For sixty years, the best risk-adjusted returns on planet Earth lived behind a $250,000 minimum and a regulatory definition called "accredited investor." The threshold was set by the SEC in 1933 to protect a stenographer making $43/week from buying snake oil.
The number never updated. The stenographer became a software engineer making $200K, sitting in front of a Bloomberg terminal in her pajamas, locked out of the same early-stage rounds her employer's company sold equity to a sovereign wealth fund for. "Sophisticated investors only," said the prospectus.
The rope was nylon. The sophistication, mostly a haircut and a relationship.
Meanwhile, your retirement account went down a hole. Into S&P 500 index funds returning 9% (good). Into bond ladders returning 4% (fine). Into "high-yield" savings returning whatever the Fed felt like that week (less fine). Into one or two Ponzis (bad).
We're not against holes. Holes are how rabbits live. The problem is who gets to go down them.
"In another moment down went Alice after it, never once considering how in the world she was to get out again."— L. CARROLL, 1865 · OUR ENTIRE INVESTMENT MEMO, ABRIDGED
Three things happened in the last decade that made retail VC actually feasible:
We did the math. Decided we could run a fund with a $50 minimum, a 2/20 fee structure, and still clear top-quartile net returns. 34.8% IRR later, we were either right or very lucky. We'll know which in another 12 years.
The biggest predictor of LP returns is which fund they're in, not which fund's in which sector. We open the same fund to everyone.
We see ~3,000 pitches/year. We do 30 investments. We are willing to be the boring fund in a deal, every time.
We hold positions for 7+ years. We don't take secondaries. We don't early-sell into hype. We wait.
No company gets more than 8% of a fund. Even our highest-conviction bets sit alongside 30 others. Power laws work both ways.
You are. The founders are partners. We say no to deals that pay founder favors at LP expense, even when the deal looks good.
You'll see our IC notes, our pass memos, our sector allocations, our return distributions. The hole is dark; we keep the rim well-lit.
We're a thesis-driven fund. Each year we publish a list of theses we're hunting against. Companies pass through five gates before we wire.