Lee Linden, former founder Fund GP Briansingman and co-founder and managing partner of Quiet Capital Lee Linden, is seeking more than $500 million from a new fund called GPX. A significant portion of GPX's funds are as large as 50%, up to 50%, from Peter Thiel, co-founder of the founder fund.
GPX uses two strategies: The company will invest approximately 20% of its capital in funds managed by emerging VCs targeting pre-seed and seed stage startups. The remaining capital will be directed towards partnering with emerging managers on major late investments in the breakout company (probably in Series B).
This is a rather different approach compared to how most venture companies operate. While a typical VC company invests all its capital directly into a startup, GPX employs elements of what is called the fund of fund model. This is a less common investment strategy in which a company invests a portion of its capital in a portfolio of other funds, rather than an underlying asset, such as a startup. The Fund of Funds offers limited partners a convenient way to access companies under the radar or difficult to access, but the key drawback is the double layer of fees. It is billed by the funds and the underlying manager.
Capital, raised by Fund-ofFunds companies, reached its lowest level in 16 years last year, but Singerman and Linden are betting that a strategy that is exclusively with personal brands, unique networks, and partially funded funds will encourage GPX checkbooks to open.
Singerman and Linden may be working on something. Venture capital concentrates on the largest funds, so some of the best investors in these companies are no longer interested in being part of a larger machine. They are leaving the giants to launch their own investment suits that allow them to become more agile and professional.
GPX bets that next-generation VC investors will identify and support many powerful early stage companies, allowing Singerman and Linden companies to guide late stage investments to the most successful portfolio companies of emerging managers.
This is where GPX strategies are especially valuable. Although early stage VCs often try to exercise proportional rights in later funding rounds (such as Series A, B), fund size usually prevents them from maintaining ownership rates of top-performing companies. When faced with such opportunities, small VCs are often rushing to develop special purpose vehicles (SPVs) from existing limited partners. However, these processes take time and allow other investors to snap coveted equity spots in the most popular trading.
Behind the GPX capital, emerging funds have the opportunity to lead the later rounds as well as exercise their proportional rights.
Information previously reported that Singerman and Linden have launched GPX but have not provided details on the fund's target size or other strategies.
Singerman and Linden did not respond to requests for comment.