Despite raising over $70 million from over 200 investors in 2017, Vibe Capital founder Ankur Nagpal is shrinking the fund side of the company by roughly 43%. The move, which Nagpal calls a “sell-side restructuring,” cancels capital calls and sends back money that had already been wired to the fund. In his official blog post about the decision, Nagpal writes that “[t]he [venture] capital industry as we know it is evolving. […] We decided to take this step because we want our fund to be better positioned for long-term success.” Though he cautions his investors that “there’s no crystal ball” and they may not see their money returned immediately, Nagpal says they are still committed to achieving their investment goals.
From the text, it is clear that Nagpal is feeling more confident about the market conditions and expectations for startups. He believes that a $1 billion outcome is now realistic, which led to him contracting on his investment return. If he were to invest from a smaller fund size, he believes that this would give him an even higher multiple if successful in returning capital to investors.
Since announcing the cut, the founder of incentivized review platform Lighthouse suggests that many of its users who received capital back are actually going to allocate it to other ventures. Nagpal anticipates that his investors will invest in new startups outside of their own ventures and he is excited to see what the future has in store for Lighthouse.
As the startup world shifts and struggles, many solo GP’s are feeling the pinch. Many are shrinking fund goals, extending fundraising timelines, teaming up with investors to avoid team risk or even going toward placement agents, once taboo in the world of fundraising. Rajesh Nagpal is one such solopreneur who has taken this new landscape into account and decided to make a big change in his life – he is moving from his city to a smaller town so that he can put 90% of his time into building his new startup. Nagpal says that while it will be tougher at first, he is confident that this move will be worth it in the long run as it will help him focus on what truly matters – creating something unique and valuable for others to enjoy.
Image: A startup at its desk. Shutterstock
The history of solo GPs
Prior to the rise of solo GPs, there was much less regulation and oversight when it came to angel investing. This allowed entrepreneurs with massive followings on social media, who may not have had the resources or expertise to seek out traditional funding sources, to form their own funds and invest in other startups. Today, however, with platforms like AngelList making it easier and cheaper for fund managers to set up shop, the field has become more competitive. As a result, many novice investors are venturing into angel investing without having the necessary experience or knowledge base