The Full Ratchet (TFR): Venture Capital and Startup Investing Demystified

Eric Sippel of Sippel Farb Family Office joins Nick to discuss Raising from Family Offices, How to Differentiate as an Emerging Fund, and Common Mistakes Made by Established Firms. In this episode we cover:

  • Walk us through your background and path to running Sippel Farb.
  • Before we jump in can you give us some thoughts on Family Offices investing in Venture and how that has changed over the 25 years that you've been doing this?
  • What are the major investment focus areas for the family office?
  • With regards to manager selection... What gets you excited when you review the profile of an emerging fund?
  • Tell us about the 3 S's that you look for.
  • Rounds are moving faster then ever and prices seem to be escalating to 2-3x of what they were just 3 years ago.  Many GPs cite their speed of decision-making as a strength -- What is your opinion of quick investment decisions and short DD timelines?
  • At New Stack, we focus on ownership.  However, some managers prefer a less concentrated approach with more shots on goal.  What are your key learnings regarding portfolio construction over the past few decades and what do you look for in emerging funds?
  • Many LPs look for differentiated strategies for sourcing and winning deals... and put heavy weight on those factors.  Where do you stand?
  • When a GP is pitching any family office, not just yours, what should they be mindful of that may be different than when they're pitching an institution?
  • Family Offices are often a bit opaque... it's hard to find them and know what their investment interests are.  Do you have advice or suggestions of ways that fund managers can find and connect with families that may be a fit?  Have you seen any strategies from GPs that have connected with you in creative and friendly ways?
  • What mistakes do you see "emerged/established" managers making the most? What about emerging managers?
  • There's a great piece on Substack by Nikhil Trivedi that discusses the rise of the Solo GP. What are your thoughts on the rise of angels to super angels to sole capitalists? Do you perceive this as a threat to traditional VC firms? 
  • Last year, Different Funds published a report on the rise of capital going to vehicles outside of flagship/committed funds--i.e. SPV's, Syndicates, Rolling Funds, and Opportunity funds. How does an LP navigate all these vehicles?
  • You've worked with a lot of GP's.  What sort of bad behavior have you observed that you attempt to screen for now?
  • Are there signals post-investment, after a certain period of time, that indicate to you that a GP or fund is working well.
  • What's your opinion on using follow-on capital to bridge a company to Series A?
  • What advice, that we didn't cover, would you have for GPs out there that are raising a Fund I or Fund II?

Direct download: Eric_Sippel_final.mp3
Category:general -- posted at: 11:50pm EDT