Tim Flannery - Simplifying Fund Closing - [Founder’s Field Guide, EP. 55]

**Patrick O'Shaughnessy** (0:00)
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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Founder's Field Guide. Founder's Field Guide is a series of conversations with founders, CEOs, and operators building great businesses. I believe we are all builders in our own way and this series is dedicated to stories and lessons from builders of all types. Founder's Field Guide is part of the Colossus family of podcasts, and you can access all of our podcasts, including edited transcripts, show notes, and resources to keep learning at joincolossus.com.

**SPEAKER_2** (1:06)
Patrick O'Shaughnessy is the CEO of O'Shaughnessy Asset Management. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of O'Shaughnessy Asset Management. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions.
Clients of O'Shaughnessy Asset Management may maintain positions in the securities discussed in this podcast.

**Patrick O'Shaughnessy** (1:32)
My guest today is Tim Flannery, Co-Founder of Venture Fund Administrator, Passthrough. Passthrough is removing friction from the manual time-consuming fundraising process by making investor onboarding as simple and automatic as possible. Passthrough software helps investors fill out subscription documents in minutes rather than hours and allows GPs to easily track LP subscriptions during a fundraise.
Our conversation discusses the power of identity as a feature to build products around the double-edged sword of solving an unsexy problem and how Passthrough has thought about pricing their software. Please enjoy my conversation with Tim Flannery.
Tim, we were talking before hitting record and you said something just there and I told you to stop because maybe it's the right place to start our conversation, which is this notion that if you think about the complex Yale endowment model, sort of the fanciest of asset allocation investing models out there in the world, the ability to do that sort of thing may be working its way down, all the way down to the individual. There's this sort of democratization of ways that you can invest types of investors, different kinds of backgrounds of GPs out there. We're gonna talk a lot today about just like what's happening in the world of investing, but maybe that concept is a great wedge to begin our conversation. What are you seeing that leads you to say that what Yale can do perhaps at some point soon, the individual will be able to do?

**Tim Flannery** (2:51)
There's a couple of things happening. The very practical examples of this is one, angelists has continued to develop products and so if companies like Allocations and Carta and everybody else that's building these things that allow fund managers to get off the ground quickly, these fund managers, because they're new to the environment, it means that they know different investors. And so first, there's this pull where the manager themselves, they have their own network, they can go bring it in. The second is a push.
So about a year and a half, two years ago, Partners Group, huge, huge private equity firm, lobbied the Department of Labor to change regulations around ERISA requirements.
So individual ERISA plans weren't allowed to invest in private funds. Then all of a sudden in June of, I think it was 2020, they issued a letter that said, actually, sure, you can start taking IRAs in. And so then companies like Alto IRA have exploded. First, they have opportunities to do this in tax advantaged ways. Then they're actually looking for those opportunities. And so this dates back all the way to the JOBS Act where everybody's just been trying to modernize the infrastructure around this and increase access. There's just this continual trend of institutional products are available to non-institutional investors, both the allocator side and on the fund manager side. So we're seeing people left and right. I have all of this pent up demand or I have all of this pent up capital that I wanna deploy, but how do I make it happen?

**Patrick O'Shaughnessy** (4:17)
Maybe we could go all the way to the end and then all the way to the beginning.