Why solo capitalists are winning with Itamar Novick from Recursive Ventures

[00:00:00] Itamar: Solo capitalists, the precedent seed stage are probably a founder's first choice. You're talking to the final decision maker as a founder, you want to maximize the potential, maximize the time that you spend with investors so you can raise the round and go back to building your business. That's actually the important stuff, not the investment.

[00:00:19] Itamar: A hundred percent of the solo capitalist time is focused on helping you as a founder, right? LPs are increasingly interested in backing solo GPs because they're, they're seeing performance. And they're seeing an innovative model to venture capital that's actually working. You want to get a check from Gary Tang.

[00:00:37] Itamar: You want to get a check from Orange Eve. We should think about new types of venture capital firm setups that are performing well. Venture capital, it's a young, pretty young, you know, industry and market. It's only been around for 30, 40 years at scale. There's going to be a big evolution here.

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[00:00:58] Rahul: Welcome back to Understanding VC. [00:01:00] I'm your host Rahul. Understanding VC is a perpetual MBA on a single subject, venture capital. And today I'll be having an in depth conversation on the merits and challenges of being a solo capitalist with Itamar Naumik. Itamar is a solo capitalist and founder at Recursive Ventures, a pre seed fund focused on fintech AI and emerging tech startups.

[00:01:20] Rahul: Let's talk to him.

[00:01:21] Rahul: Hi Itamar. Thank you so much for joining me today.

[00:01:25] Itamar: Yeah, excited to be here joining you, Arul, and joining the listeners we have on the line. Thanks for having me.

[00:01:33] Rahul: Yeah. So, um, I read this tweet a couple of weeks ago. it is from, uh, VC Ed, sir. he basically tweeted, solo GP phones have, historically been perceived to be riskier, but I haven't seen a single

[00:01:46] Rahul: solo GP hit by a bus yet have seen many partnerships disintegrate due to interpersonal conflicts.

[00:01:53] Itamar: That really cracks me up because I get that, you know, run [00:02:00] by the bus question all the time from LPs and percent LPs.

[00:02:05] Itamar: And fortunately, I haven't ran into other solo capitalists who have been run by a bus. I hope it stays that way.

[00:02:12] Rahul: Yeah. Yeah. So, so, would love to know what exactly a solo capitalist.

[00:02:19] Itamar: So I think it's interesting because we've had this concept of solo GP actually sort of evolved to a solo capitalist. And I think, uh, and solo GPs are pretty much a new phenomenon as well. And solo capitalist is even a newer phenomenon than solo GPs. So the way I at least define solo, uh, So capitalists is, not just a one person investment team, but actually a one person team.

[00:02:46] Itamar: So the entire team is basically one person. They could be supported by, sort of back office folks, maybe marketing folks, but really the investment team. Only has a single member in it, [00:03:00] right? And that's a solo capitalist.

[00:03:02] Itamar: Unlike solo GP firms, where there's maybe one GP who's making the decision, like the final call on the firm, but there could be multiple investment professionals and multiple investment committee members, IC members, all weighing in on the decision.

[00:03:17] Itamar: So I think that's a distinction. And clearly the two solo GP and solo capitalists are very distinct from the traditional. sort of, GP fund with multiple GPS and multiple investors around the table.

[00:03:30] Rahul: Yeah. Okay. So, I did not know the distinction between solo GP and solo capitalist. You know, that is a new thing. I thought it was the same. Yeah. So, uh, I mean,what are some of the benefits of,being a solo capitalist?

[00:03:47] Itamar: So it's interesting. Uh, I think hopefully I bring an interesting perspective to the table on that front because I actually had, I've been fortunate to work at an institutional Series A [00:04:00] firm on Sand Hill Road, a firm called Morgantar Ventures. It's one of the storied most successful VC funds in history.

[00:04:09] Itamar: It's been around for decades and decades. Early investor in Apple. Siri and so many nuance, so many other successful companies.

[00:04:18] Itamar: And, I was actually a junior guy, at Morgan TheraVentures between 2010 and 2012. it's been a while and, I've taken so much from that experience. I've learned so much from my time in, sort of an institutional VC firm.

[00:04:34] Itamar: and, you know, one of the things that I've learned is that. VC firms are really set up the right way to support what, I call early and mid stage investments, which is really Series A, Series B, maybe even up to Series E, maybe even up to pre IPO, because what you get in these partnerships is a lot of checks and balances, which are very appropriate, right?

[00:04:58] Itamar: for example, my firm had seven [00:05:00] investment professionals. Five senior, two junior, and everybody could weigh in and some great thoughts around the table. Folks have their prospective networks. They can do extensive due diligence with prospective customers. They can figure out, what's the competitive landscape looking like.

[00:05:16] Itamar: And that's really helpful when you're trying to figure out whether you want to deploy 10, 15, 15 million dollars. into a company. One thing that I've found during the years doing earlier stage stuff. So I'm also a founder of an incubator previously called UpWest and I've been doing precedence seed stage investments as well as angel investments for the last 13 years.

[00:05:39] Itamar: What I've found the hard way is that the traditional multi partner model is great for those later stage deals, but it's actually not that good for the precedent seed stage deals, right? It's not that effective. because there's a couple of reasons for that. The first one is speed [00:06:00] and velocity, because really, at the earlier stages, a lot of what you're betting on is people. And very successful people who are domain experts. They know what they're focused on. Maybe they're, they're still entrepreneurs, repeat entrepreneurs who have built companies before have been very successful.

[00:06:14] Itamar: And these type profile of founders, they get funded really, really quickly. And, you just have to move fast, right? The second thing I've found is at the pre seed stage, especially, and even at the seed stage, there isn't really a lot of diligence to go off, right? It's not that. There's 20 customers that you can call because the company doesn't have 20 customers.

[00:06:35] Itamar: Maybe it's just like building its product Maybe it has a few design partners, but they're not active in production Actually, you know using this,

[00:06:44] Itamar: service or the product so really the traditional diligence that you expect That a bigger venture from capital would do it's not really appropriate There's not that diligence work to do so you don't need all those people around the table And that kind of leads [00:07:00] you to a question of, well, if you don't need all those checks and balances because there isn't really that much to check, right, then why would an enterprise GP, an enterprise partner, win an investment decision in a consumer company that they don't know about, they don't know the space, and yet they're voting no and the deal doesn't get done.

[00:07:21] Itamar: So. So it's kind of like, maybe if you think about venture capital as different micro asset classes, like super early, pre seed and seed, and then early, A, B, and C, and then mid stage, and then pre IPO, I think you almost have to have a different, like, operating cadence for each one of these. And I believe that the solo GP or solo capitalist, Operating cadence is actually one of the best for pre seed and seed.

[00:07:50] Rahul: Yeah. So, um, other than speed, right? Uh, so even when you look at, let's say, Union Square Ventures, the personal brand [00:08:00] of Fred Wilson kind of overpowers the, VC brand anyway, right? So, maybe that's also one reason to be a solo capitalist because, you know, people, uh, founders especially like to work, work with a certain person, What to expect from that person and is also directly talking to that decision maker when he's approached.

[00:08:19] Rahul: So, does all of that also help?

[00:08:23] Itamar: Well, in terms of value for founders, I think it's very clear, right? Like solo capitalists, the pre seed and seed stage are probably a founder's first choice.

[00:08:33] Itamar: And it's for multiple reasons, right? The first one is, you're talking to the final decision maker, right? And I've been an associate in a bigger venture fund, and I have a lot of respect for these guys, but You know, we all know that they're not the final decision maker in most cases, right?

[00:08:49] Itamar: So as a founder, you want to maximize the potential, maximize the time that you spend with investors so you can raise the round and go back to building your business. That's actually the [00:09:00] important stuff, not the investment.

[00:09:02] Itamar: So you want to know you're talking to the decision maker and clearly when you're talking to a solo capitalist, you are talking to the decision maker, right?

[00:09:09] Itamar: And not only are you talking to the decision maker. You're actually making the best use of your time. So I'll give you one example, right?

[00:09:17] Itamar: Some funds, and I actually think it's not a best practice, they do the initial pre screening through associates, right? So for example, you know, company shows up, somebody emails the GP and says, hey, this is a great company, you should look at this.

[00:09:34] Itamar: Instead of taking the first call themselves, they let an associate or a principal level person filter out the deal for them. The issue that you find there is actually twofold.

[00:09:46] Itamar: First of all, maybe the associate or principal doesn't know enough about the space and what it takes to actually win there and they're, you know, it's a false, positive.

[00:09:57] Itamar: Like, they should have actually moved that [00:10:00] investment into the next phase because it's a very interesting one. That's the first one. The second one that happens when you're filtering with more junior folks is The founder might jump on a call and they'll be like, okay, what's this like junior person that doesn't know anything about building a company?

[00:10:15] Itamar: Why are they talking to me? I don't want to take money from this fund. I'll just move on to the next one that takes me seriously, right? And that's how venture firms can miss some great opportunities straight to their anti portfolio. So I think one advantage of those more we'll talk about all about them.

[00:10:31] Itamar: But the first big advantage is, you know, you're talking to the decision maker. You know that you're not wasting valuable time. At the end of the day, founders time is the most valuable time there is. It's more valuable than my time, right? They're the ones actually building. So, that's the first big advantage. The second big advantage is, without getting into specifics, and not necessarily generalizing for everybody, because there are all sorts of firms, partnerships are not [00:11:00] companies. Companies have a CEO. Who's the final decision maker, and they have a certain dynamics that in some cases is top down, you know, somebody makes a decision and everybody lines up and that's it, like, move on with the program kind of thing.

[00:11:15] Itamar: Partnerships are not really ran that way, it's a partnership, and there's a lot of equal partnerships VC and there's some unequal partnerships as well, we can talk about that. But the reality is, it means a lot of politics, right? So, now you have these situations where, oh, you got funded by a GP who is now out of favor, and some, for some reason, some other GP in the fund kind of undermined them, and maybe they're not performing as well, and they're essentially, out of favor inside the fund and they can't make a decision to bridge your company, for example, as a founder, right?

[00:11:55] Itamar: Like suddenly all this politics inside this VC fund,

[00:11:58] Itamar: which is honestly none [00:12:00] of your business and not your problem as a founder, suddenly it's coming to bite you in the behind. And like founders who have gone through this, especially, you know, entrepreneurs who've seen this before, like, yeah, I don't need this.

[00:12:12] Itamar: This is just like extra risk. If I take money from a solo capitalist, there's only this one person. They know the company. Well, they don't have to convince again a consumer VC that we should do an enterprise deal or visa versa.

[00:12:27] Itamar: And it's just, the right decisions are made at the right time with without bias, right? In an objective way, I do believe that there are some funds and some people in Silicon Valley and globally in the VC community who are making decisions that are not 100 percent objective, right?

[00:12:49] Itamar: There could be a Juno partner that has the best deal in the world in their hands and they're not going to be able to pass that deal through because some senior partner shoots it down and they don't even know what they're [00:13:00] talking about and like, all this stuff becomes the founder's problem.

[00:13:04] Itamar: And why? Why? I mean, it doesn't make sense. It's not objective, right?

[00:13:08] Itamar: So I think that's another second point, solo capitalists Like an advantage for founders taking money from solo capitalists. the next one is having no office, no staff, no overhead means 100 percent of the solo capitalist time is focused on helping you as a founder, right?

[00:13:26] Itamar: Like, I don't have to sit through five hours of partners meetings talking about all those 20 other companies in our joint portfolio that honestly, I have no clue what they even do. Like whether we should bridge them or whether they're going IPO or not. No, I'm just focused on my companies. I don't need to deal with all this other stuff.

[00:13:45] Itamar: I don't need to deal with training junior professionals and like You know, it takes 10 years to train a VC. I don't have to deal with that, right? That's coming at the expense of helping founders raise their next round or like reach their next customer, right?[00:14:00]

[00:14:00] Itamar: Like 100 percent of the solo capitalist time is, deploying capital and supporting founders. So it's very pure in that sense. And I think it also translates the ability to build a more trustworthy relationship with the founder, right? Where it's like really focused on, here's a single decision point. person. Here's what we do. Here's what I do, right? For you in your business. Here's how I can help.

[00:14:24] Itamar: and like generally be there to help versus, Oh, I want you to say this so I can go back to my partnership and say that you've been awesome. And like that whole doesn't really, it's not really productive, right? and I mean, there's more, but I'll just wrap up and say, this is why solo capitalists are very efficient.

[00:14:41] Itamar: Transcribed And they may generate outsized returns in the precedence seed stage. And the data, as you mentioned, is starting to show that. So I think this is some of the reasons why it's working better for founders, for GPs, solo capitalists, and for LPs.

[00:14:57] Rahul: Yeah. So, um, [00:15:00] I've read that, you know, solo GPs offer better founder friendly terms. I was thinking about like what friendly terms, apparently higher price. Why is that?

[00:15:12] Itamar: I don't think solo capitalists necessarily offer friendlier terms. I don't. Advertise myself as offering better terms than others. I think terms should be driven by the market dynamics and, um, and everybody has different, red lines or, different ceilings that they're willing to go to every solo capitalist.

[00:15:33] Itamar: Every fund has different ones. And I wouldn't necessarily say that. I believe that solo capitalists have friendlier terms than others. If anything, because solo capitalists are more focused and there is less noise in their system, they might actually be able to be better positioned to protect their guardrails around valuation if they set guardrails like that.

[00:15:55] Itamar: So, I don't know if that claim that solo [00:16:00] capitalists are more friendly from a term standpoint is true.

[00:16:04] Rahul: And, also talking about LPs, right? this is again, something that I've read that the LP network of solo capitalists usually It's composed of other founders, so it makes sense for a lot of founders to take, capital from solo capitalists, because, you know, they will come with a lot of people who can, help with, with really relevant experiences.

[00:16:26] Itamar: Yeah, I don't know if I would... I wouldn't say that's necessarily true. I think that's more broadly true for emerging managers in general, where newer funds, I mean my fund Recursive Ventures 3 is now the third sort of vintage, but I've been running Recursive Ventures is a part time role. It hasn't been full time up until a year or so ago.

[00:16:51] Itamar: so I'm considering an Emerging Manager, and I know a lot of other Emerging Managers, and I'd say that the characteristics of sort of being, being very [00:17:00] close to market, to the market, getting a significant chunk of the capital raised from founders, successful founders, SLPs. I think that's true for all Emerging Managers in a way, or at least the more successful ones.

[00:17:14] Itamar: and not necessarily for solo capitalists. so, I don't know about that, man.

[00:17:20] Rahul: Okay. And, uh, I can't think of any, but is there any way this is a bad deal for a founder? Like, taking money from solo capitalists?

[00:17:30] Itamar: ,I think it could be, I mean, there's always ways that things can go sideways, right?

[00:17:35] Rahul: is it the whole platform support that a lot of large funds can offer in terms of?

[00:17:41] Itamar: Yeah, yeah, I mean, that's definitely one, right? Of course, you go to Andreessen Horowitz, you get everything, right? They would do PR for you and executive... headhunting and recruiting for junior old, like, they will do all those different things that their platform offers. The thing that I would say is that [00:18:00] some of those full suite of services, they're great for a company that's scaling up, but the precedence stage, you're not really scaling up yet.

[00:18:08] Itamar: You're getting from zero to one, you're building momentum, and you're probably not going to hire 50 people that you need, like to outsource your recruiting to Andreessen Horowitz. So I think. That's definitely, something to consider, but not what most founders need at the earliest stages.

[00:18:25] Itamar: I think the risk with solo capitalists for founders is, time, right? Timeshare, right? Or like in mindshare, right? So, there's solo capitalists out there, I won't name names, that could do, 40 deals a year. And I think if you're doing 40 deals a year, or like 20 deals a year even, right? I think if you're doing that many, then...

[00:18:46] Itamar: as a founder, I'd look at that and say, yeah, can you realistically really support? Like maybe you're one when you have 20 companies that works, but I've been running my business for 12 years now Being a solo capitalist and if I would do 20 [00:19:00] companies a year I'd have 300 companies and there's no way I mean, that's that's like a company for every day Before raising money before looking at new deals.

[00:19:09] Itamar: It's just impossible, right? so I think That's a challenge on the solo capitalists to really define almost their contract with the founders. Like, what are we here to do for you? What is realistic expectations? Two way street, right? With the founders. And then setting up a system that actually enables the solo capitalists to deliver on that promise, right?

[00:19:34] Itamar: In my specific case, I do one thing. I do it well, and that's what I focus on. I help my companies get funded in the institutional seed round. And then they graduate and they move on to bigger VCs that know how to help them scale those companies from the Series A and beyond. And I'm usually out of the picture, right?

[00:19:56] Itamar: Because there's a board and there's all those people that do amazing work. I actually [00:20:00] know how to do their work, but I'm not interested in doing that. I'm interested in supporting the next batch of founders who are just starting getting off the ground. So what happens is, my companies, I work with them a lot very early on.

[00:20:13] Itamar: And then they graduate and they move on and they don't need me as much. So that leaves me enough time to deal with the next batch of companies. I think as a solo capitalist, if you don't have a structure like that, where you know all the different touch points and you can sort of like very effectively manage your time and focus, I think you're going to drown very quickly with so many responsibilities.

[00:20:33] Itamar: And that of course could, hurt your founders and you shouldn't do that, like you should be focused on supporting them where you. promise to support them, and that's what I focus on at least.

[00:20:44] Rahul: Yeah. And I think, it's exactly what you said, right? the one reason that founders should take capital from solo capitalists is, or maybe The way to make that call is to like just look at the solo capitalist and [00:21:00] see what that person can very specifically offer you. And if that's what you want, then you take that money.

[00:21:05] Itamar: Yep,

[00:21:06] Rahul: say that's right?

[00:21:07] Itamar: I think that's right. and I think it's more than that. I think For solo capitalists, solo GPs and emerging managers in general, I think in today's market, you've got to have a differentiation. You probably need to have a vertical focus, right? Like mine is data and AI. I've been investing in data and AI for six or more years now.

[00:21:27] Itamar: And if you're building a data or AI company, you hopefully have heard about me and you're excited about talking to me and you know, I can help you in your domain and fundraising that domain because I've been doing a lot of that. Right. So I think in general, as a solo capitalist, you got to be known for something, right?

[00:21:44] Itamar: And that's what you deliver, the value that you deliver to the ecosystem and your founders. And if you don't have that differentiation, I think it's going to be really hard for you to focus and scale.

[00:21:53] Rahul: Yeah. And, speaking of getting hit by the bus, from a LP perspective, the risk [00:22:00] would be that, that you just one man operation. And then if you go away. then the firm is gone. So why do you think, LPs are interested, in backing solo GPs?

[00:22:12] Itamar: Well, I mean, I get this question a lot. So I think LPs are increasingly interested in backing solo GPs because they're seeing performance and they're seeing an innovative model to venture capital that's actually working and smart LPs are always looking for that, right? but I think also you have to take the hit by a bus narrative, which is true risk.

[00:22:35] Itamar: You have to take it with a grain of salt. First, we haven't seen a solo capitalist get run by a bus yet, hit by a bus yet, so it's very low probability. But then you also have to think through how much damage could that do to LPs in, It has the potential to damage LPs to a certain degree, but look,

[00:22:52] Itamar: if you have a solo capitalist firm, and the principle that the solo capitalist gets run by a boss, then [00:23:00] essentially the fund will cease calling for more capital, and cease deploying capital.

[00:23:05] Itamar: It's essentially cancelled. That's what most solo capitalists have, you know, uh, for Funds like mine, which is a little bit further along and sophisticated. We have this whole, sort of scenario on what happens if I can no longer function. And there's people that jump in and help work through, the remainder portfolio and all the decisions that need to be made.

[00:23:25] Itamar: It's all set up to address that. But at the end of the day, the risk is really the exposure to the current portfolio companies. You're not going to do new investments because the fund is Basically ceases to operate doing new investments from that point onwards where the soul Capitalist is no longer, they're the supported and really what you're doing is you're you're harvesting the investments that were already made especially if they were preceded and seed is I mean it takes some effort But it's not super complicated.

[00:23:56] Itamar: I mean you have your position in the company [00:24:00] and You basically play it out until the company gets sold and then the LPs get their money back. So It's not super complicated to be honest.

[00:24:11] Rahul: Yeah. is it also true that, you know, a solo capitalist, charge lower management fee and are, more incentivized by Gary

[00:24:21] Itamar: I don't know if it's true, but I believe it should be true and I exhibit the same myself. I charge lower management fees not because somebody negotiated lower management fees but because I built my budget bottoms up and I realized that It's actually the right fit for the expense profile that, we have at Recursive Ventures, that I have at Recursive Ventures.

[00:24:42] Itamar: and that, increasing, maximizing investable capital. So not a lot of people know this about venture funds, but if you actually do the math,

[00:24:50] Itamar: you kind of figure out that out of a hundred percent, a hundred million dollar fund in this example, 20 to 25, sometimes even 30 percent of the fund goes [00:25:00] away management fees.

[00:25:02] Itamar: and fund fees. There's fund expenses as well. So like the classic, management fee is 2%, but over 20 years that, that 10 years, that's actually 20%, right? And then there's fund expense, which includes legal. And fundraising. And now SEC is kind of, barking on that tree, but also compliance fees and other fees.

[00:25:24] Itamar: And suddenly you get to 25 percent and out of 100 million fund, you're only investing 75 million. So the investable capital is actually only 75 percent of the overall fund. That's a lot of money that goes forward. I don't know. Flying business class, I guess.

[00:25:41] Rahul: Yeah. Okay. All right.

[00:25:42] Itamar: And which I don't. so. I think the right thing to do for a fund and for the portfolio companies and for the LPs is actually to maximize investable capital.

[00:25:54] Itamar: And that's what I try to do in recursive venture. I was like, how can I put every dollar that I can [00:26:00] into these companies, right? Instead, or into this bridge to help these companies survive or into this pay to play that's going to come up that they need to save money for right in this company versus eat up the fees.

[00:26:12] Itamar: and it's interesting. Also, you can do the math on this kind of cool homework. If

[00:26:18] Itamar: you have a fund that delivers 4x DPI in a reasonable timeframe or more, you actually make more money in carry. As a manager, then you make from charging management fees and paying taxes on these. This is especially true in the U. S. with the QSBS rules that actually flow through Cary to managers, right? So you would make more money if you have a blockbuster, killer fund. You would make more money from the Cary than investing in the companies that you would make from the management fees. So something to consider for some of the emerging managers out there.

[00:26:54] Rahul: Yeah. so, ideally you should negotiate, I mean, you should charge lower management fee and [00:27:00] maybe negotiate a higher carry of maybe 25%.

[00:27:04] Itamar: I think the higher carry is an interesting one. We've gone through a little bit of a bubble in venture capital. Venture capital used to be 2 in 20. And, we've seen some outlier results in the ecosystem over the last 10, 15 years, some blockbuster IPOs and a lot of unicorns running around. And I think a lot of GPs kind of, were, they thought that, wow, we're rainmakers and we should be getting 25, 30% 20 percent if we hit certain thresholds, maybe we don't, maybe we get the 30 percent right off the bat and I feel like I don't charge 30 percent or 25 percent I charge 20 percent I've never felt that's right, because it's going to be hard for you to convince me, especially as a solo capitalist, if you hit it out of the park, it's That 20 percent is not going to [00:28:00] compensate you well enough like any fund of decent size because there's only one person who's getting the carry Right, it's like if this thing if you have a big team, that's splitting the carry Then you might need to get more competitive but as a solo capitalist if you raise a fund and it's very successful and you ink all those profits and you get to save 20 percent to carry on those profits.

[00:28:23] Itamar: You're gonna do really really well, so Shouldn't that be enough of an incentive? I feel it does.

[00:28:30] Itamar: Yeah. and also a major attraction for LPs is that, you know, because of what the, what you said before about the limitation of what one person can do. The limit, upper limit of a fund size is also Not so high, right? Well, look, Oren Zeev has proven this wrong. The guy manages, I don't know, two billion dollars now

[00:28:54] Rahul: yeah.

[00:28:55] Itamar: as a solo capitalist and he's able to make it work. [00:29:00] So who am I to talk? I'm just a small manager compared to him. I think for most solo capitalists, It is true though, that there's a glass ceiling, because there's only so much that you can do and so much that you can deploy in a given year, right?

[00:29:13] Itamar: And, I think it's actually... It's less about solo capitalists. It's more about all the stages that you play in. So let's go back to Warren's Eve as an example. It's not that the guy does seed and pre seed like I do, he does, but then he follows up and he does the A and the B and the C and the pre IPO. so he's basically deploying capital across All stages of venture, right?

[00:29:35] Itamar: And as a firm, whether you're a multi GP firm or a single GP firm or a solo capitalist firm, if you're deploying capital across all these micro asset classes, you're gonna need a lot of capital, right? so I think it's more about stage than the solo capitalist. But, you know, every GP multiplies your ability to deploy capital.

[00:29:55] Itamar: And that's why, if you're seed and precinct focused and you're a solo capitalist, I believe there's a [00:30:00] cap to how much you can deploy. Yes.

[00:30:01] Rahul: Yeah. And, uh, no, I would like to also look at all the challenges of being a solo capitalist. One, again, there is a limit, on the number of companies that you can invest in. And then also just because it's a one team operation also means that it's just limited expertise. Like in your case, you said, AI data, AI plus racing, helping founders raise funds.

[00:30:26] Rahul: Right. So what are some of the other challenges?

[00:30:29] Itamar: Yeah,

[00:30:31] Itamar: I'd say, No, I'd say I think there's significant challenges and I actually even though I'm a solo capitalist to do what I do I believe it takes a village. Okay, so I have quite a few advisors and a massive network that helps me with sourcing deals Diligencing deals and then supporting my company's go to market.

[00:30:56] Itamar: So even though I'm the only one investing [00:31:00] I'm not the only person that is part of this thing, supporting all the processes that we have, right? So I actually have two venture partners, and I actually have, 12 advisors, right? and those are all formal, but there's a lot of informal folks. Now, nobody's working full time, they're not investment professionals, right?

[00:31:19] Itamar: in the fund. So that's why it's a sole capitalist firm in that sense. But, you really need, all those people for a couple of reasons. First of all, as an individual, just one person, you have blind spots. If you don't recognize it, you're just too full of yourself. there's no way that you don't have blind spots.

[00:31:38] Itamar: Every person has blind spots. Every person has biases, right? Every person, no matter how brilliant they are, needs to bounce off ideas. And have somebody smart who can help them figure out where they could potentially go wrong. And I think that a person that doesn't admit it is making a mistake. And that mistake [00:32:00] could cost, their LP's money.

[00:32:01] Itamar: so I think you're right. I think there is a need to complement the solo capitalist with a strong network of operators and investors who can really help avoid some of those potential pitfalls that happen. Really offer subject matter expertise, right? Different verticals. So I'm, sort of, I guess, an expert when it comes to go to market for data, AI, SAS companies.

[00:32:26] Itamar: I've been doing it for a very long time. I've seen a lot of companies succeed. I know some of the formulas that lead to success, and I know how to fundraise for those companies. But, you know, come a deal that I really want to do, and it's AI in the healthcare space, right? I'm not a healthcare expert. Right.

[00:32:43] Itamar: If I can't tie in one of my advisors to the company to really understand if this is the right investment and find the ways to help them, I'm not going to do the deal because I'm not value add, right? And I can't really be value add to my LPs doing diligence and making an investment decision [00:33:00] because I only have part of the expertise required, not all of it, right?

[00:33:04] Itamar: So I think you need to have that support. I think you need to have the subject matter experts. and I think you need to embed that in your process as a solo capitalist to avoid some of the pitfalls

[00:33:18] Rahul: Yeah, decision making, uh, definitely is one thing, that could be arguably better if it's a firm, right? the decision making to invest or you think that's not true?

[00:33:30] Itamar: that we talked about previously, like the checks and balances. Yes, when there's a lot to digest, having all those people around the table vote for, as part of an investment committee to make a decision, I think helps create checks and balances. But it really depends if the process is objective. And whether there's political related issues that come up, right?

[00:33:57] Itamar: And unfortunately, partnerships over [00:34:00] time, many part, not all, but many partnerships over time kind of, steer away from that objectiveness in some cases. And then I think that the decision making could be worse than a solo capitalist who's actually relying. Think about this. I'll give you an example, right?

[00:34:17] Itamar: Let's say I'm doing a data infrastructure, right? And I know a bunch about this, but I have two CTOs who are experts at data infrastructure, and they're on my advisory team, but they're not GPs. They're just advisors. there's no, we're not playing this partnership game, right? They would probably have more objective view of where this thing, like, should we make an investment in this company?

[00:34:42] Itamar: Then a GP who's part of my fund, maybe I shut down his last deal and he wants to shut down this deal. Maybe he had the wrong day and maybe he's not an expert, but he's actually making a decision. The advisors are the experts. They should be making the decision, right? So it just shows you [00:35:00] how having an investment committee with partners could lead to more checks and balances in many cases, but it might as well lead.

[00:35:09] Itamar: to making the wrong decision because of the biases that we talked about.

[00:35:12] Rahul: Yeah. Yeah. I've read that in a lot of, uh, investors, they, they do lobbying first to ensure that, you know, they get the, people on their side before the, investment committee meetings.

[00:35:24] Itamar: Yeah.

[00:35:26] Rahul: There's definitely value in building a long term firm, right, because it builds trust and reputation for a long period of time and also succession, all that doesn't happen with a solo capitalist.

[00:35:40] Itamar: Well, succession definitely doesn't happen. I think solo capitalist firms have one or two options. One is they could involve,to a full partnership. They might lose some of the benefits that we talked about, but they would gain other capabilities, right? And that's totally legit. The other one is, [00:36:00] yeah, they could.

[00:36:01] Itamar: Like, you know, basically die when the founder, when the solo capitalist leaves. So, that's why, without getting into specific around ages, I think it's a better fit for younger, potentially younger professionals, right? for example, in my case, I have easily another twenty third years of investing, right, which I hope to stay on top of.

[00:36:25] Itamar: And hopefully that provides a long enough horizon for LPs to realize several cycles of investing in recursive entries.

[00:36:33] Rahul: Yeah, but, if you're a solo capitalist, like you said, you also always need to be on top of things, right? Like, can you take a break? it's not a firm, it's just you, right? So then you miss out on things and things fall apart if you're not around. It makes it very challenging.

[00:36:49] Rahul: Let's say, take a scenario, let's say, a women solo capitalist wants to have a kid.

[00:36:56] Rahul: How does that work? It's extremely challenging, right?

[00:36:59] Itamar: [00:37:00] Yeah, I think, well, you have to, you have to think about it, it's a multi faceted question. So, the first thing I would say is, depending what, I think the solo capitalists work. is primarily focused on deploying capital and supporting portfolio companies. A lot of the back office stuff, you know, hey, we need to do this distribution, oh, we need to do this capital call, is actually very effectively outsourced to different platforms these days, whether it's AngelList or Carta, or that you work with a firm that, a firm that is focused on supporting you, through those.

[00:37:37] Itamar: We'll talk, we can talk about more about that later, but it's one of the reasons that solo capitalists can exist today is because you no longer need all those back office people inside your firm. You can outsource all of that very effectively these days, right? So, not all the wheels will fall off the cart if you go on vacation.

[00:37:53] Itamar: There is a lot of wheels that keep spinning, and all the back office and operational stuff keeps spinning even if you're gone. [00:38:00] The thing that's going to stop is you're not going to make new investments, and, you're not going to be as available to portfolio companies. And to that I would say, I think it's a real concern, and I don't know how other solo capitalists handle it.

[00:38:13] Itamar: But I'm always working a little bit, even if I'm on vacation. So for me, it's a question of where am I in the spectrum of like 20 percent busy to 100 percent busy. If I'm on vacation, I'm probably closer to 20 percent busy. If I'm not on vacation, I work 110%.

[00:38:31] Itamar: And I think whoever is aspiring to become a solo capitalist should embrace that. And if they're not ready to be always on, they might have a more challenging time.

[00:38:43] Rahul: Yeah. And, in terms of the differences of how, the traditional firms and solo VCs operate, right? are there any differences, across, diligence, sourcing, risk, the portfolio risk management or support?

[00:38:58] Rahul: Any major [00:39:00] differences?

[00:39:00] Itamar: let's start with the easy one. Support, I don't think is that different. Like when I look in my firm, I have an executive assistant, Devin. He's awesome. Helps me set up everything, offload logistics, expenses, all the stuff that you would imagine, executive assistants do. Then I have the entire back office streamed by AngelList.

[00:39:21] Itamar: So I,double check on their calculations to make sure there's no mistakes, but they do a great job and, getting all their financials and accounting in, in order. I employ, consultants on the marketing and PR side, so they can, kind of manage that. And so I think on the support side, it's very similar.

[00:39:38] Itamar: On the sourcing side. I think it's also very similar, but you're just getting the lens of one GP, right? Because, like, a firm that has five GPs is hopefully sourcing 5x more deals than... That's the hope. In the reality, that's not the case. In the reality, there's, like, several GPs who source more than others because they have a bigger [00:40:00] reputation, because they have a bigger network, because people like them and want to work with them.

[00:40:03] Itamar: So, it really depends on the firm, but, like... I think a good solo capitalist, and hopefully I can put myself in that bucket, is bombarded by deals. Like, you get a lot, you source a lot. So probably more than most partners in venture, right? so that's on the sourcing side of things. And sort of process deal dynamics, I think it's not that far off.

[00:40:29] Itamar: Because when you look like a sponsor, who's a GPU sponsoring a deal, Probably does the same type of work that I do, which is like, okay, spend a lot of time with the founders, do the diligence, pick up the phone, call prospective customers, call customers, meet the other founders, like go consult with advisors and whether this deal makes sense, like, so a single GP, in a bigger firm would probably do the same set of things that I would do at the precedency stage, right?

[00:40:57] Itamar: Maybe they have an associate that can help them, but [00:41:00] then it goes back to, Is the associate actually helpful? Or are they, potentially actually obscuring part of the picture for the GP who needs to do the hard grind, like do the work themselves to get to a decision versus, give it to a junior person.

[00:41:14] Itamar: so I think deal wise, it's kind of similar, to one GP in a bigger firm. And I think where it's really different is on, investment committee, making investment decisions. And again,

[00:41:29] Itamar: taking the bias and, bringing objectiveness back to venture. That's what solo capitalists bring to the table, and bigger funds don't necessarily do.

[00:41:39] Rahul: Yeah. And what do you think are the reasons,for this trend of solo capitalist over the last, you know, maybe five years

[00:41:49] Itamar: Yeah, so a couple of things are happening all at the same time. There's a couple of trends supporting this. The first one is, 10 15 years ago you couldn't have done stuff like this, because [00:42:00] The back office functions like Carta and AngelList and all the support that you need wasn't there. You had to, like, I remember at Morgantar Ventures, and I'm sure they still have it today at Canvas, you know, there's controllers, there's a CFO, there's all those people that deal with all that stuff.

[00:42:16] Itamar: And you need more infrastructure. You need more people in the payroll to actually make venture happen. That's evolved. That has changed. Now you can, like, you have platforms that automate and do a lot of this stuff in a pretty... good job at doing that. Right. So that's new. That's the first thing.

[00:42:34] Itamar: The second thing is, I call it, sort of the age that we're at where it's like, you know, influencers and social media and like, know, suddenly you have those emerging voices. Or it's really about the individual and not necessarily about the firm. Like you talked about Fred Wilson. People want to get a check from Fred Wilson probably more than they want to get a check from USB, right?

[00:42:58] Itamar: So solo capitalist [00:43:00] is sort of the, that trend sort of steroids, right? Like you want to get a check from Garry Tan You want to get a check from Oren Zeev right? Because. Hopefully you want to get a check from Adam Arnovic because they're like, as an individual, you know, overall, you become almost like a celebrity investor and some of those investors, it's not really like, it's all about them, it's not about the fund.

[00:43:25] Itamar: So how would they play inside the fund? They almost have to be solo capitalists. Texting played their strategy out, right? And this is a new thing, like influencers on TikTok and Instagram, right? We didn't have that 10 years ago. So that's fairly new. The last piece I would say is, the LP community.

[00:43:43] Itamar: Sort of, I'll never forget the first time I came into an AGM. That's an annual general meeting that, Mostly bigger funds, all funds actually, but bigger funds definitely have, and all the LPs show up, right? And the first one I was [00:44:00] at, probably like 2010 or something, it's been a while, I remember looking at the LPE base there, and it was very old school.

[00:44:08] Itamar: Very traditional, you know, LPEs, who probably were thinking about the world through a lens that doesn't really... Allow or enable solo capitalists, right? It was very traditional in the sense that you need to have a partnership and you need to like all those things that we know from Venture capitalists used to operate.

[00:44:32] Itamar: And within the LP community, there's now a lot of voices who are thinking outside the box. and there's an influx of new blood that's saying, wow, like venture is changing. We as LPs need to change as well. Right. And if we would only use to fund VCs that look like this or look like that, we should think about new types of venture capital firm setups that are performing well.

[00:44:58] Itamar: And so increasingly [00:45:00] I'm seeing LPs support solo capitalists. Is it everybody? Is it all the time? Absolutely not. It's actually still a minority of LPs, but it is a growing number of LPs that believe in the model. And think that it can actually deliver outside returns.

[00:45:16] Rahul: So, um, did the, availability of cheap capital have any role to play in all of these? I mean, not now, but yeah, like for the last maybe a decade. Yeah.

[00:45:31] Itamar: And I think that's true for the entire venture community, not just for solo capitalists. I think we have more firms with more capital than the category actually demands. And what I'm saying now is not popular. People are going to hate me for it. But it's the truth. I don't think everybody should be a venture capitalist, and I don't think we need thousands and thousands and thousands of firms.

[00:45:52] Itamar: I think the number of good founders and good investment opportunities, at least at the early stage out there, have grown, but they haven't grown [00:46:00] as quickly as a number of venture firms and their AUMs, right? So that it's true for solo capitalists. It's true for all managers across the board.

[00:46:10] Itamar: And it's also true, I think, and a bunch of my Series A and Series B buddies are not going to like what I'm saying now, but look, I am a contrarian, and this is, you know, part of the game here, is, I don't think you should have a billion dollar fund that does Series A investments, because there's not enough Series A deals to deploy a billion dollars in, right?

[00:46:30] Itamar: And, so a lot of funds have grown very big, let's call the truth in space, they've got, they've grown fat. They have dozens of investment professionals, they rely heavily on fees, and they've gone beyond the traditional venture model, which, you know, I think it is the one that's the best fit for early stage companies, at least, right?

[00:46:53] Itamar: So I think what we're seeing and what we'll keep seeing is a correction across the board where the quote unquote [00:47:00] tourists that, you know, wanna be VCs are gonna get out of the category. And the people that actually should be deploying checks are going to keep at it and they're going to do well because a bunch of the noise is getting out of the system.

[00:47:14] Itamar: And I think it's very healthy. And I hate to see people, kind of move away from the VC community. I know it's a very sexy job and a lot of people want to do it. Great. But I think there's only so many VCs that we need out there. And I think we've exceeded the number in the last few years. So.

[00:47:34] Itamar: It is what it is. It is, it's capitalism at its best.

[00:47:37] Rahul: Yeah. There has been these scout programs and super angels and then because of that, this becomes like a natural evolution, right? The solo capitalist.

[00:47:50] Itamar: Right, and we've had a lot of evolution between, you know, Super Angels, which are actually like, I think Super Angels are a precursor to [00:48:00] Solo Capitalists. They are very similar. I actually think Solo Capitalists are, institutionalized Super Angels. Like, Solo Capitalists combine the benefits of Super Angels with the ability to scale up like institutional funds.

[00:48:12] Itamar: That's exactly what, what we do, right? and we've had Scout programs and we've had funds investing in other funds, like funds allocating capital to fund the fund investments for all sorts of strategies. We've seen all those things really So we a positive way, like really scale over the last 5 to 10 years, 5 years when we were in a bubble, and we were in a bubble, and now that bubble is bursting, and I think some of those things are going to go away, but some of them are going to stay, and most of those things have a place in the ecosystem, so we can go through them one by one.

[00:48:44] Itamar: Scouts? It actually makes perfect sense, because there are a lot of people that are closer to the market than GPs are. It doesn't mean they should do 10 deals a year. But in their specific verticals, where they scout, they're great, and they know everybody. And there's no [00:49:00] way a single GP can do as good of a job as they do as operators scouting that market.

[00:49:04] Itamar: So I think scouts make a lot of sense, and I think that's not going to go away. Is it going to get downsized? Is our program going to change? Sure, potentially, but it still has a place. Super Angels, same story. It's... Super Angels are actually... It's high net worth individuals who know what they're doing.

[00:49:23] Itamar: They're probably ex operators, successful founders, maybe they're GPs who left their firms, and they're able to scale up their checks, right? Instead of writing 25 or 50, 000 checks like angels used to do, they can write a 250, 000 check, which is a lot for most companies, right, at the early stage. And so I think those folks are not going to go away either.

[00:49:44] Itamar: I think they're smart angels who actually are Way more value than a lot of GPs out there because they build businesses and they know how to build them and They should be the ones deploying capital because they can help the founders most so I don't think that's going to go [00:50:00] away Funds investing in other funds Feels like a natural evolution as well So I think a lot of the things that we saw transpiring over the last five years when we were in the bubble I think many of them are gonna stay There's going to be downsides, right sized.

[00:50:18] Itamar: Like this is what this strategy, this is the scale and how this strategy makes sense in the real world versus what it was during the bubble, which is the scaled up bubbly version of that actually doesn't make sense, right? I think that's what

[00:50:33] Rahul: Yeah, and I also had another VC mentioned that, you know, founders. In terms of speed and also strategy, are operating differently. One, there is, funders move fast. And the second thing is, instead of, raising one, big round, they're continuously, raising funds as the business build momentum.

[00:50:56] Rahul: So then, this also works well with, solo capitalists who can,[00:51:00] provide a very specific value. Is that true or?

[00:51:04] Itamar: we're going to see. I think what, what The other guests that you had in the show commented on, which is I call that continuous fundraising. I think that's very much the reality for a lot of companies, not everybody, but there's a lot of companies who continuously fundraising. It's part of getting a startup off the ground in the next year, effect first year or two.

[00:51:25] Itamar: It's true. does that mean that solo capitalists do a better job at supporting founders at those stages than traditional firms? Not necessarily. Absolutely.

[00:51:35] Itamar: I think it really depends on the individual GP, like, have they committed to the success of the company that they funded? If they are, then they're going to support the continuous fundraising process to the best that they can.

[00:51:45] Itamar: If they're busy doing 15 other boards at the Series C, and now they're investing in the Pre C, then, you know, guess what? They probably won't have the time to support you. So it's not necessarily a solo capitalist versus bigger fund kind of question. It's more of like, [00:52:00] are you getting the right investors for your company and the stage it's at?

[00:52:03] Rahul: Yeah. So that's the thing. the specific thing that he mentioned is that, founders, when they see somebody who can be beneficial to their business, they take money from them, to make them part of the teams.

[00:52:15] Itamar: that's a big trend, which I'm very supportive of. I'll give you an example that's actually very public and that, one of the companies I invested in is a company called Safecraft. And the founder there, Oren Hoffman, is just so prolific, this amazing guy. And when he started his company, Safegraph, he wrote a blog post about it, which we can share with the audience later if you want.

[00:52:36] Itamar: And he talked about, instead of taking the initial seed round from one big VC and, you know, everybody would fund him. He's like a 4X0 entrepreneur. He actually chose to get 50 or 100 angel investors. to build the round on because each one of those angel investors was a subject matter expert in their space had a lot of big Rolodex in their space and

[00:52:59] Itamar: could make a lot [00:53:00] of potential intros to prospective customers And that's what Oren wanted. He wanted to have all this access so he can scale up sales really quickly and Benefit from the expertise of those angels. So what I advise a lot of my companies these days is like look Of course, it depends on round dynamics and how much you're raising and what you're doing but like Try to get as many angels and subject matter experts, advisors, who are all rooting for you, right?

[00:53:27] Itamar: Think about, you can take money from, you know, one or two or three VCs, and leave like, I don't know, half a million dollars of the round open to 20 strategic advisors and angels like that, who would each invest 25K. And each one of those 20 people can help you more than the VCs that you brought in, right, potentially, because again, there's subject matter experts, they know the customers, maybe they're the customer themselves, right?

[00:53:54] Itamar: Maybe they can, you know, and that, that is more valuable than what [00:54:00] VCs offer most of the time, which is honestly more capital, right? So I actually encourage my founders to bring into the fold, those advisors and angels to help, build the company in the earlier stages.

[00:54:11] Rahul: Yeah. And, there are already VC funds who kind of operate like solo GPs, like a bag, a bunch of, solo GPs together. Right. one fund that I think is Founders Fund, they don't operate, but, they don't have like a lot of, oversight in terms of investments that each GPs make.

[00:54:34] Itamar: I sort of buy it, but I don't necessarily buy it at the same time. Because at the end of the day, and maybe founders fund is an outlier, but at the end of the day, you have to face your LPs and say, here's who we are, here's what we do, here's what our performance looks like, right? So if it's a set of lone wolf individuals and there's no accountability, there's [00:55:00] no shared accountability at the firm level.

[00:55:02] Itamar: Then who actually has that accountability at the firm level, right? Who's actually, And again, maybe founders fund is just so extreme and like Peter Thiel puts all his money into it and nobody cares and they don't have to do, go through the traditional route. so maybe that's an outlier, but in a more traditional firm, it just feels to me like I understand how it's going to be ran that way, right? And It feels like it's just a matter of time until one of the GPs comes in and say,

[00:55:33] Itamar: Oh, that guy doesn't do anything like that other GP like we have 4x DPI and I did all the 4x and that other guy didn't do shit. Right. So like, how would that work? So it feels to me like maybe a lot more like a marketing thing than actually a real thing, but maybe I'm wrong.

[00:55:55] Itamar: I don't know everybody.

[00:55:57] Rahul: Yeah, so I, [00:56:00] I mean, the reason why I asked that is because, you know, there are some challenges for sure with solo GPs, or solo capitalists and then, yeah, how can, what would the next evolution be? So I was thinking maybe a firm of, a pack of lone wolves would be the next evolution with.

[00:56:16] Itamar: I mean, it could be, but maybe we'd have to change more of the underlying structure in a more unique way. Like, why is that a firm then? Like, if it's a bunch of solo capitalists, why do they need a firm? What does the firm provide them? Capital? Fundraising from LPs? But that's one thing that GPs do anyway, right?

[00:56:36] Itamar: an underlying operational infrastructure? Again, you can buy that for 25k a year at Angel List today, right? So like... Why would you need a firm if everyone is just like this lone wolf who's independently making decisions? I don't get it. Like what would be the benefit? So maybe there's one more step missing in that evolution that we haven't figured out yet,

[00:56:59] Rahul: [00:57:00] Okay. so I have a few more questions. These are actually questions, raised by the person who coined the term solo capitalist, Nikhil Basu Trivedi.

[00:57:10] Itamar: Great guy, by the way.

[00:57:13] Rahul: yeah, so, yeah, some of them are these like, will solo capitalists operate like traditional firms when it comes to managing reserves and investing their pro rata in follow on, follow on rounds?

[00:57:25] Itamar: I don't necessarily think that solo capitalists are going to be different in that regards. It's either you have a reserve strategy and you're clear about it in your fund, or you don't. And I think that mostly stems from which stage you're investing in and what's your investment model, right? So for me, for example, in recursive, I do precedency deals and I reserve a third of my capital for follow ons and double down on winners, right? Having a third of capital reserved for follow ons at the pre seed and seed stage is actually pretty typical. It's probably the average. I mean, there's funds that do more and there's funds that do none, right? [00:58:00] So, I don't necessarily see a correlation between the two. I think good solo capitalists should have similar VCs, and if that includes reserves, that they're going to have them in place.

[00:58:14] Itamar: And if they are including reserves, They need to be able to follow through and actually underwrite subsequent funding rounds like traditional funds do. And I don't see a reason why they won't.

[00:58:26] Rahul: Okay. So what about extension to rounds and also, bridging companies to exit?

[00:58:32] Itamar: Yeah, that's an interesting one. So I'm going extreme here a little bit. When you're a GP in a bigger partnership and you need to bridge a company, you're actually coming to your partnership from a weak position, right? It's like, okay. This investment failed, but so you're not successful and that investment is a GP.

[00:58:56] Itamar: It's fine. You know, you nobody's a VC power law It's one out of a few that [00:59:00] works. We know that but like now you're basically championing a bridge right into the company and it's a higher bar, right? Like your partners might be like, yeah we don't want to do bridges bridge to where like all those questions are gonna come up right and In a way, that's good because you get checks and balances because VCs, especially experienced VCs, know that a lot of bridges don't work as initial investments, right? We know that. but on the flip side, maybe the company should get bridged and the individual GP who's championing the bridge is having a harder time. And. in that sense, maybe the partnership is making the wrong investment decision and they should have bridged the company. So I think bridges are not different than the initial investment decision.

[00:59:50] Itamar: It can either be better because you have better checks and balances from your partnership, or they could be worse because you have bias, objectiveness, [01:00:00] and political issues within the fund, right? And Either an initial investment or a bridge can be better or worse because of those dynamics, right? So, in that sense, I think in the grand scheme of things, solo capitalists are not going to be behaving differently in bridges than traditional VCs.

[01:00:18] Itamar: They're just going to be, easier for them to make the decision, maybe. Either way.

[01:00:23] Rahul: Yeah. And, in terms of, the relationship between traditional VC firms and solo capitalists, how will that evolve in your opinion? traditionally, you know, VC firms don't see like maybe so super angels as like, a threat. Right. but what about.

[01:00:42] Itamar: Well, if you're playing in the same stages that the bigger VC plays in, or a smaller VC, You're a competition. It doesn't matter if you're solo or just 50 partners are on the table. Right? So, I think competition is competition. I think, VC firms are very much aware of solo [01:01:00] capitalists. I think we're competing with traditional firms every day.

[01:01:02] Itamar: I think they're very much aware of that. It's really a question of stage. If you're, you know, the Greylock 400 million seed fund, I'm not actually competing with that fund most of the time because I do pre seed. I come in earlier than these guys So there's no competition.

[01:01:17] Itamar: But the fact that there's no competition is not because I'm a solo capitalist and they have five GPs or whatnot It's because we're not competing over the same stages In a way, I would say that traditional firms are actually maybe intimidated by solo capitalists operating in the same Stages as they are because Traditional funds are aware that we can move faster, and that we're more sexier, like sexier for our companies.

[01:01:46] Itamar: especially with serial entrepreneurs who've been there, done that, maybe have been burned by partnership dynamics, and like, yeah, I can just check, take this check from this guy who's awesome and single decision maker, and I don't have to deal with all this VC firm politics. So in a way, it's, [01:02:00] I think, more of a threat than people recognize for the traditional GP, multi GP fund.

[01:02:07] Rahul: Yeah. And one last thing,usually when you say that you're a solo capitalist, what is the general reaction from other VCs?

[01:02:16] Itamar: it really, there's a wide array of reactions. Some are like, oh, I'm jealous. Like, I wish I could operate like you operate, right? It's a dream come true in a way. Some are like, you know, I like to work with bigger teams and like, I wouldn't be working solo like this. And I think others are like, a lot of people, a lot of traditional firms and GPs don't get it.

[01:02:47] Itamar: They're like, Oh, you're just doing this because you're trying to scale up your firm and then you'll hire a partner and you'll hire another partner. you'll just be like us one day. And they're not necessarily think that in [01:03:00] some ways we're here to disrupt the traditional model. So then if they actually ask the question, it's like.

[01:03:06] Itamar: Oh, are you going to hire another like equal partner next year? And I'm like, nope. And they're like, okay, how come? Like, I'm like, no, I'm actually planning and scaling up solo. And they're like, wow. Okay. Now it's actually sounding a little bit crazy. Now you're disruptive to my business model. And I didn't think about this.

[01:03:28] Itamar: Like they, they didn't realize that it's more of a disruption. They just thought it's like noise on the sidelines.

[01:03:33] Rahul: Nice. Yeah. Thank you so much, uh, for taking the time to do this again. This was great.

[01:03:39] Itamar: Sure. It's been fun and you have some great questions and you're, unraveling and discovering a lot of interesting,nuggets and insights around, venture capital. I think it's, in a way it's, It's a young, pretty young, you know, industry and market. It's only been around for 30, 40 years at scale.

[01:03:58] Itamar: And it's only really scaled up in the [01:04:00] last 15 to 20 years. So there's going to be a big evolution here in venture capital and role. You're one of the people that's really the forefront of kind of. tackling some of those changes and helping the general audience understand that. So I have a lot of respect for that and keep doing all the great, you know, interviews that you're doing.

[01:04:17] Itamar: It's a lot of fun to see all those interviews and, uh, and learn from them. So I appreciate it.

[01:04:24] Rahul: Thank you. Thank you.