Ankur Nagpal, founder of Ocho, has decided to shrink his $70 million venture fund by 43% due to changing market conditions and less interest in venture capital. Nagpal believes that investing from a smaller fund size will allow him to return a higher multiple and put 90% of his time into his new startup. However, other solo GPs are experiencing difficult times, with some struggling to secure capital as LPs become less interested in venture capital. Many solo GPs are shrinking fund goals, extending fundraising timelines, teaming up with investors to avoid team risk, or turning to placement agents for help. This marks a shift from the fund of fund mentality that was commonplace last year. Before solo GPs were in the spotlight, LPs weren’t giving lone venture capitalists meaningful capital. Nevertheless, Nagpal’s decision to shrink his fund size and return capital to LPs could provide a positive example for other solo GPs looking to navigate these challenges.
Solo GPs and the Shifting Venture Capital Landscape
Ankur Nagpal, founder of Ocho, made headlines last year when he raised a $70 million venture fund called Vibe Capital from over 200 investors. However, Nagpal has now decided to shrink the fund by approximately 43% due to changing market conditions and less interest in venture capital. He has canceled capital calls and returned money that had already been wired to the fund. Nagpal believes that investing from a smaller fund size will allow him to return a higher multiple and put 90% of his time into his new startup.
While Nagpal’s LPs were surprised but “super happy” to get their capital back, other solo GPs are experiencing difficult times. They are shrinking fund goals, extending fundraising timelines, teaming up with investors to avoid team risk, or even turning to placement agents to help them close investors in exchange for a fee. This marks a shift from the fund of fund mentality that was commonplace last year, in which investment firms cut checks to early-stage, experimental investors to de-risk and even lead first checks into a generation of new startups.
Before solo GPs were in the spotlight, LPs weren’t giving lone venture capitalists meaningful capital. However, as entrepreneurs with massive networks sought to formalize some of their angel investing operations, the deal sweetened. Add in the fact that platforms like AngelList made it easier and cheaper to set up a fund and handle all associated admin fees, and the jokes started rolling: anyone with opinions and a following on Tech Twitter could start a fund.
In the current market, solo GPs are facing new challenges. As LPs become less interested in venture capital, the fundraising environment has shifted to more realistic expectations. This, coupled with the fact that many solo GPs are also busy building their own startups, means they are struggling to secure capital. Nevertheless, Nagpal’s decision to shrink his fund size and return capital to LPs could provide a positive example for other solo GPs looking to navigate these challenges.
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