490. Why Foundry Isn't Raising a New Fund, Lessons from Hibernation, and the Benefits and Drawbacks of a Give First Philosophy (Brad Feld)

**Nick Moran** (0:00)
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**SPEAKER_2** (0:24)
Welcome to the podcast about Venture Capital, where investors and founders alike can learn how VCs make decisions and reach conviction. Your host is Nick Moran and this is The Full Ratchet.

**Nick Moran** (0:38)
Brad Feld is back on the show. He joins us today from Aspen. He's a founding partner at Foundry and a co-founder of Techstars. Brad has invested in companies including Zynga, Fitbit, Harmonix, Havenly, Mapbox and Formlabs, amongst many others. He's a prolific writer and recently released his new book Give First, which explores how a philosophy of mentorship and generosity can fuel entrepreneurial ecosystems. Brad, welcome back.

**Brad Feld** (1:05)
Thanks. Delighted to be here.

**Nick Moran** (1:08)
It's been too long. For long-term listeners, Brad was the 10th guest we ever had on the show back in 2014 And I got to tell you, Brad, I think we went from maybe 600 total listeners, you know, to 6,000 after your appearance. So I owe you a lot for helping us kickstart this whole thing from back in the day.

**Brad Feld** (1:31)
Hello, my new 5,400 friends. There we go.

**Nick Moran** (1:34)
There we go. So Brad's back. Brad, you know, I would love to start out just with a recap on Foundry before we jump into the book. So Foundry has decided not to raise a new fund. Can you talk a bit about that decision and why you're going to deploy the rest of the current fund and not do another?

**Brad Feld** (1:56)
Sure. When we started Foundry in 2007, one of our sort of viewpoints and perspectives of what we're trying to do is not create a multi-generational firm. So Seth, Ryan, Jason and I sat down and said, you know what, we're going to raise the number of funds. We don't know how many. We're never going to increase the size of the fund. It's going to just be a small firm and just us, and one day we'll decide that we raised our last fund. And that was part of what we told all of our LPs. That was part of our fundraising pitch. That was part of what we talked about. And of course, 2007, we're just getting started with Foundry. After having all spent time and worked together, Mobius, which had been a spinout from SoftBank and affiliated with SoftBank going back to when I started, you know, co-founded that fund in the mid-90s or 1996
So we had this starting point. Now, we raised the fund, we raised the fund in 2010, we raised the fund in 2013 And then in 2016, we did something different. We didn't follow that starting point of, we're never going to have anybody and we're never going to raise a bigger fund. So we ended up adding Lindell Ackman to our team. Lindell was our largest LP from UTemco. And we ended up raising bigger funds. That was really a culmination of two things. One was personally, I've been investing in venture funds going back to 1997 My very first venture fund investment was in Highland Capital 3, you know, a long, long time ago. And my personal investments in venture funds started off as an entrepreneur investing inside funds, but then continued and so I did that a lot, especially as early and seed stage venture started coming back in 2004 I invested in the first USB fund that Fred and Brad did. 2006, 2007, invested in Josh Koppelman's first fund, invested in Monokuma's first fund. So I was doing a bunch of that stuff. And then my partners and I started investing together in funds with our own money. We created an entity that we pulled our capital and I think by 2015 we'd probably made 200 venture fund investments. And of course at this point, early stage venture funds are appearing all over the place. Every day we're getting inbound email. And it really turned from a hobby that was quite a good financial hobby and was a lot of fun and was powerful support of other early stage funds, especially ones that were getting created, to something that was like, it's very hard when you're getting a half a dozen things a week to be discerning about what you're going to invest in, especially when 80% of it is people you don't know. It might be really interesting, but you have no idea. So we ended up coming up with a strategy that we called Foundry Group Next. And in hindsight, we really created a new fund, a new firm and had some different dynamics around it. We still had at that point an early stage fund. So we raised the same 2016 fund, but then we raised this $500 million fund that was investing in venture funds, about 30% of the capital. And then late stage, or not late stage, but series B, series C type later stage, select style deals is what we referred to it as. You know, companies that were now escape velocity and working, but still weren't super expensive. We then sort of built off that for a couple of years. In 2018, we raised a combined fund that combined those two funds. And I think this was a moment in time where we started trying to think about, like, you know, what we were doing long, long, long term. And I was getting to the place where if we hadn't done that, in other words, if we had raised only a 2016 fund, you know, I was getting personally to the place where I was ready to say this was, this is my last fund.