Year 1 as a Solo Capitalist
In November 2020, I decided to raise Countdown Capital’s first fund as a solo GP. Twelve months and nine investments in hard tech founders later, I’ve learnt so much about operating a VC firm alone, winning (and losing) the opportunity to invest in founders, building a community, and myself / my limits.
I had the privilege of raising in public, so it’s only fair to pay it forward and continue to learn in public as well. Here are my top takeaways from my first year of investing as a solo capitalist.
1. The biggest reason why founders want to accept money from Countdown Capital is because they want to see me win as much as I want to see them win.
It’s no secret that capital is increasingly a commodity in VC, even at the earliest stages of a company’s life. VCs are increasingly competing on valuations as well as the value they can provide to founders (or simply getting out of their way, like Tiger Global). Yet, surprisingly, the number one reason why founders decided to have me on their cap table this year wasn’t value or valuation; it was simply a deeply shared thesis for the future and knowing that I would energetically hustle for them whenever or wherever they needed me. If vibes and timelines aligned, deals often got done — simple as that.
I’m almost certain that this story will not be as simple in the years to come as it is right now. The market continues to change, and Countdown will be scaling in the near future. But, in our first year, the values and vibes we share with founders took us far.
2. Quick decision-making is the name of the game for solo GPs. Move slowly at your own risk.
As a solo GP, you certainly have the luxury of making quick investment decisions compared to a larger firm with multiple partners. But, there is increasingly (and rightfully) an expectation from founders that a solo GP should provide a quicker investment decision.
I learnt this the hard way in May of this year, immediately after raising our first fund. I had the opportunity to invest in three different startups building valuable products aligned with our fund’s focus. In fact, I really liked the founders of each of these three companies; but, I felt I needed to have an in-depth due diligence process to validate my conviction in their companies. As a result, I ended up spending almost 10 days due diligencing each opportunity.
After completing my painstaking process for all three of the companies, I ended up committing to invest in all of them — but promptly lost the opportunity to invest in each of them. Each of those founders knew I was capable of a better, quicker process, and should have moved faster; and, because I didn’t have a quicker process, I ended up paying the price.
In June, I greatly expedited our due diligence & decision-making process after those experiences and rarely had the same problem again. For founders, time is money!
3. Building a community (or a set of communities) is the best way to meet founders as a solo capitalist.
With armies of non-partner VCs at larger firms often reaching out to founders on LinkedIn, founders today are often inundated with messages and requests to meet VC firms shortly after they have started their company. As a solo GP, I personally can’t match the volume of outreach that larger firms do to reach hundreds of founders; but, what I can do is find founders earlier and more authentically build a relationship with them. The key to making that happen has been building virtual communities.
For example, I met two of my portfolio founders on Twitter before investing in them. On Altum, a deep tech community Countdown formed earlier this year, I’ve organically met over 30 founders building companies in stealth mode. Most solo capitalists aren’t endowed with much time and money like bigger firms, but they are armed with and defined by their personality. Personality is what makes solo capitalists more relatable to founders and, thus, better served to build communities & find them online — sometimes before they are even founders.
4. Going solo reduces a lot of potential friction and increases transparency & collaboration with LPs. What they see is what they get.
One of the underrated benefits of being a solo capitalist is that my LPs have deep visibility & clarity on what Countdown is investing in and how I think through investment opportunities. I am the firm’s only decision-maker; so, they know that I (and literally anything they want to know involving the firm) am only a Slack message, text or a call away. For what it’s worth, I’ve heard that unfettered access seems to be relatively rare at bigger firms.
However, my LPs aren’t the only beneficiaries of frictionless relationships. The access goes both ways; when I have an ask for a portfolio company that involves an LP, I simply need to Slack or text them and take advantage of the direct lines of communication we have. I usually get a response within minutes!
5. You can be a solo decision-maker, but you still need someone to challenge you intellectually. Not having a thought partner leaves a big void.
One of the trickiest (and least discussed) features of operating a fund as a solo capitalist is the inherent lack of intellectual support structure. Have a thesis on a particular area that you want to bounce off of someone? As I’ve experienced multiple times earlier this year, it’s nearly impossible to if you’re operating alone without smart people around you. Even with rich imagination and ample discipline to continually question your assumptions, all you fundamentally have is yourself.
Thankfully, Countdown’s ecosystem of friends, founders, advisors, and operator angels help fill that void today. Nearly everyone in our orbit has been an incredibly honest thought partner, and I am a better investor because of them. Moreover, Countdown’s portfolio would not exist without the support of Ryan Li and Katerina Jennings — both of whom are supporting our investments and platform in various capacities. But, there’s no question that being regularly challenged by smart people is critical to being intellectually honest and harder to achieve without a partner than with one.