Why is raising a VC fund harder than a startup round?

Jason Kirby (00:02.59) All right. Welcome back, everyone. Welcome to Fundraising Demystified. Today, we have Wintry Mead with us, founder and CEO of Cool Water Capital. Welcome to the show, Wintry. Winter (00:13.634) Jason, thank you for having me on board and hopefully this is a show where lightning strikes twice. Jason Kirby (00:18.462) I love the sound of that. Well, you have an interesting background. This is a little bit of a deviation from the typical guests we have on the show. You're supporting emerging fund managers in building and raising funds for venture capital. And I would love for you to tell the audience a little bit about your background and what you're doing at Coolwater. Winter (00:40.566) Yeah, thanks Jason. The background, pretty simple. Spent 12 years in the Bay Area, worked at a couple of startups, but most of my career has been spent as an LP, a limited partner, investing into managers, fund managers, and mainly emerging managers, emerging venture capital funds. So that's kind of the perspective I'm gonna share on the podcast today. I worked at a firm in San Francisco called Hall Capital Partners founded by Katie Hall, who was very involved with the Princeton Endowment. So it was a very traditional approach to learning how to be an LP, what LPs would call the endowment model style of investing. So investing mainly into alternatives, but through managers. And so I felt like I took the training wheels off there. built a lot of perspective, not only on venture capital and private equity, but across asset classes. Like what are the return drivers? What actually creates value depending on what you're investing into, right? Real assets, public equities, private equities, you know, within private equities, buyout versus venture, like what actually drives value. So I thought it was a good foundational experience. I moved over to SAP, I helped them build a large fund-to-funds practice, so again, as an LP. But the nuance there was it was part of a larger direct investment venture capital firm team. So I felt like I got both the LP perspective as well as the VC, like the tier one VC investment perspective. And the other perspective I got there was actually as an intrapreneur. like an operator within a larger corporation, building an investment fund. And I think that's largely what contributed to creating Coolwater and looking to give back into the ecosystem and support emerging managers because even with a large budget as part of a large corporation, building a very large fund inside of a organization with tons of resources and perspective and expertise. Winter (03:03.166) it was hard, right? And it took years, it took four and a half years, right? To really feel like it was starting to get dialed in. And so the empathy that created was immense, right? And so I shifted in 2018 to really dedicate my life to supporting the innovation ecosystem. And the strategy is largely through supporting emerging managers. So excited today to talk about emerging managers and why I'm spending time in this space. Jason Kirby (03:33.754) So you had the fortune and ability to kind of tap into kind of all the different roles in the ecosystem in and of itself from LP operator to, you know, GP. So I think that's a pretty unique perspective that you bring to the table and, you know, led you to write a book on how to raise a venture fund and, you know, get access to, you know, emerging fund managers. But to kind of dive in a little bit more on kind of the LP front, you're talking about where you create, you know, where's value actually generated. I imagine you got exposure to all asset classes. What made you lean in harder on venture? Winter (04:10.498) Venture felt like net new value creation, right? So I'm all for financial engineering because it's interesting, it's intellectually stimulating. But I was sitting on the private equity team as my first investment role and investing across, again, like I mentioned, buyout, growth, distressed, venture, established venture, emerging venture. And it did feel like venture capital was intriguing because you were business building, right, like you were creating the value and you almost had like venture, if you think about it, right, like there's this dichotomy of business building and creating value out of nothing. And then there's like the capital markets, right? Like you're building into the capital markets from venture, but that was kind of what was intriguing to me. And I think the, like my bias is more entrepreneurial. So for me, like, I was kind of drawn to that, where I was like, hey, yeah, you can do financial engineering, but what's actually contributing to solutions in the world? And aligning with those people, that everyone's kind of playing in the economy, but who are the people that were, again, net new generating impactful companies? Right, again, that would grow up into the capital markets and they would be valued at some point and the financial engineering would happen at some point. But at the beginning, it was like raw business building. And like engaging with those people, like if you're living and talking and thriving alongside of those people, that's what got me excited. And I was like, how do I hang out with these people more? Right, and how do I support them? Jason Kirby (05:54.006) I think that explains why there's such a boom in interest in venture capital as a whole when it comes to people that would have gone to investment banks and or leaving investment banks where the money's at, typically finding their way into venture. But when we look at venture as the asset class in and of itself, in comparison to private equity and all the different options there are out there, how do you find performance and alpha as an LP? in the venture capital game. Winter (06:26.506) Yeah, great question. I think there's a way that cool water does it, right? So, I mean, I think you have to identify what alpha is and how it's generated. From my point of view, it's generated from really strong networks and decision-making processes. And so how do you identify people that have great networks, great discipline? great decision-making processes, right? I think that's what Coolwater is effectively, right? Like a little anecdote, right? Like I feel like I'm always trying to break things. And so I feel like my process for being an LP broke in 2016, where I couldn't meet with every single manager that I wanted to meet with because I was seeing public announcements of funds. And I pride myself on meeting with everyone. Like I met with a thousand and 10 managers last year. Like I want to see every single opportunity in the world. Right? Like, so then you can make really good investment decisions if you do that. But in 2016, I was, I started to see, right. And the market was growing. It was growing very quickly. Again, barriers to entry were coming down. Like the ability to start a fund was cheaper. It was easier to do that. Like you said, maybe there was this kind of cultural shift that was going on, but you know, that was kind of a trigger in my mind where I was like the LP model is effectively broken or my model as an LP is broken. Like I need to see more people. So how do I, to your point, like how do I identify these alpha generators, right? Shout out to Heather Hartnett over at Human. How do I identify these like alpha generators in the ecosystem? And so I felt like there needed to be a new way. Like I'd almost identify cool water as a... systems change operator, where we've kind of recreated the system of being an LP in a different way. And that's through the accelerator. Who sees the most startups in the world? Winter (08:36.546) the best brands or YC, right? So you needed a change in the system of how to actually engage with managers to be able to identify them. So, okay, fine, let's like rewind the clock. So I'm back in 2015. Let's say I meet now with a thousand managers. I'm doing the old LP style of identifying alpha. Okay, try to find alpha for me. Okay, I need to look through your data room. Jason Kirby (08:36.814) I see. Winter (09:06.25) I need to read your DDQ. I need to read your PPM, right? I need to go through your pitch deck. I need to engage with you. I need to run a process. Fast forward a year, you've met with how many funds? 25, 50. So you're missing like 975 managers that you are in your funnel, but you actually have, you don't have an opinion on them. So like, how does that make you a better decision maker? How do you actually optimize your investment decisions if you haven't changed the system? And so I think that was kind of the maybe epiphanic moment, right, where I was just like, it feels like I'm in the LP world, but it feels a little broken to me. Is there a way to change it? Right, I'm not saying it needed to be fixed. I'm just saying like, is there another way to kind of identify alpha in the market? And I think that's what I've tried to create over the last many years, like developing this accelerator for funds. Jason Kirby (10:00.494) How do you meet with a thousand people a year? Winter (10:04.77) You take 20 to 40 calls a day for a few months out of the year. And then you also have a very tight filter on folks that you know just aren't relevant for what you're offering value to. Jason Kirby (10:16.238) So these like 15 minute, just like quick call to kind of identify, you know, personality traits or just something about them, or are you actually like reviewing the materials? Winter (10:25.058) Sometimes, one of the meta concepts of venture is alignment. So what do we do at Coolwater? We offer value-added programs for emerging managers. And we just keep on iterating on those programs to try to add more and more value, to try to make them more and more valuable. We're in cohort nine right now, much tighter, much more focused than even cohort seven. We're just never satisfied with the level of value that we're adding. And just keep on recycling and reiterating into that. But yeah, I think creating the process, I think we got definitely some good feedback in the beginning from people that hadn't invested into similar models. Just how do you create the top of funnel and the filter and the ability to know what you want? decision-making processes, if you have a good process, you can run it very quickly, right? Because it's tight, it's focused. You know what you like, you know what you don't like, or even if you like it, right? Like you know what's out of scope for the moment. And so, what do we do? We run effectively two core programs. We run a program for emerging managers. Are you an awesome investor and wanna launch faster? Right? And you are institutionally biased. meaning like you want to create a great firm over time. Coolwater is a great place for you. And we run a core program that is, and that program is largely focused on launching and fundraising and understanding the institutional LP perspective, right? Like in line with my first book, How to Raise a Venture Capital Fund. And then there's a core program around like building your back office, right? All this stuff, you know, I, you know, had the lucky experience of helping set up. the operational due diligence processes and running those and really trying to understand like, what does it mean to make that jump from emerging manager to established? It's such a murky gray area. That's like, it's debated on all the panels, like define emerging manager, what's an emerging manager? Well, when do you become emerged, right? It's like the never ending debate. So the second program like tries to, like that's not an obvious answer, but it tries to support that jump, right? Like what is the operational due diligence process? Winter (12:51.178) what do you need to set up to kind of be buttoned up and check the boxes so that you can get the institutional check. And again, that's an iterative process, right? It's a process. It doesn't just like, you don't snap your fingers and it happens, you have to have the knowledge. You have to have the implementation. You have to build the organization around it, right? Like you have to manage that process over time. Like there's these pieces there. It's just like, okay, that's the second program of like, hey, you want to do this, you're institutionally biased, right? Like how can Coolwater package it in a way that's digestible, where it makes sense, where it doesn't take you five or 10 years to learn. So your go-to-market is that much faster. I think this process has already played out in the VC space. Fred Wilson blogging, Brad Feld writing books, people blogging for years, you selling your company, writing online, you doing podcasts. There's this massive amount of knowledge that's like, how do you build a startup company, but there isn't like a massive amount of knowledge of like, how do you build an investment firm? Right. And that's what Coolwater kind of stands for. Like if you want to build a great investment firm, right? Like what is the corpus of knowledge you need and what is the corpus of implementation skills you need to actually do that and management skills you need to actually do that. And that's what Coolwater offers through focus programming. Jason Kirby (14:16.234) in an oversimplified way to kind of help correlate for our audience. It's essentially like Y Combinator, but for emerging fund managers in venture specifically in terms of giving them the resource, the access, the network and support for fundraising and the structure and the credibility that comes with it. You're not accepting everyone, just like YC. You have tons of applications and the more applications, I guess that's... Part of your process, get as many applicants as possible so you can see and meet with as many people as possible. Is that a safe assumption? Winter (14:47.726) Exactly. Yeah, yeah, that's totally fair. And again, kind of like a cultural affinity as well, right? Like you have to want to build a great firm and that's who we're looking for. Those people to join Coolwater. Jason Kirby (15:05.294) And for the sake of education, maybe it's an exited founder who wants to start a fund. I see that happen all the time. It's a conversation I see pop up all the time. Or the founder that is chasing venture capital to raise and doesn't understand what it's like in the VC's shoes when it comes to actually raising capital on their side. What's the difference when it comes to, say, running a company and raising capital for your company as a direct investment opportunity versus being a fund manager and raising capital for your fund? Winter (15:47.294) Another opportunity to create empathy between founders and VCs. Um, yeah, I think the process for raising for a company, it's, it's still a process. It still requires an immense amount of time and effort and coordination. And organization and discipline, right. To, to be successful. Um, but I think it's. and this is gonna at the risk of getting in trouble here, I think it's easier to raise for a company than it is to raise for a VC fund. And again, like if you think about you're raising, let's just like play it out. Like you're raising for a company, right? You're selling the hope and the dream, right? People like you, you're talented, right? They give you some money to build kind of what you're gonna build. Fast forward six, 12, 18 months, like is it built or not? Jason Kirby (16:46.21) Yeah. Winter (16:46.75) Right? Is it working or not? Like has the market validated it or not? Right? And a fund doesn't really have the luxury of that. Right? It's like, have you built the fund or not? Yeah, I swear. Like I went through Coolwater. I built the business processes. Like I swear I have the fun product, right? The LP is gonna be like, well, what's performance? We wrote some checks into 10 companies and what are those 10 companies doing? Well, they're building. So what's the performance? Well, we lost some of your money because we took fees on the fund. It's like, okay, are you going to write more? If you're a startup and you're like, hey, I lost some of your money and I'm no further along in terms of performance and it's not clear if my product has been validated and I haven't really built... The product isn't really any further along because I've just been fundraising this whole time instead of building product. And I'm a year and a half later. is a seed investor going to come in? They're going to be like, what did you do with your friends and families money? Right. And you can play that out like versus like saying like, Hey, hit these core KPIs, right? These core metrics, like look at my progress, right? I grew 500%, whatever the number is. You can kind of like, there's a narrative there with the startup that I think is like, you can buy something that's more tangible. And so I think it's easier to raise for a startup than if you were to do the same exercise with the fund, right? And so again, I think a lot of it comes down to intention, indications, right? Behavior, you're kind of putting these pieces in place, right, like you're almost building where, you know, in the startup example, you'd be like, hey, you know, I know I don't have anything to show you, I can't show you that I grew 500%, but you know, I actually have set up all the systems, so I'm already a pre-IPO company, right? Right, it's kind of like that. is the, hey, I'm a fund manager. I know it's early in terms of performance and it's really hard to bet on me on something that's more tangible. Like in terms of like making money or whatever the metric is as an LP you wanna kind of assess. But look at everything I've kind of built, the processes, my intention of building the organization, the policies and procedures I put into place, the infrastructure I've set up, all of that. Like look at my reporting. Like you can, you make it tangible by like what you're building as a business. Winter (19:11.294) you know, before you actually have the performance. And then your go-to-market is like much stronger. You still need to be like excellent at sales between the two, right? But it's probably more difficult. And then the other thing is like, I think the, you know, sometimes in the venture world, like it's okay to blow up the system and be like, hey, I never did insurance before. I actually come from this other industry, but look at how awesome I am technically. I'm gonna blow up insurance, right? And people are like, wow, that's okay. Wow, that's a totally different take. You're definitely the person to do it. You've got the skillsets, right? And I like that you're kind of an outsider coming in. It's harder to do that as a fund manager and be like, I'm gonna raise an insurance fund. I've never done insurance before. I don't have any connections in the insurance industry. I don't even know like financial services generally. You know, I majored in XYZ. That's totally unrelated to financial services insurance. But trust me, like. give me like $20 million and I'm gonna like triple it or quintuple it in the next 10 years, right? Is anyone gonna give you that money? No, right? And so again, like I think there's the fun like raising journey for a fund manager is different than like the fundraising journey for a startup. And I think you have to understand those nuances, right? So even when you're saying Coolwater is the Y Combinator for funds, like. Yes, maybe as a heuristic, but there are nuances of being a fund manager that you have to understand and internalize in order to be successful. Jason Kirby (20:39.726) I'm glad you kind of chose the kind of controversial opinion that fundraising for a startup is easier than a fund because I personally agree. I know a lot of founders are probably like, oh, it's got to be so easy in their ivory tower. And I was like, that's hard work raising a fund. So when it comes to emerging managers and that example you gave with the insurance, you know, person no experience trying to raise money, like, what are you seeing in the market today that... is actually getting funded from a fund perspective. So emerging fund manager going out, what are you seeing actually get funded and allowing them to kind of close on their fund one or fund two. Winter (21:21.354) Yeah, it's a great question. I think I'll. I think I'll break it into maybe three buckets. So the first is just like the, let's call it the authenticity story, right? Like a narrative that sells well, right? Like I was the insurance executive that left. I started to startups in the financial services space or insurance space, I sold them, coming to market with an insurance fund. Like everything kind of lines up. There's like a... narrative, right? That kind of like a good, like you thread the needle like very well across that. I think that's still being funded. Like it's, and that hasn't changed. Like that's not a net new thing. Like LPs have always looked for that story, right? The fundraising market is definitely more challenged in 2024 than it was in 2021. But again, like there's that, right? Like that really hasn't changed whether you're in, yeah, I'd say 2005, 2010, 2015, 2020, 2024, like... That's probably like a tried and true archetype that's still getting funded. I'd say you have the folks that are just like persistent and incredible at fundraising that are still getting funds off the ground. And this could be like your capital network is an advantage, your sales skill, marketing and sales skills are like advantages. So those people are like still getting, and again, like that's more generalist, but I throw a bunch of people into that bucket where it's like, do you know, again, like how to raise for a startup? Do you know how to raise for a fund? And again, like that's probably consistent as well. But in this market, it's especially true because you need to be more disciplined and better at fundraising because it's harder, right? Like you're gonna work three times as hard and you're gonna raise half as much. Winter (23:21.822) And so I think there's that element of like sales skills that's important. And then the last bucket, I'd probably say like themes that are the zeitgeist. And the ones there are, as you would imagine, right? Like Nvidia disruption, AI, right? Like the world is moving, like AI is the new internet. Climate, right? Like everyone's kind of experiencing the volatility of like weather. Jason Kirby (23:22.882) I think there's that element of violence. There's a lot of violence. Winter (23:51.922) And that's becoming almost like an international top down, like, okay, everything's getting pushed down. It's like, wow, these huge gaps in the market are being created to address sustainability and climate. So the themes there, funds that are kind of aligning with these bigger macro shifts in the world economy are being funded. Rightfully or wrongfully so, some people might be in the climate space, maybe they're not the authentic team. but because they're kind of capturing the zeitgeist, they're being funded. Ideally you have in each of those three buckets, like people line up in all three. Like you've got the authentic story that they're incredible at sales and they're doing a theme that's like, you know, world positive, right? But I'm saying like, what's getting funded right now? I'd say another trend that I've seen just through the last couple of accelerators is the, you know, operator turn VC. Like there's much more of that behavior in this market. than there was in 2021 when cost of capital was lower, right? There was more risk seeking behavior in terms of starting a new business, starting a new fund, raising a new fund, when cost of capital was lower and more interest was in venture capital. But, you know, cost of capital goes up, interest in venture capital goes down. You have a lot of like outflows of, you know, people that were dabbling in venture because of the hot thing a couple of years ago. Right? That changes behavior from fund formation standpoint of who, like which GPs are actually starting funds. And so you have a lot more people that are probably just used to, like if you started a company and like, I've had to persist with it for a while, there's a certain behavior, right? Like you're just trudging through mud all day long, every day uphill. Right? And so I think like that mentality, if you have it is not the mentality of like someone raising a fund in 2021. It's a different mentality and like not everyone has it. And so I think the fund manager that I see in today's market is much more aligned with like what it was 10 or 15 years ago when you're raising a fund, right? Like a lot of people don't have that perspective. Like they have the up into the right perspective of raising a fund. They don't have like the coming out of the great recession perspective of what it was like 15 years ago, right? To raise a fund. Like they just didn't experience it. So. Winter (26:17.59) they feel like, oh, fundraising should be 2021 behavior when like actually market is more today. Like this is how hard it is to raise a fund. You're asking someone for all this money, right? And it's very hard to like just create value generally, right? And like what there's all these variables within venture, the access, the network, the portfolio construction, the management, all these things you have to do, right? All this trust you have to build with. you know, people that are gonna give you that money. I think that's like another thing that I've seen. So the behavior, like the person that's kind of starting it, who's in market, who's actually getting funded, there are these like more persistent mentality people, like call it like founder mentality, call it whatever you want. But it does feel like people that have started a company in the past and been successful there, and if they kept with it, more of those people are starting funds in today's market than not, than like traditional spin-outs. Jason Kirby (27:09.468) And do you think those kind of operator turn fund manager have a higher probability of success or have a higher probability of getting funded? Winter (27:20.038) Again, like if it's an authentic story, yes for funded. For success, I hope so. I mean, I'd have to, like if you gave me an example, I could analyze it, but I think what you've seen as a bigger macro shift is what do founders want, right? Like how has the market shifted over the last 10 or 20 years? I'd say the market has shifted to greater transparency and more like more requests for value add, right? So who can actually offer perspective on product, perspective on strategy, perspective on business building, you know, who can help founders, right? And if you're a former founder, you kind of understand again, what that means, like you may have more empathy. to founders, like you may be better at helping founders that may be strategic enough to actually like change the outcome, right? Some of that's luck, some of that's skill, but it's hard to like say unless there's a specific example, but I do think like generally the market has like wanted more authentic VCs. meaning like VCs with more operating background that can help founders. And I'd say this is generally, you'd have a better perspective on it than me probably. But I'd say founders want that as well, where they're looking for functional expertise. They're more savvy about how they're building out their syndicate, right? They're looking for people that can be additive, right? Where it's like, hey, how do I put this together and be strategic about it? So like these investors, these emerging VCs that are coming in and they're filling out the round. how do they actually help me grow my business? And if you have a really strong authentic background, where you can add value to the companies that are your targets, that you're looking to put into your portfolio, that probably resonates better in today's market than it would have 20 years ago, maybe. Maybe not, maybe it's the same. Jason Kirby (29:28.074) No, I would agree from a founder perspective and just kind of seeing what I'm seeing in the market, especially the more talented founders that are either, especially the second go around. Someone that's already had success, they're choosing to kind of bring on, because at some point capital becomes a commodity. There's a lot of capital out there. Who's going to kind of have the differentiator beyond just capital or maybe specific term sheets? And so someone that can add value might be able to come in earlier, better terms and that can build and nurture a relationship with a founder over an extended period of time as opposed to someone that maybe comes from a traditional finance background who hasn't kind of been in their shoes. Albeit, could be a great financier, could have a great network and have other value points but hasn't necessarily been in that founder's shoes, which for better or for worse there is definitely an appeal to a lot of founders to have access to those types of people. one or two in their round, especially in the early days, to kind of add that additional guidance and perspective that otherwise they wouldn't have potentially. So I agree. Winter (30:36.234) And maybe definitionally, this is why you see a lot of operators as emerging managers focused on early stage, right? And you see a lot of people with traditional, more traditional kind of investment banking or financial backgrounds go to more growth stage firms. Cause it's more of a financial exercise at that point to invest versus a, you know, harder, there may not be any right answer type exercise where it's like it is in the early stage days of building a company, right? It's like, which path do we choose? No idea. Right? Like there's no, there is a right or wrong answer. We'll find out about in like, you know, six months or six years, but like, you kind of, right? Like you're kind of have to have someone that has that perspective that can help guide you when like there aren't straightforward answers and everything you operate in is like a gray area. Jason Kirby (31:26.97) Yeah, I would agree. So going back to supporting the ecosystem and supporting emerging fund managers, when you see these fund managers come to you and whether it's raising capital or just their overall structure, what are some of the common mistakes that you're seeing these GPs make in their early days of setting up a fund? Winter (31:51.51) Yeah, there's a few. I'd say a big one is not being self-reflective enough in the beginning. And that can mean a few different things. Right, when we talk about authenticity, that could be you asking the question like, okay, I've never done insurance before, but I wanna start an insurance fund. Like, have you been, have you like... criticized yourself enough, how are other people gonna think about that? I think that's kind of an important piece. I think another one is on the self-criticism, are you at the right stage to manage other people's money? And maybe the answer is no. So maybe you go out too early for something, where you being an angel investor for another two or three years, letting your angel portfolio mature a little bit longer, staying at that. you know, VC firm for a couple more years and letting your, you know, attribution grow a little bit more. Or yeah, like trying one more, you know, swing as a founder, like, and maybe, you know, you're even more successful this time. And then, you know, you can have a larger GP commit and your fundraising journey is faster and tighter. Like when you actually do your go-to-market for raising the fund, like, again, that comes from like a certain self-awareness and proprioception of self that I think is sometimes lost because you're just so busy and you're just running super hard and that mentality of I've just got to get it done, it's all about effort. But I think a lot of successful emerging managers have been pretty deliberate and intentional about what the journey is and where am I in that part of the journey. And just looking at it from other people's perspectives, including LP's perspectives, which is like, would I buy this asset right now? would I buy this fun product right now? Like would I buy you as the team right now? So I think that might be one mistake. I think another mistake that might be related but just in terms of like tactical advice, like trial it, right? Like you can sit in a vacuum, sit in your sauna and like criticize yourself like all day long. But then you're like, okay, I've gotten to a point where maybe I should. Winter (34:17.19) circle this with a few people that I trust, right? Kind of say like, hey, here's how I'm thinking about my narrative or my story or the fun journey or the fun story, fun narrative, kind of figuring that out. And like that iterative process is pretty important and having the right people to give you strong advice, right? Like, and maybe again, this is maybe another debatable controversial point, but like what makes a good board member? Right, like what type of advice do they give you? Do they like give you like one super strong opinion, there's no other opinions and way to navigate as a CEO. And it's like, it's my way or the highway. Like, is that a good board member? Like maybe, maybe that's the type of advice you like to receive, or is it more like, have you thought about it this way and that way? And here's three examples from my history of like where things have gone right or gone wrong, right? Things to think about, you're the decision maker, it's gonna be your fun product that you create. finding maybe those people in the latter camp that can help you think about the fun product you're building from a few different perspectives, right? Maybe find some of those people. I think that iterative process, like if you're not doing it, you kind of go out and it's like the person that starts the phone call talking for 20 minutes. You're just like, do you know, like I was here, you know, to, I don't know, like order dinner. Like I didn't even realize this was gonna be like a pitch meeting. Like I dialed the wrong number. So I think like if you just like figured out in the beginning, right? Like I think a lot of people are hard charging, which is good. Like you want, you kind of need that behavior, right? Like run through walls type of behavior. But if you do it without thinking, right? And you know, the wall's too hard, like then you just end up falling backwards or falling flat on your face. And that's like, that's the iterative process that I think is outside of yourself. It's with like a trusted group. I mean, I could go on, but yeah, I think there's a number of mistakes that GPs kind of make. Maybe the big picture thing here is if they slow down a little bit more and they really thought of, again, if you're a former founder, for example, if you really thought of what was the product that I created at my company, now think about it as what's the product I'm creating at my venture firm? And is this really strong? Both when you have nothing. Winter (36:43.926) Like, and you're kind of like selling the dream. And also like over time, right? How does that kind of narrative change and how does the fun product strengthen over time? I think that's really important. And kind of sometimes people miss the forest with the trees there. Winter (37:51.186) Jason, I lost you. Jason Kirby (37:56.986) Oh, that's my fault. Oops. I was muted. I'm here rambling on for the whole time. Sorry about that. We'll cut that part out and I'll go back to what I was saying. So I think it's really interesting the point that you brought up about self-reflection and asking yourself, you know, are you ready to manage other people's money? And personally, I went through that process myself, exiting my last company and... kind of sitting on my hands, like, what do I do? And I loved the idea of running a fund, but then that question came up and I was just like, do I really know how to construct a portfolio? Do I really know how to deliver returns and manage other people's money over an extended period of time? And I felt the answer was no. And I was like, I think I need more reps. I think I need more exposure. I need to kind of get deeper into this industry beyond my limited perspective of just a founder and just an operator. and see how the rest of the world works and what the opportunity really is after I've kind of done this for an extended period of time. Because I'm still very young and have a long road ahead, that was not the time for me. And glad I did because then we went into 2022. So if I started a fund, it was going to be an absolute nightmare. And so yeah, I think that's really important advice. And I hope everyone has someone in their corner to kind of ask. or have them ask that question and be able to reflect. I think that was a really good point of advice that I don't think people hear often enough. You've kind of walked through a variety of different use cases and situations for different GPs coming in and looking at this. When it comes to Coolwater, you specifically kind of mentioned you have a cohort model. How does that cohort model work? what does that look like for maybe a potential fund manager who thinks they're ready to apply? Winter (39:59.79) Yeah, so as mentioned, we have programs. There are different programs, the way we thought about building those programs or modules are more focused on like, what are the core concepts you need to understand as an emerging fund manager? And what are the key problems you need to solve? So it's grown, right? It's a very long list of like things that we think you need to understand or... Jason Kirby (40:00.183) Yeah, so as. Winter (40:29.522) build or implement or manage. So that's kind of how we built it. We have these different programs. If we're just talking about the core program for fund managers, why have we decided on a cohort model? For me, the way I think about why is venture successful, it's because of information sharing. and strong networks. And like, what's the speed of that information being shared? What's the breadth of that information being shared? And again, like, what nodes do you know to get things done quickly? And as a venture capitalist, that could be doing deals, right? That could be fundraising. That could be answering questions that you could be pulling your hair out for 15 days, or if you knew the right person, you could ask, you know. very quickly and answer it in 15 seconds. So again, I think the cohort model for me enables these network effects that are, it's a very relevant concept in venture, in venture capital in particular, of just like how, even if we deliver a program, or we consult one-on-one, how do we deliver more impact faster? And I think it's pretty obvious, but I think you... I think there's like another concept that you have to like stack onto that. It's like, okay, great. That's obvious. But the management of that, like the management of network effects is probably the most important concept, which is why the cohort works. Like if you just put people into a room, right. And you expected someone to throw the party, right. Or someone to share their like deepest insight, right. Or someone to identify like their biggest problem. Would it happen? Probably not. Maybe it would organically with certain groups, but I think the behavior would probably indicate that most likely it wouldn't happen, right? It'd just be discombobulated and like you wouldn't get to a good outcome. But the cohort model is like, great, what if we took a curated group of 20 of the most select next generation emerging manager, next tier one firms, like these people that are immensely ambitious and already like super successful, right? Winter (42:53.734) better than Stanford, better than Harvard, name your favorite, whatever vocational school or transformational experience. What if you could put them, and then you manage that group, right? And all of the networks and all of the value add and all the perspective, right? And then you layered on top of a program that just constantly iterates. We're just never satisfied with how much value we're kind of adding into that program. So for me, that's the experience. of coming into the accelerator, where it's like you, yes, learn from Coolwater. And there's like, you know, this body of knowledge, I think all aspiring and existing fund managers should know. But it's the ability to kind of like manage the network effects across the cohort that I think makes it super powerful. It's that kind of compounding effect of both of those things. And again, like then you have cohort over cohort. So we've helped launch now over 200 funds, right? And that's over 350 GPs. And so there's a lot of knowledge that comes from that, right? An immense amount of knowledge that comes from that, right? Like this is, I've written two books. I've written the outline for a third, but like the knowledge that comes out of like all of these, right? Like all of these smart people is like a tome. that captures just like what it means to like, build the best, you know, most pure like institutional investment firm like in the world, right? Like who has that body of knowledge? I'm sure there are other people that have it, but that's it. And then it's like, you have to, if you just delivered that, right, as a tome, like it'd be completely overwhelming, right? No one would digest it. No one would read it. Maybe like two people in the world, but like you have to... of process it as well. So that's like the, you know, the taking all the learnings and translating it is also an important piece, which is why I think you need kind of like a centralizing factor like a cool water to kind of say like, hey, cohort model works great. It actually compounds on itself. And then like, it just gets better every time. Right. And like, and it changes too, like the fundraising market changes every six months. And like, how do you pick up on those changes? Winter (45:19.686) You don't pick up on it by talking to one person, you get one perspective, right? But the cohort model delivered through a program where we have 50 plus teachers come in from all different LP archetypes, share their perspectives. Like that's very powerful in terms of like understanding the zeitgeist of the LP market. And then you have like all of these different GPS from different geographies, international, national come in. They're very smart, they're super savvy, they're very plugged in. They get it, right? They're sharing their insights. Like that kind of compounds on itself. And you have a very good robust understanding of the environment in which you're selling the product. Right? It's like your startup, you know nothing about the client or the customer. You go into the sales meeting blindfolded, right? Sell your product. Like, is that going to end well? Probably not. Go through the Coolwater experience as a cohort. You have like... very strong perspectives from the LP's perspective, from the GP perspective, across a bunch of different geographies, right? And now you go to sell your fun product into a very richly understood and richly informed environment, right? Like you're very like prepared, hopefully, to increase your chances of success. So over explain that, but that's kind of why the cohort model I think. works, but it doesn't, it's not just putting people in a room together, it's curating it, it's managing it, right, and it's delivering programs on top of that so that there's this shared experience and like it's more robust knowledge kind of development and implementation that happens over the course of this program. Jason Kirby (47:05.09) Well, it sounds like an incredible experience for anyone considering launching a fund or in the midst of launching their fund. Do you see typically only first-time fund managers or do you see a lot of people are on fund too or maybe they had a fund with someone else and they're starting a new firm? What's the typical profile that you see coming? Winter (47:24.846) Yeah, so if you're not ready to be a fund manager, we have a program that's just focused on doing deals and building track record, like you need to be accredited. But it's like, how do you build a strong track record to actually have a go to market to actually have like an initial track record that turns into your fund product. But in terms of our core program, it is, we've had funds one through four. I would say if you're a fund three or four, you're joining because You think this is a powerful community and you want access to it, right? And I think if you're fun one or fun two, you're interested in what do best practices look like? And am I doing everything in my power to build the right product to start, right? And again, it's a lot of fundraising is increasing your chances of success, whether that's increasing the number of. top of funnel or the number of qualified leads, or like, what are you trying to do to raise your funds successfully? I think you should, just again, like important concepts to think through. Jason Kirby (48:33.914) No, I think that those are all good points for anyone looking at or considering this as an opportunity for themselves. As we conclude here and kind of wrap up, what would be the best way for someone to learn more about cool water or learn more about you? Winter (48:50.234) Yeah, I mean, reach out on LinkedIn. It's probably the easiest way. So like, hey, heard you on the most amazing podcast with Jason. I'm a rock star and was hoping for an introduction to Jason, but I'll be like, and then you can be like, and by the way, I like, I thought Coolwater sounded interesting as well. Any more information you can write on Coolwater? So I'll make the introduction to Jason for you. And then, Jason Kirby (49:15.874) Nice. Winter (49:19.734) if you're a fit for the podcast, and then I'll send you some information on Coolwater as well, and kind of what we offer as value add to, again, where you are in the journey. Are you an angel? Are you ready to launch your fund? Have you launched your fund? Do you want to build your back office? What do you need in terms of support as an emerging manager? I think just give me a little bit of context there, and I can probably share with you some more information and more details on how to engage with Coolwater. Jason Kirby (49:50.182) Well, I'll be sure to leave a link in the description as well as a link to your website and LinkedIn as well. Winter, it's been an absolute pleasure having you on the show and kind of getting a very different conversation than we usually have in terms of the other side of the coin in terms of raising capital as a fund manager. And as we kind of addressed earlier in the show, like having empathy for both sides of the equation from founders raising capital versus funders raising capital. I think that was a unique conversation that we're fortunate to have and share with our audience. Winter (50:26.418) Jason, thanks for having me on. Appreciate it. This was fun. Jason Kirby (50:28.334) Awesome. Great. Cool.