The Generalist - The Future of Solo Capitalists

Hey friends,

It’s so good to be back.

For those of you keen for an update, I’m happy to share that Philosophical Foxes got off to a great start with an amazing group of web3 builders, creatives, and collectors joining the project last week. I’m extremely grateful for the support of so many of you and am excited to find new ways of telling stories through the strange, intriguing data structures of the blockchain together.

Today’s piece has little to do with those matters. Instead, we'll dive into the world of “solo capitalists,” the influential class of investors that work alone but manage to secure allocation in many of venture capital’s hottest rounds.

How do they pull that off? What should traditional funds do to counter their rise? We’ll answer those questions and explore the movement deeply. Jump in to get started.

IN COLLABORATION WITH CLAY...

I’ve known the Clay team since the beginning, and I’m hyped to share more of their story with you soon. Clay brings data sources together to help people find information and build (sometimes mind-blowing) automations. It’s pretty cool to see how companies are using Clay to superpower their growth, sales and recruiting teams. Here are a few neat examples:

• Growth: You can stream in email signups from Hubspot, add data from LinkedIn (things like title, company, etc.), and see if those companies are hiring for certain jobs or what their tech stack looks like.
• Sales: You could start by searching LinkedIn, add emails and phone numbers from sources like Clearbit, and sync back to your CRM or marketing platform.
• Recruiting: I didn’t know recruiting was this high-tech these days, but apparently you can stream in Twitter followers (or even threads and DMs!) and Github stargazers to a table, filter the bios for keywords like engineer or iOS, match to LinkedIn profiles, and then connect to Lever or your email client.

If you’d like to join me and companies like Mainstreet, Pave and Newfront — click this Generalist link to get a month on the Pro plan for free. And check them out on Product Hunt this Tuesday!

THE FUTURE OF SOLO CAPITALISTS

Actionable insights

If you only have a couple of minutes to spare, here's what investors, operators, and founders should know about solo capitalists.

• Leading “solo capitalists” manage more money than many funds. Oren Zeev manages more than $1 billion without additional investment support. Elad Gil, Josh Buckley, Harry Stebbings and Lachy Groom manage funds in the hundreds of millions with similarly lean structures.
• They win through speed, empathy, and expertise. By avoiding firm politics, solo investors can move more quickly, committing to a round in hours or days. Many are current or previous operators, giving them empathy for founders’ journeys. Some bring unique expertise to the table, too.
• Creators lead the way. Many members of this movement built their reputation as creators, amassing large audiences in the process. This influence has been translated into securing allocation in competitive rounds. Those that tell powerful stories about their portfolio businesses can drive remarkable results.
• Established institutional LPs have backed solo GPs. University endowments and other institutional investors have funded several top managers. In doing so, these LPs seem to have made peace with the model’s structural risks.
• Venture firms should aggressively ally with these disruptors. While tier 1 funds will worry more about Tiger Global, solo investors have changed the market’s dynamics. Proactive firms will adapt, empowering these managers and benefiting from their favorable brand and impressive reach.

There is only one place to begin. On Thursday of this week, TechCrunch reporter Natasha Mascarenhas tweeted a link to an SEC filing. The Form D noted that Buckley Ventures III, LP intended to raise a $500 million investment vehicle.

If you’ve never heard of the fund before, that news might not mean much. Venture firms seem to be raising at an unprecedented clip with Kleiner Perkins, Andreessen Horowitz, and Paradigm all announcing mega-funds in 2022.

The difference is that Buckley Ventures is managed by a single individual: Joshua Buckley. Not only is the sole general partner (GP), on track to manage more money than many partnerships, he also serves as the co-founder of Prologue, a holding company that manages Product Hunt and its affiliated accelerator, Hyper. In this breadth, Buckley is an unusual case. But he is not alone in managing considerable capital as a solitary fund manager.

As brilliantly articulated by Nikhil Basu Trivedi in his canonical piece, “The Rise of the Solo Capitalists,” a new wave of investors has emerged that manage large capital bases and win allocation over storied funds. Conventional wisdom suggests that these solitary operators succeed primarily by better empathizing with founders and moving more quickly – venture capital’s nimble, darting speed boats carving circles around incumbents’ slow-moving frigates.

Since he published his piece 18 months ago, the trends Basu Trivedi observed have accelerated. Players like Josh Buckley, Oren Zeev, Brianne Kimmel, Lachy Groom, Shruti Gandhi, and Elad Gil are managing significantly more money, while newcomers like Packy McCormick and Harry Stebbings have translated large, engaged audiences into fresh venture vehicles. Many others are quietly thriving and newcomers are bubbling up behind this emergent class.

What should we make of this movement and where is it headed? In today’s piece, we’ll attempt to answer these questions, while digging deeper into the following topics:

• Definitions. Basu Trivedi offered a concise definition of “solo capitalists.” Since his piece, its meaning has taken on a life of its own.
• Catalysts. Though Silicon Valley has always had its angels, societal and sectoral shifts have galvanized this cohort.
• Players. Some institutional managers have begun aggressively seeding solo GPs. We’ll talk through who provides the firepower and where it ends up.
• Playbooks. With fewer resources and less time, solo investors should theoretically struggle. Instead, they’re thriving.
• Challenges. Playing the solo investor game isn’t easy. The model’s strengths come with drawbacks and some of the cadre’s allure may not last forever.
• Countermoves. Top-tier funds won’t be overly worried – at least for now. Marginal players, however, are seeing allocations move elsewhere. To survive, they must adapt.

Let’s go solo.

IN A MEME
​​For the pictorially inclined, here's the whole piece — all 10,100 words of it — in a single meme.

PUZZLER
​​​All guesses are welcome and clues given to anyone that would like one. Just respond to this email for a hint.

Anant S was the gimlet eyed winner of our previous puzzler, seeing through its wordplay. They were joined by Vatsal G, Michael S, Jeffrey G, Tim S, Sukumar R, Joe H, David P, Luke C, Keith N, Tord N, Dan M, Aaron M, Ashita M, Sean K, Lisa O, Mikaela R, Chris S, Thomas R, Brady W, Sudarshan P, SN, and Andrew S. All provided sharp answers to our last riddle:

The answer? A deck of cards. I also accepted answers related to baseball “diamonds.” Willam J provided a creative response, noting that Neptune and Jupiter both rain diamonds. Very interesting!

It has been a wonderful, slightly-crazy week – for which I am very grateful. I think I’ll try and switch off a bit this afternoon, and reacquaint myself with the outside world.

See you soon,

Mario