Brian Singerman’s new fund has a twist, and Peter Thiel as a giant backer

Former Founders Fund GP Brian Singerman and co-founder and managing associate of Quiet Capital, Lee Linden, are looking for over $500 million for a brand new fund referred to as GPx, three individuals accustomed to their technique instructed TechCrunch. A good portion of GPx’s fund, probably as a lot as 50%, will come from Founders Fund co-founder Peter Thiel, these individuals stated.

GPx makes use of a two-pronged technique. The agency will make investments roughly 20% of the capital into funds managed by rising VCs who’re concentrating on pre-seed and seed-stage startups; the remaining capital will go towards partnering with rising managers on main later-stage investments (most certainly at Sequence B) of their breakout corporations. 

It’s a reasonably totally different method in contrast with how most enterprise companies function. Whereas typical VC companies make investments all of their capital straight into startups, GPx is adopting parts of what’s often called a fund-of-funds mannequin, a much less frequent funding technique the place a agency invests some portion of its capital right into a portfolio of different funds, fairly than straight in underlying belongings, similar to startups. Whereas a fund-of-funds provides restricted companions a handy approach to entry under-the-radar or hard-to-access companies, a big downside is the twin layer of charges: these charged by the fund-of-funds and people by the underlying managers.

Whereas capital raised by fund-of-funds companies hit a 16-year low final 12 months, based on PitchBook, Singerman and Linden are betting that their private manufacturers, distinctive networks, and a technique that’s solely partially a fund-of-funds will encourage restricted companions to open their checkbooks for GPx.

Singerman and Linden could also be on to one thing. As enterprise capital concentrates within the largest funds, a few of these companies’ greatest traders are not interested by being part of a giant machine. They’re leaving the behemoth companies to launch their very own investing outfits the place they are often extra nimble and specialised.

GPx is betting that the following technology of VC traders will establish and again many robust early-stage corporations, permitting Singerman and Linden’s agency to co-lead later-stage investments within the rising managers’ most profitable portfolio corporations.

Right here’s the place GPx’s technique turns into notably helpful: early-stage VCs usually attempt to train pro-rata rights in later funding rounds (Sequence A, B, and past), however their fund sizes usually stop them from sustaining their share possession in top-performing corporations. When confronted with such alternatives, small VCs usually scramble to lift particular objective automobiles (SPVs) from their current restricted companions. But, these processes are time-consuming, permitting different traders to snap up coveted fairness spots in probably the most sought-after offers.

With GPx’s capital behind them, rising funds could have a possibility to not solely train their pro-rata rights but additionally lead a later-stage spherical.

The Info beforehand reported that Singerman and Linden are launching GPx, however didn’t present particulars in regards to the fund’s goal measurement and different technique particulars.

Singerman and Linden didn’t reply to a request for remark.