I have noticed a growing trend with new seed stage venture funds - their Limited Partners (their investors) tend to be, in part, other VCs.
At Susa Ventures, we are no exception. We have some great LPs that are later stage VCs.
This makes sense for so many reasons, but until starting Susa, I never thought about how great this can be for the entire value chain.
- They understand VC. The good, the bad the ugly. You can skip the generic stuff during your fundraising pitch, and once they fund you, they are some of the most helpful LPs. They can send deals, share trends, make introductions, and more.
- The fund's portfolio companies can gain access to these LPs for follow on funding, and likewise, these later stage VCs get and eye into an early stage portfolio in hopes of funding a couple of them.
Although I am a huge fan of this, you have to be careful to manage expectations and conflicts of interest. As long as the later stage VC knows that you will make decisions first and foremost on behalf of your companies, I think you can avoid problems.