Against the Grain

RAISE: A Five-Year Retrospective - The Operators Strike Back

June 21, 2021

Since Joanna Drake and I started RAISE five years ago, more than 500 emerging venture capital firms have attended. The project has turned out nothing like we originally expected. 

At its inception, we thought RAISE was going to be a place for fund entrepreneurs to share tactical information. Our plan was to talk about things like investor relations, hiring, portfolio management, back-office management, and the like.  

That first year, we had an extra room off to the side. We thought: “Why not let some of the funds pitch to some LPs?” There weren’t many funds open to the idea of a “Demo Day.” And, there weren’t many limited partners in attendance. Nonetheless, we thought it couldn’t hurt to try. To our surprise, as soon as the funds started their presentations, about half the audience in the main hall left to watch. 

Clearly, the fund pitch sessions had product/market fit. It was just a different product than we expected. The ecosystem needed a platform to connect emerging venture firms with forward-thinking LPs who wanted exposure to the next generation of venture capitalists. 

RAISE 2016

Nothing makes me happier than watching firms come to the conference and then hit escape velocity. Looking back over five years, I decided to take a look at which firms have done  best since then. 

“Best” in the context of venture capital firms is a squishy and perhaps unhelpful concept. We could talk about the firms that have raised the most money or had the best returns (which is hard to know). We could count the firms behind the most iconic companies. None of these measures seemed to capture what I was looking for. 

Instead, I decided to look at which funds have become enduring investment franchises. After all, the whole conference was intended to help new venture capitalists evolve into institutional platforms for the long haul. These funds have scale and deep LP relationships with top-tier LPs, and they have quickly built brands that mean something. And, they are hiring a second generation of investors for multi-fund capability. Which funds are thinking in decades?    

I realize my take is entirely subjective, but when I think of the enduring investment franchises that have come through RAISE, three firms stand out: NFX, Jazz Venture Partners, and Fifth Wall.

Notably, all three firms have partnerships that are dominated by operators, not investors. Not one firm is a spin-out of a big firm. Looking at this list, it struck me — the operators have struck back. 


NFX answered the question: how would a group of accomplished operators do venture capital differently if they wanted to compete against the best venture capital firms in the world? NFX launched with a large four-person partnership that had built businesses with more than$10 billion in exits. Any of these partners could have joined a major firm, but they opted to start with a blank slate. 

Looking at NFX now from the outside, they have created an enormous competitive advantage by using their product skills. They created digital products that flipped the script on the classic passive and active deal-flow model. They took the content and community strategy that First Round Capital pioneered and took it to the next level. The firm connects investors with entrepreneurs in such a way that they create great value for the ecosystem. Most importantly, these products give NFX an information advantage by collecting all that sweet data. I can only imagine the insights they are able to glean from these products.   

Furthermore,  NFX takes brand-building seriously. They bought ads on the top of Ubers. I don’t see many VCs do that. When your product is a commodity (money), brand matters. In just five short years, they have raised $465 million and built a team of 21 employees. There is a lot to learn about building a VC from NFX.   

Jazz Venture Partners 

With a much lower profile, Jazz Venture Partners has gone from a startup fund to closing more than$600 million in capital. I am sure it would get me in trouble to list their LPs by name, so I will just say that Jazz is now backed by some of the biggest and fanciest fund investors — ones that any VC firm would be proud to have.

What explains Jazz’s success? Like NFX, Jazz started with a big team — a five-person team. There are two operators who spent years running significant P&Ls, one doctor/investor with an institutional quality track record, a fourth partner who is the super-connector, and a fifth who is a world-renowned neuroscientist. 

When Jazz started, their mandate was very specific: they invested at the intersection of neuroscience and human performance. This is the kind of thematic fund that resonates because its investment theme straddles traditional technology venture capital and health care, which is a tough mandate. As a specialist firm, generalist tech firms can partner with them rather than compete. At the same time, health care firms wouldn’t touch many of their targets, e.g. video games or cognitive behavioral therapy, to treat mental and physical illnesses. So, I see the right team and the right theme as the foundation of their success. 

Jazz was run from day one as an institutional-quality fund. It was all very professional, very by the book. Their first fund landed a few influential thought-leader billionaires early and then leveraged relationships with large institutions like TPG to get to $150 million. For their second fund, they brought on large long-standing LPs like university endowments and other similar institutions. 

Now on their third institutional fund, the firm has built an impressive second generation of investors and expanded its investment mandate by dropping the explicit focus on neuroscience.    Now, Jazz Ventures invests in companies improving human performance, no connection to neuroscience required. Once they had the trust of their LPs, they were able to expand the target set and now have a platform to invest at scale for decades. 

Fifth Wall 

Fifth Wall proves that if you have LPs that are super-important to an ecosystem, you will have a massive advantage in deal-sourcing. Fifth Wall’s industry LPs are some of the largest operators of commercial real estate in the country. 

If anyone is doing a PropTech-related deal, they are going to want Fifth Wall to participate. I saw this first hand recently when Fifth Wall came along late in a heavily oversubscribed round in which Akkadian was investing. The CEO made room for them, explaining to me that Fifth Wall’s money was strategic because its LPs could be large customers. When a firm can arrive late to an oversubscribed process and still get in, that means that the firm has competitive advantage in deal-sourcing.  

It helps that founder Brandon Wallace is an experienced operator, having built two companies prior to becoming an investor.  Since then, Fifth Wall has built a team of 29 people. Brandon filled his team with other operators along with a heavy dose of private equity professionals, McKinsey and Bain consultants, and a few traditional venture capitalists. This firm looks nothing like a traditional VC firm. 

The results speak for themselves. In five years, Fifth Wall has raised $1.4B and launched new strategies focused on sustainability and retail.  

Five years of RAISE suggest that the operators are striking back. The newest generation of great firms looks nothing like the quiet, clubby, generalist tech firms of yesterday. We can all learn a lot by looking at their successes.  

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Ben Black
Ben Black is a Co-Founder and Managing Director of Akkadian Ventures and a 20-year venture capital veteran. He is also the Founder of RAISE Global.

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