It wasn’t obvious to me at the time when I made my first angel investment in 2020 that this would be my future. I was approaching year six working with CEO/co-founders scaling early stage companies. I was at my third startup. After close to two years at each company I longed for the earliest stages again. Zero to one. Pure chaos and ambiguity. Less than 100 people. Maybe even 10 people. I knew I couldn’t keep starting over every two years. I knew I didn’t want to be a startup CEO. Having had a front row seat to what that really looked like, a lot changes over 10+ years. The short of it is that I never wanted to manage 1,000+ people or be the CEO of a public company. I have admittedly never met a single builder who does. I was at a fork in the road.
I was always enamored with venture capital. I was a part of fundraising roughly $300MM+ between Blend, One Finance and Built. I did my tour of duty on Sand Hill Road. Received several rejections. Sat through terribly boring board meetings. Asked myself on a regular basis what VCs really knew about startups and why on Earth were they so entitled. In the spring of 2020 after leaving One, I purchased The Business of Venture Capital. It was the first time it ever occurred to me that VCs also fundraise, also get rejected and are working for a very long list of Limited Partners (LPs).
In 2020, one of my best friends left Blend to start a company. He asked if I wanted to invest. I decided to set aside a chunk of cash to invest in 2020 and was determined to learn the ropes of getting in front of founders and getting allocation early on. I thought this would be a very difficult task. I let several people know in my network that I was angel investing and the floodgates opened. I deployed all of my personal money in a few short months in four great companies. I was very much still operating at the time and didn’t give investing much thought when I ran out of personal capital to deploy. I kept helping founders without allocation and didn’t advise because of the time commitment.
In early 2021 I received a call from a partner at a venture firm that was on the board of one of the companies I worked for. Blend had just gone public. One Finance which I was on the founding team of had just raised a Series B (it has since sold to the Walmart/Ribbit Capital JV). Built was on an absolute tear. My angel investments were all marked up. “Nichole, you are a great picker of companies to work for and your angel investments are solid. Have you ever considered raising a fund? We would love to give you a chunk of cash to do so.” I told him I would give it some thought. Scouting never appealed to be. I didn’t want to represent a single firm/brand. Raising a fund was interesting.
I reached out to a handful of VCs that I deeply respect and asked for their advice. I had no idea how to structure a fund, what the time commitment would be or anything related to incorporating/setting it up. Every single one responded “go for it” and many invested along with offering great advice about fund structure.
To kick off the raise, I wrote up an email (no deck) with the below outlined and sent this around to my network (redacted quite a bit as many companies are in stealth and out of respect for my LPs privacy):
About me: I am an operator (Blend/Built/One Finance) focused on supporting brilliant and fearless founders and bringing their whiteboard dreams to life. Etc, etc.
Angel investments: 4.46x MOIC
Vesta (seed) (mortgage infra/LOS) Conversion Cap led seed - a16z led Series A
Pine (seed) (Rocket of Canada) Greylock led seed - Greylock led Series A
Nuvo (seed) - (b2b, credit analytics) Index led pre-seed - Founders Fund led Seed
Trustlayer (seed) - (plaid for insurance) Propel led seed - Craft Ventures led A
The fund: $4-5M, seed/Series A, largely focused on fintech and proptech. Check sizes between 50-250k. No reserves for follow-ons. US based.
Fund investments:
Full list
Current LPs:
Full list
Within a few months, I was staring at 10M committed and promised two anchor LPs that I wouldn’t raise more than 5M. I capped the fund at 5M and used AngelList for everything end to end. I raised from a total of 31 LPs. A handful represented the majority and left room for smaller checks from founders/operators.
No one asked about portfolio construction (more to come in this). I learned very quickly that for a 5M fund it was about access and allocation and proving that you can get into great deals. No one cared about the fund thesis either. While I said I would focus on fintech and proptech, I took every single call. I talked to healthcare tech founders, climate tech founders, web3 founders, etc and quickly learned that a lack of focus would crush me. While building a track record I needed to focus where I knew I was strong and well versed. Even saying that you invest in fintech is incredibly broad.
My check sizes started off small. Having never personally written over 50k into a company at the time, I had a tiny bit of stage fright. I remember getting 250k in allocation in a pre-seed stage company which was the first investment in Fund I and felt so sick over a check that size that I told the founder to cut me down to 100k. I laugh now when I think about how ridiculous that was. I have a few great mentors that happen to be repeat Midas List investors that don’t shy away from offering direct feedback. “Have strong conviction, maker fewer investments and concentrate in your winners”. My average check size went from 75k in the first quarter of the fund to 250k.
I knew within days of investing from Fund I that this is what I was meant to do. Sure, it sounds cliche, but it is true. This was it. This is how I take my pure zero to one execution DNA working with founders and work full time at the earliest stages.
The fund even at 5M would easily become a distraction and I had a duty to the company I was working for. I am not built to split my time between two full-time jobs. I made an easy decision to transition to investing full time. I was okay with going from being a known-quantity in start-up world to a no one in venture capital. Several notable firms asked me to consider joining as a partner as I was communicating my decision to go the solo GP route. The truth is that I really wanted to see what I was made of on my own.
In March 2022, I left the operating in start-up world for a new kind of operating as a founding and solo GP at Wischoff Ventures. While I most certainly have very hard days where I wonder what in the hell I was thinking not going in-house to learn the ropes, I wouldn’t change a thing. All for failing and learning quickly. I get to spend all of my time with some of the most brilliant people in the world.
More to come on firm building, LP updates, future funds, detailed investment memos, etc.
Raising My First Venture Fund
So incredibly inspiring and would love to be on a similar path but in the film production world in the future. Will be following/supporting -- keep following your intuition!