Semil Shah is the Founder of Haystack, one of the leading pre-seed and seed firms of the last decade. Among Semil’s portfolio include the likes of DoorDash ($DASH), Instacart, Hashicorp ($HCP), Opendoor ($OPEN), Figma (acquired by Adobe), Carta and many more exceptional companies. Semil’s first fund is marked between a 30 and 40x fund, astonishing.



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Timestamps:

0:00 What is Semil running from and towards?
3:07 How do you decide on each fund’s size?
4:35 Pre-Seed Rounds
9:22 Overlap of Talent and Entrepreneurialism
12:33 Series-A Investing
13:23 Why limit your AUM?
15:28 How often do you lead deals?
19:31 How low will you go on ownership?
22:13 Speed of Investment
23:27 Investment Mistakes
26:30 The Lifecycle of Raising a Fund
29:36 How to Find New LPs
32:42 Biggest Mistakes GPs Make in Fundraising
36:14 How to Create Urgency with LPs
40:39 Kickers on Funds
41:56 Biggest Fundraising Mistake
47:52 Why is LP Churn Coming & Difficulties in Raising
50:14 LP Incentives
54:31 The Chanels & Walmarts of Venture
58:46 Where have LPs made mistakes?
1:03:57 How to Distribute an Endowment Fund
1:06:36 What Sins VCs Commit
1:09:02 What Sins GPs & Founders Commit
1:12:07 Favorite Article & Why
1:12:55 Biggest Worry about Venture Landscape Today
1:15:31 Most Underrated Angel Investor Today
1:16:57 Single Hardest Moment of Haystack Journey
1:17:44 Single Biggest Return
1:19:35 Biggest Miss - OpenSea
1:21:46 Best Investment Advice
1:23:10 Most Recent Publicly Announced Investment


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In Today’s Episode with Semil Shah We Discuss:

1.) The Makings of Semil Shah:

What is Semil running away from? What is he running towards?
What does Semil know now that he wishes he had known when entering venture?
What is Semil’s biggest advice to managers raising their first funds now?

2.) Fund Sizing: Growing vs Staying Disciplined:

Question from Hunter Walk: How does Semil determine the right size fund to raise with each fund
Question from Satya Patel: Why have you resisted increasing AUM?
In the last episode Semil mentioned a three-year deployment cycle for the fund, did he stick to it? What are the benefits and drawbacks?
What investing mistakes did Semil make over the last 3 years that he wishes he had not made?

3.) The Secret to Fundraising for a Fund:

What is Semil’s biggest advice to emerging managers on finding new LPs? What works?
What materials do managers need to have in place for a new fundraise? Deck? Dataroom?
What are the most common mistakes VCs make when pitching LPs their funds?
How does Semil follow-up with potential LPs post-call? What works? What does not?
How does Semil suggest creating a sense of urgency for LPs to commit to a fund?
How does Semil feel about giving preferential terms to convince LPs to commit to the first close?

4.) The Current Landscape:

For VCs:

How will the current landscape impact emerging managers’ ability to raise?
What advice would Semil give to them? Raise smaller?
Kyle Harrison said on the show recently, “differentiation will kill 80% of venture firms, especially the so-so ones”. Does Semil agree? Who is set to struggle? Who is set to thrive in this environment?

For LPs:

What does Semil think are the biggest mistakes LPs made over the last 2-3 years?
How will they respond in this market cycle?
If Semil were handed an endowment fund, how would he allocate today?
Does Semil agree, we will see a denigration of venture returns to those of PE like multiples? Why?

For Founders:

How does Semil advise founders on raising today when everyone says they are investing but very few really are?
How does Semil advise founders on how to think about valuation inflection points with respect to raising capital?


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