When I ask most venture capital companies to whom their limited partners are, or investors providing money for their funds, I receive the same cryptic response: endowment, pension funds, families and individuals and individuals. It is a closely kept secret for most VC operations. Lead Edge Capital, based in New York, adopts a different approach: it proudly lists the more than 700 people who support its fund directly on its websiteAlthough he does not include his donors of institutional funds.
The number of LPS is an amazing figure for any venture capital business, and in particular that with a relatively modest active ingredient of $ 5 billion in management. But Nimay Mehta, head of Lead Edge, swears by the strategy, even though he is preparing to collect the seventh business fund this year, which will lead to more than 700 calls. He affectionately called the process with a high intensity of labor as “a crazy quantity of brain damage”. But in the increasingly competitive field of software investment, this is what distinguishes Edge from his peers.
Mehta is well used to winning the phone. He comes from the Mafia Insight Partners – another New York company giant who helped set up an ascending approach to supply, in which analysts at the start of their career find agreements thanks to the awareness of cold.
Mehta was a student at Harvard in 2007 when he saw a job list in an entrepreneurship club for a part -time internship at General Catalyst. He called the cold to the person who set up the list and obtained the position: a little glamorous position paid about $ 15 each hour devoted to the implementation of prospects in a database, as he remembers. He moved to New York in the fall of 2009, the financial crisis raging around him, and transformed his experience into GC in an analyst position at Insight, joining the “Dialling for Dollars” team, as he said. “This is one of the best training you can get in the investment,” Mehta told me about cold call startups. “Your love and appreciation for very large companies have been entirely born to speak with bad businesses.”
“It's like going to the gymnasium,” he added. “Each telephone call is a representative.”
During her stay with Insight, Mehta was presented by a classmate to a former Bessemer analyst who was starting a venture capital company and sought to hire the investment team. Mehta joined in May 2011 and Lead Edge launched his first fund the following month.
While Lead Edge still increases around 50% of its capital of institutional investors, 95% of its partners limited by logo are individuals – and that was part of the initial design of the company. Lead Edge wanted to build his LP base around people who could be useful for his wallet companies. “It was really a function of my supply experience and to have spoken to so many founders and CEO myself,” said Mehta.
The number has also increased over the years, compared to approximately 100 LPS in the first fund at 750 today – a Who's Who of Fortune 500 Director of managers, entrepreneurs and advisers of large companies, from the former CEO of Macy's to the CFO of Workday. “Building a business like ours is like trying to put an orbit satellite,” explains Mehta. “Objects in orbit remain in orbit, but bringing them to orbit is really very difficult to do.”
He stresses that directing EDGE's growing investments in the SAFESEnd tax software company in 2021 as an example of the success of the strategy. After the company acquired 65% stake in the platform, Lead Edge asked its LP to demonstrate the software to their accountants, which led to millions of income. Lead Edge sold the company to Thomson Reuters for $ 600 million earlier this year. The other notable outings for the company include Asana and Uber.
While many venture capital companies find it difficult to attract the attention of the LPS in the midst of a liquidity tightening, Mehta maintains that the unique approach of Lead Edge helps to promote close relations with its donors – it says that the company retains 95% of these donors between funds. This can also be assigned to the company's yields.
The biggest question for the company, in particular with its insight and Bessemer's DNA, is the size. Lead Edge is a fraction of the size of his offspring, with around 80 people in his team. However, it is trendy in their direction, in order to collect an even greater fund than the sixth of lead Edge, which has totaled nearly $ 2 billion. When I asked Mehta if his goal was to reach the insight scale, he gave a diplomatic response: “My ambition is great yields.”
Although Mehta insisted that Lead Edge has no master plan, the company's donors army is only growing, especially since its wallet leaders have successful results and join the LP base – 70 in total. “It's the wheel,” he said.
Leo Schwartz
X: @Leomschwartz
E-mail: leo.schwartz@fortune.com
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This story was initially presented on Fortune.com
