How 3 VCs are Creating a New Form of Access for LPs
How 3 VCs are Creating a New Form of Access for LPs
Jan 26, 2023
Halle Kaplan-Allen
Investing as a Limited Partner in a Venture Capital fund has a high barrier to entry. Minimum check sizes will often be over $100,000 and only investing in one fund does not allow diversification in strategy. Historically, this has prevented smaller check writers from participating as LPs. This particularly affects investors from marginalized backgrounds as they are less likely to be able to invest the minimum check size into several funds.
3-VC is looking to change this. Gale Wilkinson of Vitalize Venture Capital, Caroline Lewis of Rogue Women’s Fund, and Mac Conwell of RareBreed Ventures have teamed up to provide a new way for LPs to invest in funds. Through 3-VC, accredited investors can invest in all three funds with only a $10,000 minimum commitment. This structure allows smaller investors to participate in funds, even as the funds grow. In allowing a diversified, low commitment option to invest in VC funds, they hope to increase access for underrepresented and female investors.
Sydecar is thrilled to be supporting this initiative that aligns with our mission of increasing access to and transparency in the private markets. We chatted with the team on their backgrounds as investors, how to increase access, and their vision for 3-VC.
Was there a specific experience or moment that made you realize the importance of increasing access to venture capital, leading to your interest in forming 3-VC?
Caroline Lewis (CL): When I first was getting started as an angel investor, I went to a local investment group. I will always remember walking in and seeing a room that was 98% Caucasian, cis men over the age of 45. Many were supportive, but I remember feeling like I didn’t belong. Subsequently, when I spoke to a few funds, many of the investors said I shouldn’t even consider investing unless I had at least $250K to invest.
I was a leader at a large corporation, was making good money, and had saved for angel investing purposes, but I still felt locked out of the industry. In my experience working with underrepresented investors, I found there is an initial risk aversion, often due to social and environmental conditioning. In talking to Mac and Gale, we realized that many of the investors in our funds wrote small checks or were first time investors. They were key to us getting started, so we are all committed to ensuring they can grow with us as our funds get bigger.
Mac Conwell (MC): In my experience as founder, working at a fund, and launching my fund, my ethos has always been about access. In my first fund, I had a diverse group of over 200 LPs who were getting a chance to access the venture asset class. As I was thinking about raising a much larger second fund, the smaller check writers investing less than $100,000 weren’t going to be able to access my fund. That was going to be the vast majority of my first fund’s LPs. It felt wrong that they would be excluded.
Gale Wilkinson (GW): I have been in the VC industry for 10 years and I haven't seen much movement in terms of the percentage of dollars going to underrepresented founders. I believe the way to fix this is to dramatically increase the number of dollars being deployed by underrepresented general partners and limited partners. 3-VC provides an accessible on-ramp for more people from underrepresented groups to invest. As these investors dip their toe in the VC waters, they take the first step to deploying more capital in this asset class down the road.
What was a key learning you had in starting a diversity-aware fund that emerging investors should know?
CL: The Rogue Women’s Fund is specifically focused on investing in founders who identify as women and non-binary. This segment represents the majority of the US population, but yet still remains a minority when it comes to investing. Report after report shows that this population continues to outperform – in a bull or bear market – by a significant amount, yet funding is still critically low. If you’re an accredited investor, working a high paying job, and you care about this issue, then you need to be part of the solution. There isn’t going to be “someone” else that steps-up and starts funding more women. It’s you. If you care about women’s social and economic empowerment and you care about making more money, then you should be investing.
MC: Throughout my career, I was taught that venture was done in a specific way. That funds and fees are to be set up in a specific way. There was this playbook. In raising my first fund, I learned that you don’t have to follow this playbook. Venture as an asset class is not fully baked. There’s so much room to do things differently and to be innovative. Just because nobody’s seen it before or nobody’s done it before doesn’t mean it can’t be done or shouldn’t be done.
Do you see this new structure changing how you approach investing and portfolio support?
CL: The biggest advantage of this new structure and opportunity to how we invest and support founders is furthering the investor support that Rogue Women is able to offer through an even broader and more robust LP base of skilled individuals that want to help the portfolio companies.
Have you encountered unexpected challenges in coordinating between yourselves or with LPs?
CL: The only challenge was finding a trusted partner for the facilitation of the legal, accounting, and platform for this vehicle that shares our values and commitment to excellence long term. We’re grateful that Sydecar is that partner. The benefit of working with Mac and Gale is that we have a foundation of trust that we built through the Kauffman Fellowship program.
MC: It's worth it. This is not without precedent. We've seen funds have successful strategies building large LP groups of qualified purchasers, as the restriction is up to 2000. We knew it was viable. The more positive aspect of coordination has been getting to educate people about this asset class, how to work this asset class for their personal benefit and to share with others to help grow the asset class.
What do you hope will be the long-term impact of 3-VC?
GW: I hope more accredited investors are able to invest in VC funds, which have historically required high minimums that prevent many individuals from participating. A VC investment is a great way for new investors to begin investing in private markets, as each fund will have a diversified portfolio which by definition helps to mitigate investor risk.
CL: I hope that this opportunity inspires the outsiders, underdogs, and those critical to our society to leverage the power and wealth they’ve worked so hard to gain to change the world through investing in this asset class.
MC: I hope to help grow wealth for significantly more people from more diverse backgrounds. The ability to put $10,000 a year for four years into a vehicle allows somebody the opportunity to learn and grow, becoming more proficient and able to invest in more vehicles. The long-term hope is that we will see more diverse GPs getting more capital because the pool of capital is more diverse.
Investing as a Limited Partner in a Venture Capital fund has a high barrier to entry. Minimum check sizes will often be over $100,000 and only investing in one fund does not allow diversification in strategy. Historically, this has prevented smaller check writers from participating as LPs. This particularly affects investors from marginalized backgrounds as they are less likely to be able to invest the minimum check size into several funds.
3-VC is looking to change this. Gale Wilkinson of Vitalize Venture Capital, Caroline Lewis of Rogue Women’s Fund, and Mac Conwell of RareBreed Ventures have teamed up to provide a new way for LPs to invest in funds. Through 3-VC, accredited investors can invest in all three funds with only a $10,000 minimum commitment. This structure allows smaller investors to participate in funds, even as the funds grow. In allowing a diversified, low commitment option to invest in VC funds, they hope to increase access for underrepresented and female investors.
Sydecar is thrilled to be supporting this initiative that aligns with our mission of increasing access to and transparency in the private markets. We chatted with the team on their backgrounds as investors, how to increase access, and their vision for 3-VC.
Was there a specific experience or moment that made you realize the importance of increasing access to venture capital, leading to your interest in forming 3-VC?
Caroline Lewis (CL): When I first was getting started as an angel investor, I went to a local investment group. I will always remember walking in and seeing a room that was 98% Caucasian, cis men over the age of 45. Many were supportive, but I remember feeling like I didn’t belong. Subsequently, when I spoke to a few funds, many of the investors said I shouldn’t even consider investing unless I had at least $250K to invest.
I was a leader at a large corporation, was making good money, and had saved for angel investing purposes, but I still felt locked out of the industry. In my experience working with underrepresented investors, I found there is an initial risk aversion, often due to social and environmental conditioning. In talking to Mac and Gale, we realized that many of the investors in our funds wrote small checks or were first time investors. They were key to us getting started, so we are all committed to ensuring they can grow with us as our funds get bigger.
Mac Conwell (MC): In my experience as founder, working at a fund, and launching my fund, my ethos has always been about access. In my first fund, I had a diverse group of over 200 LPs who were getting a chance to access the venture asset class. As I was thinking about raising a much larger second fund, the smaller check writers investing less than $100,000 weren’t going to be able to access my fund. That was going to be the vast majority of my first fund’s LPs. It felt wrong that they would be excluded.
Gale Wilkinson (GW): I have been in the VC industry for 10 years and I haven't seen much movement in terms of the percentage of dollars going to underrepresented founders. I believe the way to fix this is to dramatically increase the number of dollars being deployed by underrepresented general partners and limited partners. 3-VC provides an accessible on-ramp for more people from underrepresented groups to invest. As these investors dip their toe in the VC waters, they take the first step to deploying more capital in this asset class down the road.
What was a key learning you had in starting a diversity-aware fund that emerging investors should know?
CL: The Rogue Women’s Fund is specifically focused on investing in founders who identify as women and non-binary. This segment represents the majority of the US population, but yet still remains a minority when it comes to investing. Report after report shows that this population continues to outperform – in a bull or bear market – by a significant amount, yet funding is still critically low. If you’re an accredited investor, working a high paying job, and you care about this issue, then you need to be part of the solution. There isn’t going to be “someone” else that steps-up and starts funding more women. It’s you. If you care about women’s social and economic empowerment and you care about making more money, then you should be investing.
MC: Throughout my career, I was taught that venture was done in a specific way. That funds and fees are to be set up in a specific way. There was this playbook. In raising my first fund, I learned that you don’t have to follow this playbook. Venture as an asset class is not fully baked. There’s so much room to do things differently and to be innovative. Just because nobody’s seen it before or nobody’s done it before doesn’t mean it can’t be done or shouldn’t be done.
Do you see this new structure changing how you approach investing and portfolio support?
CL: The biggest advantage of this new structure and opportunity to how we invest and support founders is furthering the investor support that Rogue Women is able to offer through an even broader and more robust LP base of skilled individuals that want to help the portfolio companies.
Have you encountered unexpected challenges in coordinating between yourselves or with LPs?
CL: The only challenge was finding a trusted partner for the facilitation of the legal, accounting, and platform for this vehicle that shares our values and commitment to excellence long term. We’re grateful that Sydecar is that partner. The benefit of working with Mac and Gale is that we have a foundation of trust that we built through the Kauffman Fellowship program.
MC: It's worth it. This is not without precedent. We've seen funds have successful strategies building large LP groups of qualified purchasers, as the restriction is up to 2000. We knew it was viable. The more positive aspect of coordination has been getting to educate people about this asset class, how to work this asset class for their personal benefit and to share with others to help grow the asset class.
What do you hope will be the long-term impact of 3-VC?
GW: I hope more accredited investors are able to invest in VC funds, which have historically required high minimums that prevent many individuals from participating. A VC investment is a great way for new investors to begin investing in private markets, as each fund will have a diversified portfolio which by definition helps to mitigate investor risk.
CL: I hope that this opportunity inspires the outsiders, underdogs, and those critical to our society to leverage the power and wealth they’ve worked so hard to gain to change the world through investing in this asset class.
MC: I hope to help grow wealth for significantly more people from more diverse backgrounds. The ability to put $10,000 a year for four years into a vehicle allows somebody the opportunity to learn and grow, becoming more proficient and able to invest in more vehicles. The long-term hope is that we will see more diverse GPs getting more capital because the pool of capital is more diverse.
Investing as a Limited Partner in a Venture Capital fund has a high barrier to entry. Minimum check sizes will often be over $100,000 and only investing in one fund does not allow diversification in strategy. Historically, this has prevented smaller check writers from participating as LPs. This particularly affects investors from marginalized backgrounds as they are less likely to be able to invest the minimum check size into several funds.
3-VC is looking to change this. Gale Wilkinson of Vitalize Venture Capital, Caroline Lewis of Rogue Women’s Fund, and Mac Conwell of RareBreed Ventures have teamed up to provide a new way for LPs to invest in funds. Through 3-VC, accredited investors can invest in all three funds with only a $10,000 minimum commitment. This structure allows smaller investors to participate in funds, even as the funds grow. In allowing a diversified, low commitment option to invest in VC funds, they hope to increase access for underrepresented and female investors.
Sydecar is thrilled to be supporting this initiative that aligns with our mission of increasing access to and transparency in the private markets. We chatted with the team on their backgrounds as investors, how to increase access, and their vision for 3-VC.
Was there a specific experience or moment that made you realize the importance of increasing access to venture capital, leading to your interest in forming 3-VC?
Caroline Lewis (CL): When I first was getting started as an angel investor, I went to a local investment group. I will always remember walking in and seeing a room that was 98% Caucasian, cis men over the age of 45. Many were supportive, but I remember feeling like I didn’t belong. Subsequently, when I spoke to a few funds, many of the investors said I shouldn’t even consider investing unless I had at least $250K to invest.
I was a leader at a large corporation, was making good money, and had saved for angel investing purposes, but I still felt locked out of the industry. In my experience working with underrepresented investors, I found there is an initial risk aversion, often due to social and environmental conditioning. In talking to Mac and Gale, we realized that many of the investors in our funds wrote small checks or were first time investors. They were key to us getting started, so we are all committed to ensuring they can grow with us as our funds get bigger.
Mac Conwell (MC): In my experience as founder, working at a fund, and launching my fund, my ethos has always been about access. In my first fund, I had a diverse group of over 200 LPs who were getting a chance to access the venture asset class. As I was thinking about raising a much larger second fund, the smaller check writers investing less than $100,000 weren’t going to be able to access my fund. That was going to be the vast majority of my first fund’s LPs. It felt wrong that they would be excluded.
Gale Wilkinson (GW): I have been in the VC industry for 10 years and I haven't seen much movement in terms of the percentage of dollars going to underrepresented founders. I believe the way to fix this is to dramatically increase the number of dollars being deployed by underrepresented general partners and limited partners. 3-VC provides an accessible on-ramp for more people from underrepresented groups to invest. As these investors dip their toe in the VC waters, they take the first step to deploying more capital in this asset class down the road.
What was a key learning you had in starting a diversity-aware fund that emerging investors should know?
CL: The Rogue Women’s Fund is specifically focused on investing in founders who identify as women and non-binary. This segment represents the majority of the US population, but yet still remains a minority when it comes to investing. Report after report shows that this population continues to outperform – in a bull or bear market – by a significant amount, yet funding is still critically low. If you’re an accredited investor, working a high paying job, and you care about this issue, then you need to be part of the solution. There isn’t going to be “someone” else that steps-up and starts funding more women. It’s you. If you care about women’s social and economic empowerment and you care about making more money, then you should be investing.
MC: Throughout my career, I was taught that venture was done in a specific way. That funds and fees are to be set up in a specific way. There was this playbook. In raising my first fund, I learned that you don’t have to follow this playbook. Venture as an asset class is not fully baked. There’s so much room to do things differently and to be innovative. Just because nobody’s seen it before or nobody’s done it before doesn’t mean it can’t be done or shouldn’t be done.
Do you see this new structure changing how you approach investing and portfolio support?
CL: The biggest advantage of this new structure and opportunity to how we invest and support founders is furthering the investor support that Rogue Women is able to offer through an even broader and more robust LP base of skilled individuals that want to help the portfolio companies.
Have you encountered unexpected challenges in coordinating between yourselves or with LPs?
CL: The only challenge was finding a trusted partner for the facilitation of the legal, accounting, and platform for this vehicle that shares our values and commitment to excellence long term. We’re grateful that Sydecar is that partner. The benefit of working with Mac and Gale is that we have a foundation of trust that we built through the Kauffman Fellowship program.
MC: It's worth it. This is not without precedent. We've seen funds have successful strategies building large LP groups of qualified purchasers, as the restriction is up to 2000. We knew it was viable. The more positive aspect of coordination has been getting to educate people about this asset class, how to work this asset class for their personal benefit and to share with others to help grow the asset class.
What do you hope will be the long-term impact of 3-VC?
GW: I hope more accredited investors are able to invest in VC funds, which have historically required high minimums that prevent many individuals from participating. A VC investment is a great way for new investors to begin investing in private markets, as each fund will have a diversified portfolio which by definition helps to mitigate investor risk.
CL: I hope that this opportunity inspires the outsiders, underdogs, and those critical to our society to leverage the power and wealth they’ve worked so hard to gain to change the world through investing in this asset class.
MC: I hope to help grow wealth for significantly more people from more diverse backgrounds. The ability to put $10,000 a year for four years into a vehicle allows somebody the opportunity to learn and grow, becoming more proficient and able to invest in more vehicles. The long-term hope is that we will see more diverse GPs getting more capital because the pool of capital is more diverse.
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