So let's have that transparent conversation. But asking that question can lead to three outcomes. As you say it. There could be the clear interest, which is great. There could be the fuzzy interest, and There could be a structural. No, you just don't fit our strategy. So how would you coach a GP to get more information to avoid that fuzzy bucket?

Speaker A: Yeah, I think you need to figure out why you're in the fuzzy bucket simplistically. Right. Like is it that they don't know why you're special or is it that you are investing in deep tech and they just made three deep tech fund investments and therefore you're just going to have overlap with some managers that are already in the portfolio. Like, you need to get more information on like why they're on the fence because there's a couple of different, like sub buckets you could fall into and then you can better figure out frankly if it's worth your time or if it's not. You know, there's no amount of additional information that's going to make them do a fifth hard deck investment in like you for. It's just not happening.

Speaker B: Yeah, I wish all LPs were uh, avoiding that fuzzy bucket like you do with uh, the answers you provide, which is great. You know, I want to talk about co investments from the LP side. Right. There's a lot of co investments happening. SPVs, as we mentioned. What are the best practices that GPS can do to help incentivize LPs to participate in co investments with VC managers? Right. You got the pre approvals, IC memos, threshold approvals, all these things. How do you think about that in terms of making sure an LPGP relationship is good to go on a co investment strategy?

Speaker A: Yeah. So what we request from our managers or like the dialogue that we have with the GPS that we've backed is getting like a full year view on like what might be coming down the pipeline. We communicate and like in the memos that we write on gps, we tell them in their past portfolio, in the current portfolio, if they've started deploying. These are the assets like we know we're interested in. Like, we've already flagged them as like gems and fund one to our ic. And so if something happens with any of these assets, please keep us abreast. But otherwise, like any subsequent funding rounds with portfolio companies happening in 2026, give me a sense of where they might fall on a quarterly basis. So we actually map that out, we use that, uh, we map that out across all of our gps and we kind of also use that to figure out our time management. And if there happens to be a slow week, we'll start proactively writing a memo for something that's coming in Q3 and just try to stay on top of.

Speaker B: So you'll actually build a CRM for co investments even if they're not something happening until the back half of the year. Just so you're ready to go if it comes in quickly.

Speaker A: Correct. Yeah. And we've started to internally like write the memo, um, on a deal we know we want to do, present it to our ic, kind of get like a soft sign off. And then assuming that the valuations and like whatever revenue statistics or, you know, specific items we've noted is like things we'll get when the deal is live, aligned with our thinking or don't like deter us wanting to do the deal. It's like a faster sign off process.

Speaker B: Needless to say, if a deal comes out on a Friday and they need your answer by Monday, you're not too happy about that structure that you have not been aware of.

Speaker A: That's true. There's one thing I can say I think we're very good at is operating like a direct shop when it comes to like one of the best SPVs that we're in that I'm most excited about. I got on Thanksgiving on like my first vacation after like a year and a half. Then I was in Nicaragua with my family and I got that thing done by Monday, you know, or we did because we needed to. But yeah, it like wasn't ideal.

Speaker B: Okay. So you can move fast no matter where you are. That's great. All right. I gotta ask for your honest take on the venture markets right now. You know, where are you seeing the biggest differences in the risk reward dynamics between true early stage versus later stage pre IPO secondary markets? There's so much going on. How are you feeling right now, the overall venture market?

Speaker A: I'd say I'm still feeling pretty optimistic. I stand by the earlier point. Like there's a lot of ways to win in venture. Obviously there's a ton of chatter which I think is accurate about the bifurcation of the venture market. And the stuff that the multibillion dollar funds are doing is a completely different asset class than the stuff that the $700 million funds are doing. And like that is true. There's a couple of funds we've looked at recently that are in like the 30 to $50 million range that are 20, 22, 23 vintages and the two 3x DPIs because they had like an incredible acquisition for a company at 400 million post by strategic. And these deals that you kind of forget about because they're not SpaceX. And in the news are still driving meaningful returns for LPs and GPs and everyone alike. Obviously not every LP can pursue those smaller funds because we're putting a couple million dollars to work at, you know, per fund. But if you're, you know, if you need to put a 200 million dollar check into one of these guys, like obviously that, that math doesn't work and you have to think about perhaps more of a barbell approach. But all that to be said, like I'm, I'm still optimistic about early stage venture. I just think people need to stop comparing it to, you know, Andreessen and the likes because it's just, it's a different asset class.

Speaker B: Yeah, no, I appreciate that. That's great advice, especially for some of the earlier funds and smaller fund sizes. This wouldn't be a podcast if I didn't get your take on how you're implementing AI into your workflow as a due diligence process and how the complexities of assessing managers before using these tools has changed dramatically and how you can either do more due diligence faster, whatever it is. How are you incorporating that into the fengate workflow?

Speaker A: Yeah, I think one of the areas I'm most excited about is how we're thinking about portfolio monitoring at the end of the like underlying portfolio assets of the funds that we've backed. So we built out something as an example that yeah, looks at every portfolio company in the funds that we're in or like past funds that they have that we have like SPB access to that shows us like our market exposure across like energy, fintech, whatever that's. And I think a lot of LPs struggle to think about how their portfolios are actually like shaping up because the branding of venture funds are so like wishy washy when they're like, we do physical AI and it's like what does that actually mean? Is your entire portfolio of robotics is it space? Ah, what is it? And so we're starting to have a very granular view of where we actually have exposure both in market and also a network side where founders used to work, which helps us think about just healthy diversity as we're adding new funds to the portfolio. I think it's particularly important for investors that invest in like deep tech or hard tech because yeah, those brands can be like exceptionally like all encompassing and like wishy washy. And there's actually a lot of like variability around what they end up doing if you look at the portfolios and map it out.

Speaker B: Yeah, very true. All right, before we wrap Things up. We always ask our guests for their fast favorites. So first off, your favorite podcast.

Speaker A: This is so generic, but 20 minute BC.

Speaker B: Is this still 20 minutes?

Speaker A: It's probably more like 45. Yeah. Uh, maybe.

Speaker B: Yeah. All right, next is your favorite newsletter or blog.

Speaker A: Favorite newsletter is probably the, uh, what is it called? The mit, like Technology Review.

Speaker B: Oh, wow. Yeah, okay, definitely. Uh, how about your favorite tech gadget?

Speaker A: I just got this as a gift, which is going to also sound very generic. The eight sleep. But it's amazing.

Speaker B: Changed my life, changed my wife's life. It's amazing. Just test out the different temperatures because it gets really cold sometimes. Okay, how about your favorite new trend?

Speaker A: In tech or in life?

Speaker B: In life, in anything.

Speaker A: I think in technology and venture, I'm seeing a little bit of a resurgence of consumer investing, which I like in life. I feel like I'm seeing some nice pushback to the Gen Z, like over optimizing of everything and like being scared to have a glass of wine because their sleep score is going to go down to like 76 or whatever. I feel like the seesaw had tilted too far and we're kind of coming back in the other direction. Maybe that's.

Speaker B: That's good. No, I like that one.

Speaker A: Yeah.

Speaker B: Okay, good. Next is your favorite book.

Speaker A: Favorite book is probably Small Fry, which is by, I think it's Lisa Brennan Jobs, who's the daughter of Steve Jobs.

Speaker B: Yeah, right, of course. And last but not least, your favorite life lesson.

Speaker A: Favorite life lesson. My favorite life mantra, which is super corny, is an object in motion, stays in motion, which I feel is, I don't know, an LP land. And you're like doing all these random chats and dinners and you're just kind of like, where is this leading? You have to like just keep doing it because you don't know where it's going to lead and always lead somewhere.

Speaker B: That's awesome. Fantastic advice. Well, thanks so much for joining us in the Tank today with Julian Melpy from Fengate.

Speaker A: Thank you. It's a great job, Matt.

Speaker B: Hey, everyone, thanks for tuning in to another episode of Tank Talks. We hope you found today's conversation as insightful as we did. If you're enjoying the show, we've got three quick things to ask of you. First, hit that subscribe button button on your favorite podcast platform so you never miss an episode, whether that's Apple Podcasts, Spotify, Google podcast or YouTube. Next. Follow us and stay up to date on upcoming episodes and behind the scenes content on social media with Twitter, LinkedIn and Instagram and lastly, share the love. If you found value in today's episode, share with a friend or colleague who'd benefit too. Your support helps us bring in more amazing guests and keeps the Tank Tots engine running. That's it for today. Until next time. Keep disrupting and innovating.