Why I've Joined Pattern Ventures as the Firm's Newest GP!

I’m thrilled to announce that I’ve joined Pattern Ventures as the Firm’s newest General Partner and Head of Manager Research! Pattern is a fund-of-funds focused on partnering with small, top-tier, early-stage emerging venture managers. After launching and leading Allocate’s emerging VC manager program, this next step is a natural continuation of my path, and I’m excited to continue the work I’ve become so profoundly passionate about throughout my nearly decade-long career as an institutional LP.

The venture capital landscape has changed significantly over the past decade, with an explosion in new firm creation, and a maturation of the “brand-name” firms. Many of these incumbents got their start as early-stage firms, but have since markedly grown their fund sizes and now invest across stages. This shift has considerably altered the risk/return profile of these firms. While they will continue to access high-quality deals, fund level returns will be more predictable, with greater downside protection but also more limited upside. Looking forward, I believe the best absolute fund returns within VC will come from small emerging managers, and my deep conviction in this thesis is exactly why I’m betting my career on it. 

It’s simple math: a large $1 billion multi-stage fund with 10% exit ownership needs to generate $30 billion in total portfolio enterprise value to achieve a 3x fund-level return. For a $5 billion fund with the same exit ownership, that figure jumps to a staggering $150 billion! As these legacy firms have meaningfully grown their fund sizes over time, they have also skewed towards deploying more of their capital at the later stages, creating a massive opportunity for emerging funds to access deals at the earliest stages without competing against these larger firms. And if these emerging firms can access the right deals at the earliest stages, they can be meaningful contributors to fund-level returns due to smaller fund sizes. A $50 million fund with just 5% exit ownership only needs $3 billion in portfolio enterprise value to return a 3x, and a single $1 billion unicorn returns the whole fund. And the same $30 billion in total portfolio enterprise value that produces a 3x fund return for a $1 billion fund with 10% exit ownership would generate a 30x fund-level return for a $50 million fund with just 5% exit ownership!

However, investing in emerging managers is really, really hard. As Frank Rotman from QED very aptly wrote about last week, not all emerging managers are created equal, and most won’t achieve long-term success. Manager selection becomes even more important when partnering with emerging managers, and it’s critical to select managers with “true differentiation and specialized skill” as Frank wrote. The best emerging managers will produce some of the strongest absolute returns in venture, but the gap between this cohort and the rest of the field will be large.

I believe Pattern’s team is the single best team to build a top-tier portfolio of small, early-stage emerging venture managers. Pattern’s Co-Founders, Nico Mizrahi, and Alex Kassan, along with the rest of the Pattern team, have collectively deployed over $1 billion into emerging fund managers and other alternative investments over the past two decades. In a short time, Pattern has built an exceptional reputation and demonstrated impressive access, partnering with standout GPs like Blake Robbins, who recently spun out of Benchmark, and Chris Howard, who previously led early-stage investments in companies like Flexport, Lattice, and Figma at his old firm Fuel Capital (where I was previously an LP!). 

Pattern’s reputation among GPs is another big reason that attracted me to join the Firm. In an industry where most Limited Partners are exactly that—“limited” partners—Pattern stands out for its active partnership and support of emerging GPs. There’s a huge white space for LPs who can add value and support emerging GPs beyond just providing capital, and Pattern is exactly that type of partner.

I’ve truly never been more excited to be investing in emerging VC managers and could not be more bullish on the opportunity set today. The massive bull market run up to 2022 minted a new generation of exceptional operators, many of whom are now launching new venture funds. Meanwhile, spinouts from top-tier firms are at an all-time high, driven by generational transition, fund size growth, and the desire of many of these partners to return to their pure early-stage roots. With innovation only continuing to accelerate, fueled in part by recent advancements in AI, the early-stage VC landscape is ripe for investment. I can’t wait to get to work investing Pattern’s first fund and building the firm alongside my amazing partners. 

If you are an emerging VC raising between $5 million and $50 million, let’s chat!