We closed Fund IV smaller than we could have raised. The reasoning is unfashionable and worth explaining.
We had commitments for more than we took. Turning that down required a conversation among the partners that lasted several weeks, and the arithmetic behind it is straightforward once you write it out.
Fund size determines behaviour
A larger fund needs larger outcomes to return capital, which pushes you toward bigger checks, later stages, and more companies per partner. None of those are wrong. They are simply a different job than the one we want.
At our current size, each partner carries around six active boards. That number is the whole strategy. It is why we can spend two hours on a founder's hiring problem without checking the calendar, and why a Sunday call gets answered.
The trade we are making
- We will miss companies because we cannot write a fifteen million dollar check quickly.
- We will be diluted in the best outcomes more than a larger fund would be.
- Our returns depend on a smaller number of decisions being right.
We accept all three. The alternative is a firm where founders get a quarterly check-in and a warm introduction, and there are already plenty of those.