Dan is a Principal at Colibri Equity Ventures, a single family office. Dan leads the venture capital strategy and also participates in all alternative private investments. Dan started his venture capital journey as an intern at Viola Credit, a venture debt fund in Tel Aviv, before spending time in investment banking at Peter J. Solomon Co. (now Solomon Partners) where he focused on consumer and retail mergers & acquisitions. After banking, Dan spent ~5 years at Alpha Partners, a late-stage venture firm that partners with early stage managers helping them follow on in their late stage deals. Dan is still involved with Alpha as a Venture Partner.
How does your experience in direct investing inform how you evaluate potential fund investments?
My experience direct investing at Alpha was unique in the way it helped me evaluate funds in this current role. At Alpha we helped early stage firms follow on into their late stage companies so most of my role involved meeting VCs, understanding their portfolio and particularly their relationships with their respective management teams. Through that process, I was able to assess which VCs had an edge based on who had the strongest relationships with management. Those VCs were able to get super-pro rata, information rights and continued access to management even when it had been years since they invested. Those were generally the types of managers who had more “hits” in their portfolio and typically were generating better returns. Once I began fund investing, these were the types of patterns I was looking for in the funds we ultimately backed and continue to back. Further, it made me realize there is a lot more to a logo of a company I see in a fund deck. Oftentimes you see many funds with the same logo on their pages as indicative investments. Some investors put a small check in so they can leverage the logo for fundraising, while others have that investment as a core investment. Nothing wrong with leveraging a logo of a great company, but at Alpha we weren’t able to do much with those types of investors since they did not have a relationship with management and oftentimes got into the deal through a process that wasn’t repeatable or scalable.
What was your motivation to expand into fund investing and how did you prepare for the role?
After an amazing 4.5 years at Alpha, I was beginning to think about what my next steps would look like. Given I was mainly a co-investor at Alpha, I always felt like my role was unique, as a lot of the day was like what an LP would do but I was direct investing. I mostly evaluated VC portfolios and spent most of my time talking to VCs versus companies. I would often hear the whole story of the fund and how they evolved and discuss their best companies and how they got into them. Through these processes there were always fund managers I wanted to back, but could only do so through helping support their direct opportunities. A fund of funds was not on the road map for Alpha, but was something I was increasingly interested in. Additionally, we had a close relationship with the Pritzker Group which had invested in a few funds and I respected the way they developed their relationships with funds like us and it was a very collaborative approach. I was really interested in exploring that side of the business further which is why I ended up pursuing it.
In terms of preparing for the role, there weren’t many ways (or time) to prepare before I started. My role at the family office is not just fund investing and is pretty generalist in nature. As we explored what building a venture arm of a family office looked like, we decided that partnering with emerging managers was the best way to build a larger platform, but this was not determined until after I joined.
What is one piece of advice that you would give younger investors who are looking to break into fund investing?
If I had to give advice to someone who is thinking about getting into fund investing, I would tell them to think really hard about what it is about fund investing that appeals to them. Each role is quite different, and there are not a ton of people who only focus on venture capital fund investing. Oftentimes the roles can span fund investing into alternatives more broadly which would include real estate, hedge funds, real assets, private equity, private credit, growth equity and much more. Most institutional fund investing roles tend to be like this. So if you just want to focus on venture make sure you are getting to know the funds and family offices that spend a disproportionate amount of time in the space. But if you are open to a more generalist fund investing role, you get to explore a lot of interesting categories that you otherwise wouldn’t get exposure to. It also seems that the more generalist allocators have the ability to write the largest checks into venture funds despite spending less time with them so that is definitely something to think about as you explore getting into this career.